Supreme Court decision in the Schechter case. The bill we now have under consideration is House bill 8479, and is the last draft of those who are sponsoring this legislation, as I understand it? Mr. SNYDER. Right. Mr. HILL. That is the bill on which we are conducting hearings this morning. Mr. TREADWAY. I think I understand it. Mr. HILL. You may proceed. Mr. SNYDER. Seldom, if ever, has a bill of this magnitude been accepted by all groups in such a large way. In other words, a careful check-up indicates that possibly 65 to 75 percent of the bituminous tonnage output operators are favorable to this measure and, of course, more than 97 percent of labor connected therewith is favorable to this measure. The reason for such regulation is to be found in the utter demoralization of this basic natural resource industry in relation to its commerce, its national service to the people, its waste of resources, its cut-throat competition, its disappearance as a Federal taxpayer, its starvation of labor and pauperization of mining communities. I might say in connection with that last statement that perhaps no Congressman is better qualified to speak on that condition than I am, because Fayette County, in Pennsylvania, exemplifies that condition of the starvation of labor and the pauperizaiton of mining communities more than any other county in the United States. Its disorders can be traced to the fundamental evil of excess mining facilities. At no time in the last 20 years has the productive capacity of our bituminous mines been less than twice the consumptive needs of the country. The result has been an increasing struggle for tonnage contracts at prices determined by the overhanging surplus. Labor has been the chief victim of this struggle. The labor cost of producing coal is about 65 percent of its total production cost. Other items are relatively stable, so the wages of the miners have furnished the field in which the cutthroat competition of operators and of coal districts has found easiest play. As long as the industry was substantially organized from a labor standpoint, there was a floor level below which this wage cost could not go. But the pressure of the big consuming interests-the railroads, utilities, and larger manufacturing concerns-continued; prices sank lower and lower, and in 1923 and 1924 began a wholesale process of breaking up the union, destroying collective bargaining and substituting arbitrary wage scale wholly within the control of the operator. And each operator was compelled under the circumstances, however much as he may have regretted it, to enter upon a system of recurring wage cuts in order to secure his contracts. Everybody knows how utterly disgraceful the last 12 years of the bituminous-coal industry has been. It has been a process of selling labor rather than coal. And in this process the miner's wage was further sweated by the practice and devices developed in connection with long hours, the abolition of check-weighmen for weighing the coal, and compulsory trading at company stores. Finally, the pressure began to reach beyond the wages of the miners and to encroach upon the capital side of the industry. I think it a fair statement that not 5 percent of the bituminous operators of the United States had made any money since 1926, until the Recovery Act and the bituminous-coal code gave them some measure of relief from their own suicidal struggle for markets. But the evil effects went further. It became necessary to mine only the coal which required the lowest recovery cost, and a profligate waste of this natural resource began. The report of the Natural Resources Board, made to the President and transmitted by him to Congress in January, states that more than 35 percent of our soft coal is lost in mining. The percentage loss in European mines is 5 percent. I know that reference is often made to our inexhaustible coal supply. But such statements are based on the inclusion of the billions of lignite in western fields, too far removed to be capable of economic utilization. The report of this same Resources Board states that the life of the Pittsburgh bed was limited to 100 years; that the smokeless field will last but 85 years, and it is coal beds such as these upon which our greatest industrial pressure rests. The disorders of this industry have had their reaction in the matter In 1919, 1920, and 1921 the average of governmental revenues. Federal revenue derived from the bituminous coal industry was $35,000,000 annually. This had practically disappeared even in the boom year of 1929. The Government as such and all the people have a stake in this matter. Anyone interested in the problems of the coal industry should read the decision of the Supreme Court in the Appalachian Coal case made in April 1933. Mr. HILL. Will you give the citation, if you have it? As I have said, the Recovery Act and the Bituminous Code under it gave the industry a certain measure of relief. Prices were established without any exploiting of the public. Mine workers were organized and they secured collective wage agreements in practically every field. But after some 14 months of the code the old market psychology broke out, price cutting and chiseling became more and more manifest, and the legal machinery for enforcement failed. It was owing to this price cutting that all efforts to renew the present wage scale between the operators and miners, which expired April 1 of this year, and which has been under negotiation for renewal since last February, have utterly failed. The operators are dropping back into the red again, and in any event claim they are unwilling to negotiate a scale of fair wages until they know that there is some form of government control which will stabilize the industry against its old cutthroat practices. I may say right here that there is not an operator present, I think, who will not substantiate that last paragraph of mine. This bill has been advocated by sound labor organizations and by the United Mine Workers since its introduction in January. More and more of the operating side of the industry have come to a realization that the purpose of this legislation is wholesome. The present status of the bill represents the original draft with such changes as have been unanimously agreed to by a conference of operators representing more than two-thirds of the commercial tonnage of the country. These changes have been accepted by the miners. In my judgment this bill is offensive only to those interests that would like to prey, as of old, upon a coal market that represents not only starvation wages, but sales below production costs; or to those operators who welcome a return to the old cutthroat struggle for markets in the hope that they at least may survive amid a ruined industry. In concluding my statement, Mr. Chairman, I should like to say that I do not think there are more than 5 percent of course, I should not like to think there is more than 1 percent-but I do not think there are more than 5 percent of the operators as individuals in the country who are opposed to this bill. I was agreeably surprised this morning when my secretary opened the mail and handed me a letter from the largest bituminous coal man in one of my counties, Somerset County, stating that after careful consideration they had decided that this measure was the only salvation to save the bituminous coal industry in Somerset County and adjoining counties, as he saw it. I cite that because if there was one man in the last election who fought me as hard as he could, it was this man. He is on the other side. But I think he sees the fairness of this proposal. Mr. TREADWAY. I understood you to say that you felt there was a unanimous agreement between the miners and the operators. Mr. SNYDER. I should not have said that, if I did say it. I meant there was almost a unanimous agreement. Mr. TREADWAY. You said something about 90 percent of them being in agreement, that there was practically a unanimous agree ment. Mr. SNYDER. Yes. Mr. TREADWAY. You may not have used the word "unanimous", but the point I am getting at is this: From what you say, I take it you expect to substantiate the fact that the miners and operators favor this legislation. Mr. SNYDER. I do. Mr. TREADWAY. There is one other factor to which you have not referred, and that is the consumer. Where does he come in? Mr. SNYDER. My knowledge of human nature would lead me to answer you in this way, that if we can stabilize this industry through this medium, the ultimate cost of coal to the consumer over a space of years will be less than it has been over the last 10 years, let us say. What the consumers are interested in is to get as low a price as possible for their bituminous coal, whether it be for use in their homes or their mills or factories, or ocean steamers, or what not. Mr. TREADWAY. I do not quite agree with that. I do not think they want to pay as little as possible. That would get us back to this cutthroat practice to which you have referred. I come from New England. We do not believe in a policy up there of getting the better of the other fellow. Mr. SNYDER. I did not mean it that way; I beg your pardon. Mr. TREADWAY. We want a fair and equitable distribution. But naturally, we do not mine coal. We consume great quantities of it. Therefore, I would like to know something about the effect of such legislation on the consumer. You talk about the price being low over a period of years. Do you think that you could get back to fair prices? Mr. SNYDER. May I make this statement right there? Mr. TREADWAY. I would like to have you do so. Mr. SNYDER. If my memory serves me correctly, during the coal strikes at various times, I have read in the papers-of course, we cannot always rely on them 100 percent--where New England was practically shut off from a supply of coal with which to run their mills and factories, whether it was bituminous or anthracite. That has occurred in New England, has it not? Mr. TREADWAY. I recall the anthracite strike and its effects in New England very distinctly. Mr. SNYDER. The point I want to make in answer to your question is this: When those New England people are inconvenienced by strikes, because there is not any stabilization procedure between the operator, the miner, and the consumer, it costs the citizens of New England thousands and tens of thousands of dollars to change their furnaces from the burning of anthracite coal to bituminous coal, or converting their heating apparatus to oil burners, and what not. The point I make is this, that this bill has in it a stabilization feature that we are hopeful will prevent such strikes throughout the bituminous-coal industry. The people in New England, as well as in Michigan or in Florida or any other place where they consume coal, can well afford to look forward with an easy mind to a prospect that this will not occur again just at any time, and disturb their financial and economic status. Mr. TREADWAY. In other words, you feel that as long as there is an agreement between the miners and the operators, you do not need to call in the consumer. I do not mean that at all. Mr. SNYDER. Oh, no. Mr. TREADWAY. Because you are going to take care of him anyway. It is all going to be satisfactory to the consumer under this arrangement of yours? Mr. SNYDER. I meant to say in my general statement that I thought the consumer, looking at it from the financial point of view, over a space of years, would be better served in this way than he has been for the past 10 years. Mr. HILL. If the gentleman will yield at that point, there is provided in this bill a set-up by way of a commission of 9 members, 5 of whom shall be men not interested in the production of coal or any of the competing commodities; 2 shall represent the coal industry and 2 the miners' interests. Mr. TREADWAY. Then the consumer, according to your own statement, Mr. Hill, must get his representation from among the five who are the general appointees. If there are 2 for the miners and 2 for the operators, why should not the consumers have 2 of those 5? Mr. HILL. None of the five will be interested either as miners or as producers of coal or any of the competing commodities, such as electrical energy or oil, and so forth. So that they ought to be impartial in their decisions. Mr. SNYDER. May I make this final statement? This whole set-up has for its purpose, as I said, the stabilizing of the industry so that the consumers of coal will become the beneficiaries. Mr. TREADWAY. That is fine, if you will produce proof that that condition is going to develop. Mr. SNYDER. That is what we intend to do. Mr. VINSON. The gentleman from Massachusetts indicated that he did not quite catch your statement as to the unanimity of opinion between the miners and the operators. With reference to the 97 percent figure that you gave, if I recall it, you were referring to the miners. Then, if I recall your statement correctly, you said that 65 percent of the Mr. SNYDER. Sixty-five to seventy-five percent of the operators. Mr. SNYDER. The tonnage. Mr. VINSON. Sixty-five percent favored this plan. You made another statement, Mr. Snyder. I just wonder where you got the figure that 65 percent of the cost of coal was in labor. Were you referring to the cost of coal at the mouth of the mine? It occurs to me, without having the specific figure before me, that the percentage of labor cost in the production of a ton of coal, both direct and indirect, would greatly exceed 65 percent. I thought possibly your 65 percent figure referred to the direct labor cost. If it did, the indirect labor cost would have to be added to that. Mr. Snyder. There are a number of factors I had in mind that I had before me when this figures was computed. I would not like to make a statement now without referring to those figures again. Mr. VINSON. I wish you would check up on that because I feel certain that the direct labor cost and the indirect labor cost together would come to more than 65 percent. Mr. SNYDER. I shall be glad to do that. Mr. COOPER. In making you check of that matter, Mr. Snyder, I hope you will give us some definite information as to just what point you fix the question of cost; whether it is the cost of the production of coal or the ultimate cost of coal to the consumer. Mr. SNYDER. It is at the point of consumption. Mr. COOPER. Of course, if it is the point of consumption, naturally you have to figure in elements of transportation cost and various phases that would not enter into the calculation if you were taking the cost of the production of the coal. I feel sure that it will be very enlightening if you can break down that estimate. Mr. SNYDER. I shall do that. Mr. HILL. Do you have a breakdown of the cost of production that you can furnish us, or will you furnish us one later? Mr. SNYDER. I will present it to the committee later. Mr. HILL. It will be very helpful to put that in the record, as Mr. Cooper suggests. Mr. SNYDER. At this point? Mr. HILL. Yes, when you revise your remarks. Mr. SNYDER. Thank you, gentlemen. Mr. HILL. The next witness is Judge Warrum, general counsel of the United Mine Workers of America. STATEMENT OF HENRY WARRUM, COUNSEL FOR THE UNITED MINE WORKERS OF AMERICA; INDIANAPOLIS, IND. Mr. HILL. You may proceed, Judge Warrum. Mr. WARRUM. Mr. Chairman, I have no writted statement. But I think in the beginning I ought to call the attention of the committee to a matter in which they indicate they have considerable interest. That is the genesis and the development of this proposed legislation. The United Mine Workers have been before Congress for some time asking that the industry be stabilized, rationalized, and regulated, because the United Mine Workers, after all, are the residuary sufferers of the demoralization that, as every one knows, has settled on the bituminous mining industry for many years; many years before the depression began. In 1928, we appeared before the Senate committee urging the passage of a bill, and extended hearings were had. A subcommittee |