certed activities for the purpose of collective bargaining or other mutual aid or protection.' Under such a provision the public would have no greater security, as related to its coal requirements, that it has had in the past.

Since the war and up to the present time, on an average, the coal industry has sold its product to the public at a price which is actually less than cost when taking into consideration all proper accounting charges.

Under the proposed bill it is difficult to picture how the consumers of coal can expect anything but an increase in the cost thereof on account of the administration expense, the taxes which will be imposed for the purchase of marginal lands, the rehabilitation of miners, as well as the increase in State taxes which must be added in order that the States may replace the loss of revenue occasioned by the withdrawal of taxable lands, which will be included in the nontaxable Federal reserves.

You are undoubtedly aware that a corporation holding mineral reserves is taxed at approximately double the rate of an individual landowner or farmer where coal underlies the surface holding. It may be that the farmer landowner will be compelled to absorb much of the burden of increased taxation on the remaining taxable property.

As a result of their own individual difficulties there has been engendered a very strong defeatist attitude among many of the operators, and so in order to get some degree of temporary security they are willing, in many cases, to accept theories as exemplified in the bill under consideration, which when applied to their own industry and to all industry may prove disastrous to our American institutions.

The theory upon which the draw-back tax is predicated is one which, if adopted by Congress and judged constitutional by the Supreme Court, can be applied to any instrumentality created or sanctioned by State or Federal authority. In fact, it creates a nonexclusive club, called a code, in which an individual is taxed for not becoming a member although in all other respects he may be an industrious, conscientious, and honest citizen of the United States. In fact such a tax is not imposed basically for revenue but as a means of coercion. In itself it is manifestly confiscatory, and will place such a burden upon corporations not subscribing to the code that they will be economically extinguished.

If Congress has the right to pass legislation regulating an industry, the laws so promulgated apply to all individuals and corporations doing business and there is no need to inflict a coercive tax. The courts of the United States are created to uphold the laws and anyone transgressing the law can be readily punished. This is an extremely dangerous precedent and is an unwarranted extension of the right to tax, and in this instance to destroy.

If the right of Congress to tax in this manner is upheld there is no limit to what can be accomplished, irrespective of the laws of the country and the courts, through the imposition of so-called “voluntary” agreements or code.

The next question which appears of material importance is the composition of the Commission and Labor Board. These boards are created to act in the capacity of industrial supreme courts. A court is presumably composed of men of broad experience having knowledge of law and equity, and who have that quality of mind which sifts

facts from fancy and produces a balanced judgment. Boards composed of men representing special interests which are often at great variance in their objectives and aims can do nothing but create confusion and discord, and will encourage dissensions in their findings. If industry is to be integrated and governed then it is essential that those to whom the problems are presented be disinterested men who represent the finest product of American civilization. Otherwise through the stimulation of the baser instincts of man, requiring them to pass upon questions which affect their own interests, the system will become corrupt and will ultimately destroy itself.

In connection with the discussion of the labor problem we should review the implication of the proposal for the rehabilitation of miners who are out of work and for which a maximum of 25 percent of the $300,000,000 is to be appropriated. In the first place the sum will in all likelihood prove to be wholly inadequate. Should this be true the tax will of necessity have to be raised which will react adversely on labor and stimulate the production of competitive forms of fuel and power production, as increased cost will restrict the markets for coal.

I do not see how the coal industry could bear up under the tax to take care of its own miners in addition to such taxes as must be levied to care for all other unemployed and indigent aged as provided for in the social-security legislation recently passed by Congress. It would not require a great stretch of imagination to believe, should the GuffeySnyder bill be passed, that every individual who had ever entered a coal mine and who cannot or will not work will demand rehabilitation. The coal industry would then be caring for a disproportionate number of the unemployed. It would be utterly foolish to presuppose that the coal industry in its present condition could burden itself with such an undertaking and have any hope of maintaining its product as a competitive fuel. If all industry be required to care for its unemployed then the theory expressed might work, but no one industry can afford to carry the entire burden.

In the preceding paragraph we have discussed the rehabilitation of miners. In title If there is also a provision for the purchase of so-called "marginal lands” and a fund set up for the acquisition thereof.

Section 12 under title I, provides that no certificate of convenience for the extension of railroad facilities shall be issued without the approval of the National Bituminous Coal Commission.

It might easily happen that land owned by an individual or corporation would not qualify under the provisions set up as a yardstick for the purchasing of property and the railroad being denied permission to extend its facilities the owner could not make use of his property. The denial of the right to use the property without compensation would be unconstitutional.

If the Government obligates itself to purchase coal lands under whatever provisions it deems necessary it is not inconceivable that it will at so e time become the actual owner of the coal lands of the United States. The operating companies would then become tenants of the Government. Let us extend our thoughts to other industries affected with a public interest now or in the future. If a like condition were created therein the Government would ultimately become the owner of all the resources of the country. If you accept the theory of this portion of the Guffey Snyder bill you must ultimately reach the conclusion that it is the policy and will of the people of the United States that the Government of the United States shall own and control the resources of the country. If we should carry this thought one step further and apply it to the profit motive we would have communism in the true sense of the term.

It seems to me we have not had sufficient experience under regimentation, integration, or regulation to crystallize into law such an elaborate program having such importance and such far-reaching implications. It is much easier to do than to undo; legislation passed in haste for one industry, embodying in it principles having such significance cannot fail to affect all industry.

From my experience as a member of a code authority under the N. R. A. and my knowledge of the operations of two other code authorities, together with my experience in directing the activities of companies in which I am interested, I am convinced that unless, and until, the Government has a monopoly in an industry no price fixing or allocation scheme or formula will be either legal or practical. I am convinced that the day the principles of price fixing and allocation in industry, by or under the supervision of the Government, become a part of the national program it is only a matter of time when industry will be governmentally owned because the agency that fixes the prices determines the profits and will ultimately own the stock. If industry be permitted to form marketing agencies, trade associations, or other instrumentalities for cooperative effort of its own volition, which are in fact not monopolies, and the marketing agencies or trade associations be permitted to meet under the supervision of the Federal Trade Commission or some other body, for the purpose of making agreements and developing fair practices; if the laboring man is guaranteed the right of collective bargaining and is free from all coercion as to his affiliations, then can we hope for better relationship between the various units of capital and capital and labor, which, because of its sound general basis, will be far more likely to produce a lasting benefit to the industry and to the employers and employees engaged in it. Mr. VINSON. What are your companies?

Mr. BERWIND. The Berwind-White Coal Mining Co., operating in central Pennsylvania; the Ocean Coal Co., operating in Westmoreland County, Pa.; the New River & Pocahontas Consolidated Coal Co., operating in the New River, Pocahontas, and Greenbrier fields of southern West Virginia, and the Kentland Coal & Coke Co. of Kentucky, owning lands in eastern Kentucky.

Mr. Vinson. How long have you been intimately connected with the production of coal?.

Mr. BERWIND. I have been with the companies 12 years. I graduated from the Naval Academy in 1916 and spent 4 years in the Navy after that.

Mr. VINSON. Was your father in the coal business before that?
Mr. BERWIND. My father is dead.
Mr. VINSON. Was he in the coal business?

Mr. BERWIND. My uncle, who died many years ago, founded the business, and my two uncles and my father have carried it on.

Mr. Vinson. What was your attitude toward the N. I. R. A. before it was enacted into law?

Mr. BERWIND. We did not believe it would work, sir, but when it was put into effect we did our best with it. It brought some benefit to the industry.

Mr. VINSON. After it was put into effect you had an opportunity to observe its workings, did you not?

Mr. BERWIND. Yes, sir; I tried to.

Mr. Vinson. I believe you stated you had some connection with the coal code authority.

Mr. BERWIND. That is right, sir.

Mr. VINSON. What do you state as to the benefits under the code set up, through and under the N. R. A., as to the operators, the employees, and the consuming public?

Mr. BERWIND. I am not sure that the consuming public gained a great deal, or at least I cannot see where they have.

Mr. Vinson. What about the operator and the employee? Mr. BERWIND. The operator has undoubtedly increased his price. Whether the method set up for maintaining prices could have survived, I am doubtful, because there were some problems that came up that it was very difficult to solve in fairness to everyone,

and some of them could not be solved in fairness to everyone.

One of the greatest problems that came before the code authority was the effort to make rules and regulations in regard to losses that would take care of a man if he lost a 5,000-ton contract, and that would protect another man if he lost a 50,000-ton contract so he would still be in business and perhaps could smile.

Mr. VINSON. As I understand you, the operator was benefited?
Mr. BERWIND. Yes; for the time it was in existence.
Mr. VINSON. And the employee was also benefited?
Mr. BERWIND. He was benefited.

Mr. Vinson. When you say you do not know whether the public was benefited or not that is, the consuming public-I take it you refer to the fact that the price under N. R. A. to the consuming public was somewhat larger?

Mr. BERWIND. Yes, sir.

Mr. Vinson. Was it higher than it would have been if you had not had the code set up?

Mr. BERWIND. Yes, sir.

Mr. VINSON. If we have been told correctly, the realization price, the price to the consuming public, is practically the cost price to the operator under the code set up.

Mr. BERWIND. From everything I have seen, I believe that is correct.

Mr. VINSON. Now it seems to me that the only argument that could be made-the only fair argument that could be made-for reducing prices on coal to the consuming public would be that coal should be sold to them below cost of production; is that a fair statement?

Mr. BERWIND. I think, as you have put it, it is a fair statement. I am not sure that your implication does not go beyond that.

Mr. VINSON. In other words, the consuming public-and certainly we ought to be as much interested-and if there is any difference in degree we ought to be more interested in the consumer than we are in either the employer or the employee, because there are more of them.

Mr. BERWIND. We are all the same, to some extent.

Mr. Vinson. There are more of them. But the thought occurs to me that there is no right either in law, or just common, everyday

justice, for coal to be sold to the consuming public for less than the cost of production.

Mr. BERWIND. Well, do you not believe that that is true of every industry, perhaps? I mean, if you are not willing to accept the theory that the Government of the United States should guarantee to each individual a profit-

Mr. Vinson. I am not saying that; I am talking now as to the attitude of the consuming public.

Mr. BERWIND. I think the average man would accede to that as a principle. I do not know whether it could be worked out.

Mr. Vinson. Of course, there are a lot of factors in it, but I am speaking of the everyday attitude.

Mr. BERWIND. It is very bad economics to sell your product below the cost of production because you have unstable conditions; no one can deny that.

Mr. VINSON. If I understand correctly, you and your associates were in favor of the extension of the N. R. A. for a 2-year period?

Mr. BERWIND. Yes, sir,

Mr. TREADWAY. Quite a little is being said about the sale of products below cost, coal or anything else. That is not really in accordance with American traditions or methods of procedure. Do you know of any line of business that objects to anybody engaged in business making a fair profit?

Mr. BERWIND. No, sir; I would think not; I would think certainly they would be willing to.

Mr. TREADWAY. But by and large, the average man does not want to deal with another man if he knows he is beating down the prices of goods so much that the seller is not going to make a decent profit out of them.

Mr. BERWIND. I think, philosophically, that is correct, sir.

Mr. TREADWAY. That is a sane attitude to take, it is not? We do not want to change an old dollar for a new one, do we?

Mr. BERWIND. No, sir; we do not want to do that. Under our profit system, if it is to continue in any form of balance, we must make a profit, otherwise the institutions created under it will fall.

Mr. TREADWAY. I think we all recognize that. Also, we have heard quite a good deal about benefits under the N. R. A. You would have been glad to have seen the N. I. R. A. continued, would

Mr. BERWIND. Yes, sir.

Mr. TREADWAY. But after the Supreme Court said it was unconstitutional, you did not advocate it then, did you?

Mr. BERWIND. No; we are trying to abide by the law.

Mr. TREADWAY. If the Court said it was wrong, you did not advocate it, even though it was beneficial to you?

Mr. BERWIND. I do not understand your question. You cannot advocate anything that is unconstitutional.

Mr. TREADWAY. I am not talking about that. The point that Mr. Vinson made was that you benefited under N. R. A. and would like to see it continued. But you do not advocate continuing it if it is not constitutional?

Mr. VINSON. I did not ask him if he wants it continued. I asked him if he appeared here in the hearings and asked for its continuance.

you not?

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