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In the period July to June, 1926–27, coal production was over 107,000,000 tons greater than in the same period of 1927-28.
All these swings combined indicate a reserve army of at least 150,000 menthe very number our dictator is trying so hard to release. Yet, throughout che period of 12 years under consideration as a whole, it is clear that normal annual requirements changed but little. The variations are due to those disruptions of normal which must be expected and which the soft-coal industry must be prepared to face.
Now it may be admitted that nearly all industries face these twin problems of seasonal and cyclical variation, and not a few, like coal, in some aggravated form. It may be conceded further that some have measurably succeeded, by planning and foresight, in reaching a degree of stabilized operation. But in behalf of the bituminous coal industry it must be said that its problem is rendered doubly difficult by two peculiar features.
First is the inability, to any large extent, to store or warehouse its product. Even if such problems as handling cost, inventory losses on a constantly fluctuating market, and fire damage (from spontaneous combustion) are omitted, physical conditions at the mines are usually ill-adapted to storage. An even greater complication is the question of sizes. Much coal is not sold as simple run of mine," but is prepared over screens as lump, egg, nut, and so-called
slack," the final resultant. These sizes result from the same operation, pour simultaneously into the waiting railroad cars, and obviously must be moved quickly out of the way. Yet orders in hand for the various sizes may not be so nicely balanced; seasonal demands for the different sizes do not always coincide; and a sudden cancellation from a large industrial consumer of slack may play havoc with the deliveries to a multitude of coal yards serving the domestic furnace
Now other industries produce a variety of articles under one roof, and doubtless they suffer at time from cancellations. But rubber boots do not result from balloon tires, or roadsters from limousines, or a keg of nails from a steel rail, with no chance to put either in a warehouse, with inability to deliver the one unless the other is sold, and with traffic urgency, rather than orders in hand, forcing out the loaded cars.
All these facts were doubtless in the minds of a special committee of the American Engineering Council when they issued, a few years ago, their report on industrial coal, which is one of the most expert studies yet made in this much-investigated industry. Covering, as it did, in thorough fashion the whole question of coal purchase and storage, the report contains one conclusion, important to note: “It is the coal consumer who must start the cycle that will bring about a stabilized industry. The producer of coal, the carrier, and the public official collectively are helpless without the active aid of the consumer.”
I pass this on without further comment to my friend, the dictator. In addition, as a summary of this whole phase, may be cited the opinion of John Hays Hammond, one of the world's foremost mining engineers and also chairman of the commission which made, to date, the most searching Government inquiry into coal: “ The operation of the coal industry is probably beset with more difficulty than any other of the great American industries, due to prevailing intermittence of operation."
I am sure our dictator has already begun to suspect this very thing. However, with us helpfully at his side, he must press on; for, in the cheerful lingo of the lads, “ The worst is yet to come!” He is next confronted with that hardy perennial of the coal industry-the question of wages.
There is a reason for the storm center. To the producer, labor represents at least two-thirds, frequently more, of the total cost of coal. In settling his wage scales, therefore, our dictator will have taken the largest single stride in his financial problem. To the miner, on the other hand, all those complexities which exist in the mines, as described in the task of selection, mal possible an infinite variety of earnings found in the pay envelopes as the result of any scale, high or low.
Now, I confess to having too little knowledge of our dictator personally to know what approach he will use. If he be of the school of humane dictators, I suppose he will first determine a living wage, in terms of annual income, and then, using his former data of work days and tons per man, arrive at his scales in that fashion. Yet even a dictator, and a humane one at that, must l'ecognize that mining wages are at all times an integral part of the national wage structure; that they can hardly be lifted, by their bootstraps as it were, out of any correlation with the farm and factory wages around them. We
have already seen one attempt of that kind come to an untimely end, itself tending to aggravate the very evils it was designed to allay. For wage scales above the prevailing level bring in more men where there are already too many, to accomplish in a shorter time the work which already offers too much idleness, and to divide among still more the annual earnings which are now too small.
If our dictator be of the hard-boiled view, he will no doubt take his going market wage for skilled, semiskilled, and unskilled labor, and reach his goal by that method. In any event, having qualified as an expert, he will be tutored enough to understand that wage scales, wage earnings, and labor costs are not to be used as synonyms; that not only are they different things, but they result from different facts; that, in mining especially, combinations of highness and lowness in these three are infinite in number, depending upon the mine, the man, and the market. Management and nature will grapple underground to produce a multitude of results on any scale, while, above the surface, organized consumer and organized labor battle for their respective shares.
When all is said and done; when a small army of accountants and statisticians have determined the basic wages suited to the varying conditions of many thousand mines; when the dictator has covered the scores of additional items of cost other than labor, all important to him and most of them obscure to the layman; when he has seen to it that all industries which proyide essential supplies are ready to function as his coal organization will function—he will have arrived at the delicate task of fixing a price for his wares. From this income—so much per ton times half a billion tons-he must carry on, No doubt certain stern gentry, cold of eye and hard of head, will already have explained in succinct tones:
“Remember! We are supporting a dictator, not a deficit."
We shall assume, therefore, that he will manage, if not a profit-making, at least a self-sustaining enterprise; that he will not seek, as the present industry does not, a subsidy from the taxpayers; that out of his total receipts
will allow capital and labor a fair share of prosperity, with adequate protection to the consuming public." So reads the gospel according to the Democrats. Yet our dictator must fix a price. Shall he go by present fact or by past precedent?
During the war we had a semidictatorship in the Fuel Administration. Ten years ago, after an examination of hundreds of mine costs and with due regard to the consumer, it fixed prices at something like an average of 80 cents a ton above present fact. Consider what has happened to many items of expense since that time. Consider the cost of coal as our dictator has just computed it, in his efforts to “work justice to the miners, consumers, and producers.” For so runs also the gospel according to the Republicans. Consider, in brief, the unhappy dilemma of our dictatorial friend. Either he will conduct his enterprise with $400,000,000 less than his forerunner considered equitable in the light of conditions now 10 years past, or he will announce the unwelcome news that the consumers must contribute that much more, at least, than they now pay under the present “disordered public service."
At this point, shall we not be considerate enough to leave our dictator solitary in his troubled meditation ?
IV. Now that we are alone together, may I whisper something confidentially? If and when our friend inside has solved these problems and a few more relating to the production and sale of coal, his job is far from done. There are some minor details. In addition to his mines, he will find himself possessed of a choice assortment of coal railroads, collier fleets, docks, and other enterprises which he must fit efficiently into his scheme of things. He must inaintain a housing plant to shelter the population of a great city. To avoid public criticism he should have these houses commodious, modern in convenience, attractively painted, well groomed as to fencing, walks, and garden space. His rents must not be so high as to exploit the tenant, nor so low as to incur a loss. He will need to run a commissary system whose thousands of stores will rival his largest chain competitior. Prices must here also be neither too high nor too low; if the one, he will anger thousands of his employees. salaried as well as day labor; if the other, he can not provide the service, quality, and variety on which they rightly insist. Owing to the isolation of his plants, he must often provide adequate medical and hospital facilities. theaters and playgrounds to counteract the somberness of the mining towns. schools for the young, churches for the devout, law and order for the way. ward.
If our dictator does not do these things they will in large measure remain undone, and which of them are luxuries in community life to-day? And when he has achieved the proper standards, if unhappily there be a deficit, he must not only add it to the cost of coal; even more definitely he must persuade the consuming public that such things socially need be, that they are not merely desirable but essential—that the consumer, in short, must foot the bill.
Let us sum up. The present problem of coal is basically one of flood control. The huge excess of productive capacity-due partly to expansion for war-time needs, to overinvestment, to the substitution of oil, natural gas, and water power, to increased efficiency of combustion, and due partly also to chronic causes, such as transportation factors, labor strikes, and the practices of the buyer, willful or otherwise-holds more mines in operation than can profitably be sustained ; retains more men than can be fully employed; puts forth more coal than can be adequately sold. This entails not merely a deficiency in the income to be shared by all parties. The price level, thus depressed, results in an actual deficit for the industry as a whole.
Anyone may be pardoned his inability to see clearly how a hasty levee of political sandbags will sustain this economic flood.
Such is the situation with which hundreds of my fellow coal producers are now struggling. I seek to present no brief in their behalf, for I see their faults and their failures even more clearly because I share them. But I would have them seen by others as I see them, with sympathy rather than blame. We are in the grip of a severe and relentless malady, and we must fight our way back to economic health without the quick and easy remedies of dictatorship.
It should also be understood that our efforts hitherto have been made against some odds in an external sense. Scattered as sheep without a shepherd the thousands of coal producers have dealt with consumer groups, often few in numbers and strong in organization. They have had to reckon with what was, until recently, one of the largest, strongest, and most uncompromising labor unions in the world, now wrecked, like the industry, on the same economic reefs. Coal producers have to reach their markets—where the delivered cost of coal awards the battle to the cheap—through an entanglement of freight rates wherein the most powerful of Government commissions holds the fate not of a mine or a company but of entire coal districts. They have endured 16 Government inquiries in less than as many years, and yet, after all this research, unmatched in any other trade, theirs is termed “the dark industry." While paying the highest wages, mining by the most advanced methods, and selling the cheapest coal of any section of the industry in the world, they have been assailed for "inefficiency."
Finding coal in chaos priest and Levite have passed by on the other side; what it needs is the understanding of the good Samaritan.
For the rest, I believe the industry must look largely to self-help. It is my own opinion that the keys to the quickest—though not to the most complete relief are in its own hands. Closer cooperation between districts, mergers of existing properties, a new attitude of mind—these can all be vital elements in the cure of the industry. And the greatest of these is a new attitude of mind. Better means of cooperation may involve a long process of education in an enterprise noted-even notorious—for its individualism. Mergers, especially in the ownerships of natural resources, require difficult appraisals and prolonged negotiation. But for a new attitude of mind all a normal man should need is a few frank hours with himself.
Mr. BELCHER. I want to thank the committee for the respectful attention it has given me and the opportunity I have had to present. our side of the problem.
Senator COUZENS (presiding). We will now adjourn until 10 o'clock to-morrow morning.
(Whereupon, at 11.55 o'clock a. m., Friday, January 18, 1929, the committee adjourned until the following day, Saturday, January 19, 1929, at 10 o'clock a. m.)
BITUMINOUS COAL COMMISSION
SATURDAY, JANUARY 19, 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 (presiding) and Sackett. Senator COUZENS (presiding). The committee will come to order. You may proceed.
STATEMENT OF E. L. GREEVER, ATTORNEY, TAZEWELL, VA., ON
BEHALF OF NATIONAL COAL ASSOCIATION
Mr. GREEVER. I speak for the National Coal Association. It is the understanding of the association that this committee, in hearings on S. 4490, does not desire any statements from individual coal operators, and that the presentation at this time be confined as closely as possible to a discussion of the bill under consideration, particularly in its legal aspect. If, however, we are incorrectly informed and the committee does desire to hear operators, a representative can and will be procured from every mining district, of which the United States Bureau of Mines lists 91. The association for which I speak is in a position, because of its nation-wide contacts, to express the greatly predominant opinion of the bituminous industry on this subject. This bill was considered at the last annual meeting of the association in Cleveland in November, at which meeting several hundred operators were in attendance, and a resolution was unanimously adopted condemning the bill.
The membership of the National Coal Association is made up of producers of bituminous coal in the United States, and it is the only organization of the kind that is national in its scope. It has members in every bituminous-coal-producing district. Its object, speaking generally, is to promote the best interests of all those engaged in the industry, with due regard to the rights and interests of the public. It has given and is giving careful attention and study to the various problems of the industry. There is indisputable evidence that real progress, although necessarily slow, is being made. It goes
without saying, and ought to be assumed by all, that the association would welcome any constitutional legislation that would actually benefit the industry and those connected with it or depend