Legitimate governmental regulation never enters this field except incidentally. But this bill provides that the Government regulate the economic processes of production. Two things are fundamentally essential to efficiency in every business of any consequence to-day. The first is concentration of responsibility and direction. The idea of divided responsibility and control was long ago abandoned. The second essential is that business must be managed by a specialist highly skilled in the field of his activity. This bill provides that a political commission, composed of men of no stipulated qualifications whatsoever, shall take charge of and direct one of the great essential industries of this country. The highly skilled specialists are dethroned, and the business is put under the direction of a group of men who may know nothing whatever about the coal business, and may be without experience in directing any business of importance. Senator WHEELER. Who are the highly skilled men in the coal business? Mr. DYER. I am talking about business in general. Mr. DYER. I am not familiar with them. Senator WHEELER. You speak about the highly skilled specialists being dethroned. Do you know who they are? Mr. DYER. No, sir. Senator WHEELER. You think if we pass this bill it would dethrone the highly specialized men? Mr. DYER. They have got them, I am sure. Senator WHEELER. We would like to have some man point them out to us, who they are. Mr. DYER. I will point them out in other fields. There isn't any business but has specialized men. Senator WHEELER. We are talking about the coal business. Is there any Henry Ford in the coal business? Mr. DYER. There are specialists in the coal field, or they could not have lived as long as they have. It seems to me it is a good sign of highly specialized business ability to be able to keep in the business at all. Such a provision is antagonistic to every sound principle of business efficiency and would be discounted as a business proposition by everyone who knows anything about the essentials of business efficiency. It is not fundamentally the amount of capital and the potential efficiency of labor that control cost of production and efficiency in business, but management. Inefficient management is extremely hazardous to any business to-day, and no business man will take a risk on this if he knows it. Such inefficiency, of course, would run up cost and increase the price of coal to the consumer. Anything that impairs efficiency in the coal business at the present time is unusually dangerous to the industry, since oil, natural gas, and electricity generated from water power are active competitors. We have an enormous aluminum plant in Tennessee to-day that has substituted hydrogenerated electricity for coal in the operation of its furnaces. The power given to this commission to arbitrarily revoke the license of any coal company when it is shown that the company has 28181-29-PT 27 failed to comply with any provision of the act or any rule or regulation fixed by the commission, gives the power of life and death to this commission over every coal company in the country. In section 7 employers are prohibited from exerting any influence on their employees in the interest of freedom of contract. This commission may revoke the license of a million-dollar corporation and put it out of business, destroy its property, and prohibit it from entering any coal field in this country, simply because it is charged that in some way, directly or indirectly, the corporation brought some influence to bear on its own employees in what it believed was in its own interests and in the interest of the employees. This power of life and death over the corporation would introduce a hazard in the coal business that would add tremendously to the cost of production and tend to destroy efficiency. What bank would extend credit to a coal company operating under such a hazard? Senator WHEELER. They do not now do that, do they? Mr. DYER. Well, maybe not. You do not want to add to it, do you? It is a well established principle in business that the greater the hazard or risk the greater the dividends must be. With such a hazard responsible business men, it is believed, would tend to withdraw from this field unless they were given the prospect of enormous profits. Under either condition efficiency would be destroyed and the cost of the inefficiency thus brought about would fall on the millions of consumers. The foundation of the American philosophy is, make the individual free, and protect him in his freedom, subject to the rights of others, and put upon him the responsibility of taking care of himself. Those who hold to the socialistic, paternalistic theory do not believe in the American theory of individual freedom. They would put the individual under the direction of the Government. They would also have the Government assume the responsibility of taking care of the individual. Did you ever think of the difference between an eagle and an oyster? The oyster is a socialist, he doesn't believe in the eagle theory of freedom, neither does he believe that a fellow should be required to take care of himself. He believes the Government should take care of the individual. The Lord takes care of the oyster. I don't know why, but He does. He builds every oyster a good strong house, and there is no housing problem among the oysters; each oyster has a separate apartment, and the oyster's house is beautifully artistic on the inside. Every demand of the oyster is satisfied without any effort on his part. He has no worries. All he has to do is to sleep and dream and improve his mind; that is the reason he hasn't any mind. That is the reason he is an oyster. But if you ever saw an American eagle he impressed you very differently from the way an oyster impressed you. He impressed you as throbbing with life and vitality and strength. When God made the eagle He pitched him out and said: "Old fellow, you are free; take care of yourself. Don't depend on the Government to 'take care of you; take care of yourself"; and the eagle has always taken care of himself. He has had some rough experiences, but he has been free and he has taken care of himself. That is the reason he is an eagle. He has taken care of himself. The ambition of the founders of this great system of industrial freedom was to make every American citizen, however poor, an eagle, a king! Senator COUZENS (presiding). Have the gentlemen in charge of these hearings on both sides of the table any idea how long these hearings should continue? Mr. GREEVER. Mr. Chairman, I have very little idea as to the time. However, our side of the question has, I believe, three more, and possibly four. Not a part of our organization, however, but advocating the same side we do. We have three more. Senator COUZENS. Mr. Lewis, have you any more to put on? Mr. LEWIS. We have no witnesses, Mr. Chairman, except our two attorneys, Mr. Warrum and Mr. Townsend, would like to analyze the objections of the others when they get through. Senator COUZENS. Do you think we could get through in about three days? Mr. LEWIS. I hardly think we could, Mr. Chairman, if we take the usual time. I think that would be a little short. Senator COUZENS. This is Thursday. We will try to close the hearings by Tuesday noon-four days. Mr. WARRUM. Would you fix a time when we can be heard? Senator COUZENS. These gentlemen on the other side, if they have to-morrow and Saturday, you would come on on Monday. Mr. GREEVER. You will sit on Saturday, then? Senator CouZENS. Yes. Senator WHEELER. Will you close by Saturday, do you think? Mr. WARRUM. We can certainly close on Tuesday if they close on Saturday. Senator COUZENS. We will try to close the hearings on Tuesday and give you all time. Senator WHEELER. I just want to ask the professor one question. In view of the fact that he has told us how the oyster and the eagle regulate their business, will you tell us what you know about the coal business and how it regulates its business? Mr. DYER. I could not give you any definite information. I am dealing with business in general. I could not qualify on it. Senator COUZENS (presiding). We will adjourn until 10 o'clock to-morrow. (Whereupon, at 12.05 o'clock p. m., the committee adjourned until the following day, Friday, January 18, 1929, at 10 o'clock a. m.) BITUMINOUS COAL COMMISSION FRIDAY, JANUARY 18, 1929 UNITED STATES SENATE, Washington, D. C. The committee met, pursuant to adjournment on yesterday, at 10 o'clock a. m., in room 335, Senate Office Building, Senator James Couzens presiding. Present: Senators Couzens, Sackett, Glenn, and Smith. Senator COUZENS (presiding). The committee will come to order. Mr. GREEVER. Mr. Chairman, Mr. A. M. Belcher, of Charleston, W. Va., is here representing the West Virginia Coal Association and desires to make a statement. Senator COUZENS. Very well. STATEMENT OF A. M. BELCHER, ATTORNEY, CHARLESTON, W. VA., ON BEHALF OF THE WEST VIRGINIA COAL ASSOCIATION · Mr. BELCHER. Mr. Chairman, like the other representatives who have appeared before this committee, I have reduced what I have to say to writing, dealing primarily with the constitutional questions involved in this proposed legislation. Associate counsel representing the National Coal Association will present other features of the matter. Mr. WARRUM. Do they represent all the operators? Mr. BELCHER. Yes, sir. Senator COUZENS. You may proceed. Mr. BELCHER. The right to do business is a property right. This right can be protected but not destroyed by appropriate legislation. Legislation, however, must be general and all-inclusive and must not give preference to any special industry or business. If preference is given to a special industry, such legislation is known as class legislation and, therefore, void as against public policy. The proposed bill relates only to bituminous coal and does not affect any fuels such as gas, natural, or artificial, fuel oils, or any other fuels with which bituminous coals must compete in use and in interstate commerce. In dealing with this proposed national legislation, which has for its ostensible purpose to remedy some of the alleged ills of the coal industry, the question that naturally presents itself at the threshold is: What powers has Congress to deal with the subject matter in the say of regulation or otherwise? It is needless to state that the coal deposits which are to be found in a number of States are not the property of the Federal Government, and Congress has not been given any power by the Constitution to regulate or control the ownership or production of coal in any |