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to adopt this act, I certainly hope that you will scrutinize it from the standpoint of an orderly test. Every member of this committee must apprehend the gravest doubts of its constitutionality. It is a profound regret if you cannot in the time that appears to be before you bring these matters into conference with the Attorney General of the United States, in conference with those who are so definitely convinced of its unconstitutionality in every aspect, and ask if he would care to defend this act before the Supreme Court, after full consideration of the decision of the Supreme Court.
Mr. VINSON. Upon what authority do you say the Attorney General subscribes to the view that this is unconstitutional?
Mr. JOHNSTON. I do not at all, by no means.
Mr. Vinson. He said the Attorney General and those who subscribed to the idea that it is unconstitutional.
Mr. Johnston. No; the Attorney General, with those of us who oppose, was my intention.
Mr. Vinson. I think that we can assure you we will be in conference with the Attorney General's office on this, Judge. We always do in executive session.
Mr. Johnston. When you do that, if you will permit me to take advantage of that statement, if you will ask the Attorney General to refer to the files in the Department of Justice and advise this committee from their complete studies and information, which I am informed they have, not as to the validity of this bill, but as to those minor adjustments which will be necessary in the Federal Trade Commission Act to bring about that elasticity that in our opinion would perform all of the functions that this Committee should perform at this time, and consider with him the entire question, you will perform a service to this industry and you will relieve this committee of a precedent which is bound to be the beginning of the introduction in the United States of the continental cartel system, where combinations are the rule rather than freedom of trade, under Government domination of the functions of management.
Gentlemen, you are junking the American system when you destroy the Sherman Act, and you are destroying the Sherman Act when you force producers into a combination in restraint of trade in order that you may regulate the consequences, the monstrous consequences which you have forced upon the industry.
Mr. VINSON. While you have been discussing the legal side of the case, Judge, I take it that you are acquainted with the coal operations from a practical viewpoint?
Mr. JOHNSTON. Yes, sir; unfortunately.
Mr. VINSON. What is the wage schedule in your field as compared to the Appalachian scale?
Mr. JOHNSTON. It is $3.80 on a basic day.
Mr. VINSON. It runs up as high as a $1.20 differential?
STATEMENT OF R. V. FLETCHER, GENERAL COUNSEL ASSOCIA.
TION OF AMERICAN RAILROADS
Mr. FLETCHER. My name is R. V. Fletcher. I am counsel for the Association of American Railroads.
The Association of American Railroads has expressed through another witness the general position of the railroads on this bill. I do not intend to go into the economic or legal aspect of the matter at all. I want only to call attention to this section 12, and to say that in our opinion that particular section should be stricken out.
Mr. Hill. What page is that, Judge?
Mr. FLETCHER. Page 36. I think you will recognize it as having been the subject of some discussion before the committee previously. I read the hearings as far as I could.
Section 12 provides (reading):
No certificate of convenience and necessity authorizing the extension of railroad facilities shall be made by the Interstate Commerce Commission for the service of any mine producing bituminous coal for the commercial markets except upon the approval of the National Bituminous Coal Commission.
The railroads, after long experience with the Interstate Commerce Commission, and bearing in mind the provisions of subsection 18 of section 1 of the Interstate Commerce Act, which places upon the Interstate Commerce Commission the jurisdiction and authority to grant certificates of convenience and necessity where a railroad proposes an extension of a line, believes that the adoption of this section 12 would lead to a great deal of harmful confusion in connection with the administration of this act.
Subsection 18 of section 1 of the Interstate Commerce Act requires every railroad which desires to extend its line to make application to the Interstate Commerce Commission, and no extension of that line can be had and no new transportation can be engaged in by the railroad company unless they have obtained from the Interstate Commerce Commission a certificate. That certificate must be based upon a finding by the Commission that the present or future public convenience and necessity require the construction or operation of the line.
It is obviously the duty of the Interstate Commerce Commission when application is made for extension by a railroad into coal territory to consider all of the economic aspects of the case and to consider any policy which Congress may have laid down or declared in a bill of this character. So that I think it is perfectly safe to say that the Interstate Commerce Commission will give due consideration to the policy of Congress as may be declared in a bill of this sort, and no doubt will give due consideration to any policy which the coal commission may have adopted on the subject.
May I append to the record a reference to five or six cases which the Interstate Commerce Commission has had before it, where railroads have been denied the privilege of extending their lines into coal properties, and in some cases, at least one or two upon the ground that it would not be socially desirable or in the public interest to increase the amount of the production of coal at that time.
Mr. Hill. You have that permission.
Mr. FLETCHER. Without taking much of your time I would just like to read a sentence or two from a case which is found in 111 I. C. C. at page 765, where the Interstate Commerce Commission said:
The circumstances are such as to render a reliable estimate of prospective coal traffic in the immediate future exceedingly difficult. There is no pressing demand for additional coal in the prospective and available markets.
Again, in a case which is found reported in 105 I. C. C. at page 53, the Commission in denying the application of the railroad company to extend these facilities, said:
The testimony shows that the mines already opened can supply a greatly increased demand, that many more mines can be opened along the existing railroads; and that most of the coal mines tributary to the proposed line could be reached with less cost by spurs or branches from the Louisville and the Southern.
This indicates that even before this act was passed, or before Congress had declared any particular policy on the matter, the Interstate Commerce Commission considered economic phases of any proposition to extend a line of a railroad.
We think the Commission can be trusted in this matter. Might I venture the suggestion, if it would not be imperitnent, that the Committee ask the Interstate Commerce Commission for its opinion as to whether this particular section is one which they favor? I have no idea whether that has been done. I do not know what the Commission might say, but I would be willing to rest my case on what reply they might make to that question.
That is all; thank you, Mr. Chairman.
Mr. CROWTHER. With relation to that, I made some inquiry as to that section on the first day of the hearings.
Mr. FLETCHER. I recall it.
Mr. CROWTHER. In regard to the conflict between the jurisdiction of the Interstate Commerce Commission and the Coal Commission.
Mr. FLETCHER. I had the honor of reading that colloquy.
Mr. CROWTHER. As I remember it, one of the proponents of the bill, when being questioned on that subject by Mr. Cooper of Tennessee, suggested that that might very well be withdrawn from the bill.
Mr. FLETCHER. I think Judge Warrum said something substantially to that effect, that they did not regard it as vital to what they were seeking to accomplish.
Mr. COOPER. I think that is substantially correct. As I recall, I interrogated the judge on that--
Mr. FLETCHER. I remember that, Mr. Cooper.
Mr. COOPER. And my impresşion is that he was practically in agreement with the suggestionMr. CROWTHER. That if was not vital? VIr. COOPER. That it was not vital. Mr. Hill. Thank you, Mr. Fletcher. Mr. FLETCHER. Thank you, gentlemen. (The brief submitted by Mr. Fletcher is as follows:)
There are here submitted five cases in which the Interstate Commerce Commission denied applications for certificates of public convenience and necessity filed by applicants seeking the permission required by section 1 (18) of the Interstate Commerce Act in order to construct additional railroad lines which these applicants desired to do in order to serve existing coal fields or in order to make it possible to open new coal fields. The facts of each of these cases will be stated briefly and the chief reasons given by the Commission for the denial of the application.
CONSTRUCTION OF LINE BY JEFFERSON SOUTHWESTERN (76 1. C. C. 778) 1928 A corporation organized under the laws of Illinois was formed for the purpose of constructing a line of railroad approximately 14.5 miles in length in the county of Jefferson and State of Illinois. The primary purpose of the proposed line was to serve a coal mine which the Illinois Coal Corporation desired to open and it was estimated that 90 percent of the applicant's expected traffic would be coal.
As to the effect of the construction of this line on the coal company the Commission said: "The addition of switching or other charges to standard rates on coal would hamper the coal company in competing with other mines in that section of Illinois, and it is improbable that the line could operate profitably without through rates” * “Undoubtedly, advantages would be sought in connection with through rates and divisions, absorption of switching charges, and the supply of cars.
In denying the application the Commission concluded:
“No important public interest demands the construction of the line. The special interest and needs of the coal company could be adequately served by building short spurs to existing railroads which could be done with a much smaller addition to the national investment in railways than would be required to construct and equip the proposed line.”
CONSTRUCTION OF LINE BY NORTHERN OKLAHOMA RAILWAYS (111 I. C. C. 765) 1926
A corporation was organized under the laws of Oklahoma for the purpose of constructing a new line of railroad in Craig County, Okla., and authorization was sought in the form of a certificate of public convenience and necessity required by paragraph (18) of section 1 of the Interstate Commerce Act. The proposed line was to be 11.5 miles of main track and 4.5 miles of spur track and its principal purpose was to reach and serve deposits of coal, which commodity, it was estimated, would furnish about 90 percent of the traffic of the new line.
Much evidence was introduced by the interested railroads on the estimated expenses and revenue of the new line and its effect on other carriers. And by various coal dealers testimony was given on the question of whether the time was ripe for opening the field in Craig County.
In denying the certificate the Commission seems to have given consideration to all of this testimony as evidenced by the statement:
“The circumstances are such as to render a reliable estimate of prospective coal traffic in the immediate future exceedingly difficult. There is no pressing demand for additional coal in the prospective and available markets."
Other reasons for the denial were that the proposed line was inadequate to meet the needs of the agricultural interests in that section and for the proper distribution of the coal whose principal market when the time was ripe was expected to be to the North rather than to the South as the proposed road was to run. Also, the Missouri-Kansas-Texas Railroad Co. declared its intention to construct tracks to serve this coal field when the prospective traffic would justify the expense.
PROPOSED CONSTRUCTION AND ACQUISITION BY MORGANTOWN & WHEELING RAIL
ROAD CO. (94 I. C. C. 372) 1925 The Morgantown & Wheeling Railroad Co. was organized under the laws of Pennsylvania for the purpose of constructing a railroad, and it filed an application seeking permission to complete the construction of a line from Waynesburg, Green County, Pa., to Blacksville on the border between Pennsylvania and West Virginia, and to acquire two other railroads.
The applicant furnished no information as to the area tributary to the proposed line or as to the population of the territory. No estimate as to the character and volume of traffic expected was furnished. It was represented that the entire territory traveled by the proposed line was underlaid with large bodies of coal which would be opened up when the line was completed.
The Commission said that the testimony as to the possibility of coal development along the line was very general and not convincing, and the facts upon the record did not justify the Commission in granting the application. PROPOSED CONSTRUCTION OF LINE BY SOUTHEASTERN RAILWAY (105 1. C. C. 53, P. 25)
The Southeastern Railway Co. filed an application for a certificate of public convenience and necessity authorizing it to construct a line about 13.5 miles long from a connection with the Southern Railway Co. at Bundy Station, Lee County, Va., northwesterly across the Virginia-Kentucky boundary to a connection with the Louisville & Nashville Railroad Co. near Louellen, Harlan County, Ky. The main purpose of the proposed line was to transport coal, and about 85 percent of the estimated freight revenue was expected from coal traffic.
The applicant's testimony was generally to the effect that the proposed line was necessary to exploit the coal properly; that this coal was needed to supply the requirements of industry in the Carolinas and elsewhere in the Southeastern States; that it was needed to supply the requirements of the Southern Railway at a reasonable price; and that a demand for the coal existed in New England.
In denying the application the Commission said: “The testimony shows that the mines already opened can supply a greatly increased demand; that many more mines can be opened along the existing railroads; and that most of the coal lands tributary to the proposed line could be reached with less cost by spurs or branches from the Louisville and the Southern."
ST. LOUIS-SAN FRANCISCO RAILWAY CO. PROPOSED CONSTRUCTION (170 I. C. C. 565),
The St. Louis-San Francisco Railway Co. applied for a certificate authorizing it to construct a line about 5.8 miles long to a mine of the Tahona Smokeless Coal Co. in LeFlore County, Okla., from a connection with its existing system at or near Cameron.
The mines did not have a direct track connection and the coal was transported by a double-track tram to a tipple on the rails of the Midland Valley Railroad Co. The coal interests maintained that these facilities put them at a severe disadvantage with their competitors and one of their representatives expressed the opinion that if the proposed line were constructed the value of their lands would be doubled because the industry would be able to expand economically, double production, reduce costs, and compete in the market more nearly on terms of equality with other similar concerns.
However, at a later time the Midland Valley entered into a contract with the coal interests to construct additional tracks. This contract was satisfactory to the coal company so the Commission said that the coal interests had no further interest in the proceedings, and counsel for the Midland Valley was authorized by them to state on the record that dismissal of the application would be satisfactory.
In view of these facts the Commission simply said that it found that the present and future public convenience and necessity were not shown to require the construction of the proposed line by the St. Louis-San Francisco Co.
Mr. Hill. Mr. Henry de Bardeleben.
STATEMENT OF HENRY DE BARDELEBEN, REPRESENTING THE
ALABAMA MINING INSTITUTE
Mr. Hill. Give your name, address, and the capacity in which you appear here, please.
Mr. DEBARDELEBEN. My name is Henry T. DeBardeleben, Birmingham, Ala. I am president of the DeBardeleben Coal Corporation, which owns and operates mines producing commercial coal in that State.
I am appearing on behalf of the members of the Alabama Mining Institute in opposition to the bill now under consideration. The Alabama Mining Institute is a voluntary association of operating companies producing 97 percent of the commercial coal and practically all of the byproduct coke, pig iron, and steel produced in Alabama.
I am just going to touch on the high spots, Mr. Chairman, and I have a brief here that I would like to file.
Mr. Hill. You may have that permission, Vr. DeBardeleben.
Mr. DEBARDELEBEN. We are convinced that, should the bill become a law, the coal industry of Alabama and the coke, iron, and steel industries of that State, and, progressively, all industries of the South, together with their employees, would be adversely affected to a greater extent than any other coal-producing district east of the Mississippi River. We are also convinced that the result would be an almost complete annihilation of the Alabama coal industry and serious impairment of Alabama commerce and the byproduct coking,