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ment in this great industry in their continuous study and search for the maximum economical extraction and the efficient operation of their mines, over a long period of years—a study and search that never ends? Those who write glibly on this subject give little consideration of the cost to the consumer, and the fact that higher prices mean loss in tonnage. Certainly we can get a greater extraction if cost to the consumer is not to be considered.
The price of bituminous coal in many areas is definitely fixed by the price of oil, natural gas, and hydroelectric power. Our tremendous coal reserves, plus our unharnessed waterpower sites, do not warrant maximum extraction at considerably higher prices to the public.
Furthermore, if we are to interest ourselves in conservation of coal, we counteract this objective if we purchase marginal mines and abandon them for, say, 15 to 20 years. Many of such mines would never be reopened, and much of such abandoned tonnage would be permanently lost. This opinion is confirmed in the United States Coal Commission's Report of 1923.
The statement was made by Congressman Snyder and others before this committee that producers with 65 to 70 percent of the national production favor this bill. We believe that over 60 percent of the national tonnage is produced by those who definitely oppose this bill.
Section 13 of the bill provides that every corporation engaged in mining.bituminous coal which ships its coal in interstate commerce or which uses the mails or other means of communication in interstate commerce to dispose of such coal shall be subject to and as a prerequisite to its right as a corporation to engage in interstate transactions shall file with the Commission its acceptance of the provisions of title 1 of the act. Neither Hitler, Mussolini, or Stalin could improve on this provision.
Congressman Snyder stated to this committee that the bill is offensive only to those interests who welcome a return to cutthroat markets in the hope that they may survive. We challenge that statement. It is not true. The Consolidation Coal Co. resents that charge, and I am sure every other producer who opposes the enactment of this bill, if given the opportunity, would brand that statement as without foundation in fact. We admit its sensationalism, but we trust that not one member of your honorable committee will give it serious consideration. The statement was, we believe, grabbed out of thin air. We never heard of a single producer who wanted a return of cutthroat markets; on the contrary, those who oppose the bill, along with some who favor it, are busily engaged now in organizing central sales companies, patterned after the plan of Appalachian Coals, Inc., which has the approval of the Supreme Court.
In addition to Appalachian Coals, Inc., functioning since April 1933, which includes tonnage in the southern high-volatile fields in Virginia, West Virginia, Kentucky, and Tennessee, an area producing over 70,000,000 tons under present business conditions, we understand that similar sales companies have been organized or are now organizing in Alabama, Pennsylvania, Ohio, northern West Virginia, Indiana, Illinois, Iowa, Colorado, and the smokeless fields of West Virginia. We believe that when such sales companies are organized and functioning in all districts, that a fairly high degree of market stability will prevail,
Congressman Snyder further stated to this committee that the producers were unwilling to make a wage contract in the absence of legislation which assures a stable market, or words to that effect. A wage contract was offered in March 1935 after market prices as determined by code authorities under N. R. A. broke down. A wage contract will be made, we hope, regardless of the disposition of this bill. We now have collective bargaining contracts covering 95 percent of bituminous mine workers. We do not now and have not for the past 6 months enjoyed stable prices. There is no reason in our judgment why such contract cannot be renewed from time to time. All that is necessary is agreement on reasonable hours, wages, and working conditions. The passage of this bill is not a necessity in the making of such a contract. Its passage would create a condition of uncertainty as to labor relations and markets that would make it more difficult to negotiate a wage contract and probably necessitate producers to insist on negotiating wage contracts in each district rather than groups of districts as is now the custom.
It has been my experience that collective bargaining contracts have been made year after year through periods of stabilized as well as unstabilized markets.
This bill does not give the consumer sufficient consideration. This fact is brought out clearly in a short broadcast on May 15 by Mr. Boake Carter, a copy of which I desire to make a part of the record.
This legislation, in our judgment, is a most amazing proposal.
EXCERPT FROM BOAKE CARTER BROADCAST OF May 15, 1935, SPONSORED BY
Philco OVER COLUMBIA BROADCASTING SYSTEM Sometimes it seems that some of the experience that has been taught through efforts to apply planned economy in the last 2 years, has gone for naught. Instead, when a plan blows up, the theory is to produce a bigger and better plan. Now the latest plan is to rescue the bituminous coal industry and between soaking the consumers, offering a new paradise for jobholders and creating monopolies, the Guffey coal bill, which the Senate may have to consider before it goes home, is one of the fanciest plans produced among all the lans of the last 2 years. Officially it is tagged as a stabilizer for the bituminous coal industry and a conservator of coal. Being a user of coal and fearing that, as the bill hints, the United States was about to run out of coal, we made anxious investigation, to find that the Federal Trade Commission in 1926 reported that at the then rate of national consumption America's coal supplies would last only the very short time of 7,000 more years. Can it be that the planners of the Guffey coal monopoly bill suspect we shall all become a nation of Methusalah's and might run out of coal in our old age, that they propose to protect us in 1935 from running out of coal by 2635 A. D. Or is it that they spy new ways to take care of more jobholders for the next 7,000 years? For it proposed a national commission and then a string of district boards of coal producers tied to the strings of the national commission, and from the national commission would issue learned decisions on how to and how not to operate the bituminous coal business. It is not hard to foresee that superintendents, district inspectors, divisional supervisors, field agents, clerks, typists, stenographers, geologists, maybe, offices, filing cabinets, desks for the parking of tired jobholders' pedal extremities, chairs, soon fastening themselves on the public pay rolls to become another bureaucracy fastened barnacle-like to the bottom of the ship of American economy. Among other things the head commission could do under the terms of the measure, would be to cut production, establish quotas by districts.
Business could not be carried on without first getting august permission from the supreme powers. The commission could fix prices, although the Senate and the House have just voted in the N. R. A. extension to kick price-fixing out of the window. Members who joined up would be rewarded by exemption from any public responsibility by being freed from the antitrust laws, although the present Congress has raised the roof about this very thing among all other code experiments of the last 2 years. To copper bottom the bribe, for that is what it is and why not call it so by its right name, the planners propose to fine those who don't join up a 25 percent tax, and then split 99 percent of the revenue up among the ones who might join. Dick Turpin and Jesse James were pikers, in their day.
Sometimes one wonders if the slippery tories of the high, wide, and handsome day of 1928 and 1929 hadn't better look to their laurels. Also the bill returns to that un-American, unpleasant principle of official boycotting, which backfired so disconcertingly in official faces when boycotting became a 9-day wonder in 1933. Not content with thus creating one of the most amazing government sponsored monopolies of all time, the climax is reached with the proposal that Federal authorities be authorized to spend 300 millions and buy up all the coal mines and properties which might interfere with the operation of such a monopoly. Thus it can be seen that the Guffey coal plan is a plan of plans, indeed. It kills so many birds with one stone, cares for the job holders for 7,000 years; advances in seven-league boots toward state socialism; takes care of the monopolists; provides for more taxes. And as usual, the luckless "Johnnie Q. Public", taxpayer and consumer, is to be taken over the hurdles. He kicks in with the 300 millions to buy up the mines as his gift to the monopolists, and then pays for higher-priced coal the monopolists will hand him for his cellar furnace. It is hard to imagine a more astonishing piece of legislation proposed in all seriousness.
STATEMENT OF C. H. MEAD, REPRESENTING THE C. H. MEAD
Mr. MEAD. Mr. Chairman and gentlemen of the committee, my name is C. H. Mead, representing as president C. H. Mead Coal Co.; Mead Smokeless Coal Co.; Faith Smokeless Coal Co., all producers of smokeless coal; Milams Fork Smokeless Coal Land Co., a lessor of smokeless coal; and Ravencliffs Development Co. a producer of natural gas. I think generally I represent about 80 percent of the
tonnage of the Winding Gulf district. I do not know that they are in accord with my views, but I think they are.
Knowing that my time will possibly be limited, I have prepared a statement which I would like to file with the committee. I have divided it into certain captions. The first one is vital, as I see it. refers to “Wholly captive properties, title II, and the 25 percent tax on coal producers."
The next I have is "Important; in support of title II and in opposition to propaganda being sent out to influence purchasers of coal against H. R. 8479."
The next I have listed is “General suggestions for the improvement of H. R. 8479." I will read those:
First, I suggest that section 2, page 3, be changed in such manner that the National Bituminous Coal Commission be comprised of 1 coal operator from either the North or the South, 1 miner from the opposite direction, 1 representative of the buyers of industrial coal, 1 representative of the distributors of coal, and 5 disinterested persons
Second, I am much opposed to marketing agencies, as I feel they will eventually result in monopolies. do not
think there is any question about that.
Third, on page 19, line 22, the act provides for the Commission to prescribe a reasonable price allowance to distributors. I suggest that the Commission give due consideration to the testimony of two representatives of distributors made this the 26th day of June 1935, that a part of the service rendered the coal industry was furnishing the producers money to finance pay rolls,
Fourth, on page 6, line 23, part I-Organization and ProductionI suggest that all district boards be composed of as few members as may be absolutely necessary; this to prevent impartial boards. We had boards under the code that were, I think, partial.
I have another one listed down here as “bad”. Possibly I had better state first, Mr. Chairman, that I do not know whether I am for this bill or not. If you can remove two things from this bill, that is, the captive tonnage and the "bad" part I am going to read under "labor relations”, I am for the bill. If those two are not removed, I am against the bill.
I want the whole captive tonnage exempted from the provisions of the bill, and this one provision under part III, Labor Relations, changed. I am going to read that. The other can go on file.
On page 26, line 9, we find the following:
The wage agreement or agreements negotiated by collective bargaining in any district or group of two or more districts, between representatives of producers of more than two-thirds of the annual tonnage production of such district or each of such districts in a contracting group during the preceding calendar year, and representatives of the majority of the mine workers therein belonging to a recognized national association of mine workers, shall be filed with the Labor Board and shall be accepted as the minimum wages for the various classifications of labor by the code members operating in such district or group of districts.
Under this provision two union miners could impose their will upon a thousand or more miners who did not desire to work as union miners. This is so manifestly unfair and unreasonable that surely the United States Government would not impose upon a free people such an injustice.
In this connection, beg to say that I have always thought that part of the country should be union and part nonunion, each acting as a
balance wheel upon the other. If the operators became arbitrary with their miners the union encroached; if on the other hand the union became arbitrary, as was the case of the Jacksonville wage agreement and the famous or infamous slogan of “No backward step in wages”, then the nonunion fields encroached upon the union, as it should be.
In carefully going over part III–Labor Relations—I visualize a large and expensive tent built and held by many stays and paid for out of taxpayers' money, that the United Mine Workers of America may be protected and be made to grow. I see also Miss Perkins skipping around the great tent with a tear gas gun that she may protect the great and mighty from being contaminated by the presence of some poor fellow who desires to be a free American citizen.
I say if they cannot stand up on their own merit, let them fall.
I feel it only fair to state that we have, serving the smokeless fields of West Virginia, not only fair and reasonable administrators of the United Mine Workers of America, but I have learned to personally like them-I even like their lawyer—so but for the policy committee of the United Mine Workers of America which I fear might sacrifice us to the North, in spite of our local friends in the United Mine Workers of America, I predict we will willingly remain union; but should the policy committee try further favoring the North, it will soon find its hold on the South is weak indeed.
I thank you.
Mr. Hill. We regret we cannot hear you more at length, Mr. Mead, but we must adjourn now.
(The statement submitted by Mr. Mead follows:)
STATEMENT OF C. H. MEAD, BECKLEY, W. Va., REPRESENTING AS PRESIDENT:
C. H. MEAD COAL Co., MEAD SMOKELESS COAL Co., Faith SMOKELESS Coal Co., ALL PRODUCERS OF SMOKELESS Coal; Milgins FORK SMOKELESS Coal Land Co., A LESSOR OF SMOKELESS COAL; RAVENCLIFFS DEVELOPMENT, A COMPANY, A PRODUCER OF NATURAL Gás.--REFERRING TO_WHOLLY
CAPTIVE PROPERTIES, TITLE II, AND 25 PERCENT TAX ON COAL PRODUCED To the Honorable Chairman and Members of the Ways and Means Committee of
the House of Representatives, GENTLEMEN: Being a coal operator of the West Virginia smokeless field and greatly desiring stability for the industry, I feel we will commit a fatal mistake unless we adopt title II of H. R. 8479, which will make it possible to control captive mines, and I am sure that unless we amend the bill to exempt all wholly captive mines, we will return to chaos in the coal industry.
All captive mine owners are bitterly opposed to this bill, and we could eliminate great opposition by exempting them. Should we not do so, they might well retaliate by opening their smokeless mines for commercial purposes; and a representative of one large such interest has told me he thought his company would do just this. In event they should do this, I have figured that they would in producing each hundred tons, get 54 tons of slack, and 46 tons of prepared sizes, which at $2.59 (the code price) would bring them $119.05, with which amount they could buy 72 tons of slack at code prices of $1.65, resulting in their receiving 126 tons for the same amount they are now paying the commercial operators for 100 tons of slack. See compilation attached.
I am not familiar with the smokeless fields of Pennsylvania, but am very familiar with the smokeless coal reserves held by the United States Steel Co, in West Virginia. This coal could be produced at an extremely low cost, some of it being so thick that it could be loaded with small electric shovels. Should United States Steel decide to open their mines, the Bethlehem and other steel companies would be forced to open also, as I presume no steel company could exist with others in the same industry having an advantage of 26 percent in coal costs. With this condition existing, some of the steel companies not having such coal İf run as a commercial mine, there would be an added cost of approximately 872 cents per ton, covered by the tax, as follows:
reserves might be forced out of business, and the smokeless operators would so lose all the steel business, which would naturally bring on heavy competiton between high- and low- volatile fields, and I feel this would be disastrous both to labor and to the operators.
In order that you may realize this is very possible, I beg to advise that the reserve by-product tonnage in West Virginia of the
Ne tons United States Steel Co. is approximately
500, 000, 000 Of other captive companies is approximately
200, 000, 000 Total..
700, 000, 000 which I am confident is very considerably more smokeless by-product coal reserves than are held by all commercial mines combined.
I am advised the Bethlehem Steel and other captive properties in Pennsylvania have large reserves of smokeless byproduct coal but I have not been able to get the figures.
I have felt that these large companies have dealt fairly and wisely, as they have not disturbed the coal situation and they have shown foresight enough to deny themselves a small profit for the time being, that they may preserve their byproduct smokeless coal reserves for a time when they will be vitally needed.
If we exempt the wholly captive mines, I feel certain no new captive property will be bought except lands carrying reserves of special kinds of coal. For example, any industry buying captive mines for its own use would be put in a very poor economic position as follows:
Run as a wholly captive mine, coal would have to be ground and then billed the parent company at the cost price of run-of-mine, while any commercial mine could furnish coal at the code price for slack, resulting in a large saving to the buyer.
Per ton Estimated annual tax for marginal lands..
$0. 060 Estimated administration fund.
.020 Estimated 25-percent tax of the drawback on $2 coal..
. 085 And it has been many years since the profits of the coal business have averaged 872 cents per ton.
The above all refers to smokeless byproduct coal.
Code prices 43 tons lump at $2.70.--
$116, 10 21 tons egg at $2.80.
58. 80 10 tons stove at $2.45.
24. 50 26 tons slack at $1.65
(1) From the above figures it will readily be seen that an industry owning its own mine would, by producing its own coal, get 146 tons of coal for the same amount of money its competitor would under the code prices get 100 tons. This would force the competitor to also buy a mine or go out of business. This being so, there would be a rush to purchase coal mines, and no doubt many poor mines would be unloaded on industries at high prices. Each industry so conducting its affairs would lessen the market for commercial mines to an extent that the output of commercial mines would be reduced and their cost correspondingly increased until the mines would have to close. This would, of course, ruin the commercial coal industry and soon a number of the industries which bought mines for their own use would awaken to the fact that they had been badly stung.
The Guffey bill will be the saving of the coal industry if the above evils are avoided, and this may easily be done by retaining title Il'if only to be used as an inducement to have captive mines remain wholly captive mines, and this may be accomplished by something like the following provision being included in the bill, "wholly captive mines shall not be subject to this act." 1 $242.30 divided by 1.65 equals 146.8 tons.