Mr. WARRUM. The chairman well remembers that he said if they got through by Saturday noon, we would be given Monday and Tuesday, two forenoons. To sandwich our arguments up in this manner after they have had a week on the other side, we do not consider quite fair.

Senator COUZENS. The chair does not see any difference between using 30 minutes now and 30 minutes in the morning.

Senator WHEELER. It breaks up a lawyer's argument.

Senator COUZENS. Well, I wanted to get through, but if you do not want to go ahead now, we can get something else to do. Mr. WARRUM. I am at the direction of the chairman.

Senator COUZENS. You say you do not want to proceed?

Mr. WARRUM. I would rather not, but I am at the direction and control of the chairman.

Senator COUZENS. We do not want any arbitrary control. We wanted to try to get through by to-morrow noon, but if it goes over until Wednesday, we will take the time. But as long as you read the statements, I thought you might proceed for 30 minutes this morning.

Mr. WARRUM. That was one thing I did not intend to do, to read any statements. There have been 12, or more, arguments made on the other side. I will have memoranda, but it is impossible to read a statement to cover what has been said by the other side. I would like to do it in a consistent way, and build up my argument, but I do not intend to read any statement.

Senator COUZENS (presiding). All right. We will adjourn until to-morrow morning at 10 o'clock.

(Whereupon, at 11.30 o'clock a. m., on Monday, January 21, 1929, the committee adjourned until the following day, Tuesday, January 22, 1929, at 10 o'clock a. m.)

BITUMINOUS COAL COMMISSION

TUESDAY, JANUARY 22, 1929

UNITED STATES SENATE,

COMMITTEE ON INTERSTATE COMMERCE,
Washington, D. C.

The committee met at 10 o'clock a. m. in room 335, Senate Office Building, pursuant to adjournment on yesterday, Senator James Couzens presiding.

Present: Senators Couzens, Sackett, Glenn, Wheeler, Hawes, and Black.

Senator COUZENS (presiding). The committee will come to order. Mr. GREEVER. Mr. Gall, representing the National Association of Manufacturers, would like to have the opportunity to present a statement on behalf of his association.

Senator COUZENS. If it will only take a minute or two, you may proceed.

STATEMENT OF JOHN C. GALL, REPRESENTING THE NATIONAL ASSOCIATION OF MANUFACTURERS, WASHINGTON, D. C.

Mr. GALL. Mr. Chairman, with your permission I should like to offer for the record a brief in opposition to the pending bill. This brief sets forth the views of the National Association of Manufacturers. Mr. Emery, our general counsel, had expected to be here this morning, but he is, temporarily at least, detained by an attack of influenza and was therefore unable to be present.

I am at the disposal of the committee, and if you have any questions you wish to ask us about or views I should be glad to elaborate them.

Senator COUZENS (presiding). You may put your views in the record, and if, after reading them, any member of the committee should desire additional information, we will call you.

Mr. GALL. I thank you, and our views are as follows:

To the Senate Committee on Interstate Commerce:

The Nattional Association of Manufacturers, a voluntary association incorporated under the laws of the State of New York, composed of many thousands of manufacturers throughout the Nation, begs leave to submit its views with respect to the pending bill S. 4490 introduced by Senator Watson, of Indiana. Our interest in this proposal is two-fold. We are concerned, first, as large consumers of bituminous coal, and, secondly, with the important principles of control which underlie the proposed legislation.

ANALYSIS OF THE BILL

The proposed legislation provides for the creation of a Federal coal commission of five members, empowered, among other things, to inquire into all matters touching and concerning the mining and shipment of bituminous coal

in interstate and foreign commerce; to issue licenses to those persons and corporations desiring to become parties to cooperative selling arrangements or marketing pools, or who desire to enter into mergers, combinations, or consolidations engaged in the mining and shipment of bituminous coal; to exercise general control over such pools, selling associations, mergers, etc.; to fix maximum prices to be charged by members of such pools, cooperative associations, and other combinations; to inquire as to the preparation of the applicant for maintaining and his ability to maintain direct selling agencies in the principal consuming markets and to provide reasonable regulations requiring the maintenance of such agencies of direct sale to the consumer. The mergers and consolidations licensed under this act are specifically exempted from the Sherman and Clayton Acts.

The bill provides for the granting of primary licenses to those who will accept that form of license and agree to be bound by regulations applicable to those operating under primary licenses. Those who fail or refuse to accept a primary license are under compulsion to accept secondary licenses and to be bound by the regulations applicable to licenses of this class.

The bill provides that licensees of the second class shall agree to the following conditions:

(a) That employees shall be free to terminate their employment and join a labor union at will, and no contract of employment which is intended to impair this right shall be lawful.

(b) Employees shall have the right to assemble for the purpose of peaceably discussing and hearing discussed principles of organized labor and collective bargaining.

(c) Employees shall be paid in lawful money of the United States and be free to purchase their necessities of life where they choose.

(d) 'Employees shall be entitled to select a checkweighman to inspect the weighing of their coal.

(e) Weights and scales used shall be open to Government inspection.

(f) All corporations licensed under this provision shall make annual reports in the manner prescribed by the commission.

Under section 7 of the bill no primary licensee "shall make it a condition of employment that the employee shall not join a labor union."

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It is also provided that licenses of either class may be revoked upon notice and hearing, upon proof that such licensee has failed or refused to comply with the provisions of this act and the rules and regulations of the commission." After revocation of license, of course, the corporation would be denied the right to ship coal in interstate or foreign commerce.

The most important phase of the bill, as we see it from the consumer's standpoint, is that no corporations, now or hereafter engaged in mining and shipment, or in the shipment of bituminous coal in interstate and foreign commerce, may utilize the facilities of commerce and thus serve their markets unless they will consent to the conditions imposed upon them when they apply for licenses which, under the terms of the bill, they are compelled to do. This operates not only to deprive corporations of their right to ship coal if they will not submit to the conditions imposed, but of course deprives consumers of the product excluded.

The foregoing is not intended to be a complete and exhaustive analysis of the terms of the pending bill, but, in our opinion, it summarizes the chief provisions to which we shall later advert.

THEORY OF THE BILL

The principal implied assertions upon which the bill is predicated are: (1) That the mining and shipment, or the shipment, of bituminous coal in interstate commerce is impressed with a public interest" warranting regulation

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(2) That although Congress has no direct jurisdiction over production per se, it may reach production through regulation of distribution, over which it claims unlimited jurisdiction.

(3) That the power (claimed) to exclude from interstate commerce includes necessarily the power to permit participation in interstate commerce upon such terms and conditions as Congress sees fit.

(4) That the congressional power to regulate interstate and foreign commerce is necessarily exhaustive and includes the power to determine

(a) Who may engage in interstate or foreign commerce.

(b) What commodities may be excluded from commerce irrespective of their inherent qualities.

OBJECTIONS TO THE BILL

1. We deny that the fact that any industry is impressed with a public interest in the legal sense has any relation whatever to the question of whether or not congressional power may be asserted over it. It may well be that the legislature of a sovereign State acquires a far-reaching jurisdiction over a corporation when it engages in business under circumstances which indicate clearly that it has devoted its business to the public use, but it must always be borne in mind that the power of Congress in this respect is not analogous to the power of a State government. Congress derives its power from the constitutional grant which authorizes it to regulate commerce. It is fundamental that production is not commerce and that, while the congressional power controls the regulation of the latter, it does not reach the former. (Coe v. Errol, 116 U. S. 517; Kidd v. Pearson, 128 U. S. 16; Hammer v. Dagenhart, 247 U. S. 251; Crescent Cotton Oil Co. v. Miss., 257 U. S. 129; United Mine Workers v. Coronado Coal Co., 259 U. S. 344; Heisler v. Thomas Collieries Co., 260 U. S. 245.) In this connection, the following language from Cooley, Principles of Constitutional Law, at page 65, is exceedingly appropriate :

"To constitute commerce between States it is essential that it be not confined to one State exclusively, but concern more than one. The ordinary trade of a State, the local buying, selling, and exchange, the making of contracts and conveyances, the rules for the regulation of local travel and communication, and all the infinite variety of matters which are of local interest exclusively, are left wholly to the regulation of State law. The commerce of a State which Congress may control must in some stage of its progress be extraterritorial. It can never include transactions wholly internal, between citizens wholly of the same community, or extend to a polity and laws whose ends and purposes and operations are restricted to the territory and soil and jurisdiction of such community. Nor can it be properly concluded, because the products of domestic enterprise in agriculture or manufactures or in the arts may ultimately become the subjects of commerce outside the State, that the control of the means or the encouragements by which enterprise is fostered and protected is implied in this important grant of power."

In addition, the language of the Supreme Court of the United States in Veazie v. Moor (14 Howard, U. S. 568), is equally appropriate and might well have been uttered with reference to such a proposal as the one now pending before your committee:

"A pretension as far-reaching as this would extend to contracts between citizen and citizen of the same State, would control the pursuits of the planter, the grazier, the manufacturer, the mechanic, the immense operations of the collieries, the mines, and furnaces of the country; for there is not one of these avocations the results of which may not become the subjects of foreign commerce, and be borne, either by turnpikes, canals, or railroads, from point to point within the several States, toward an ultimate destination."

At the outset, however, it should be noted that the Supreme Court of the United States has expressly said, in the case of Charles Wolff Packing Co. v. Kansas Court of Industrial Relations (262 U. S. 522), that the mining of coal is not affected with a public interest in the legal sense.

2. It seems to us well settled that Congress may not regulate production under the guise of regulating commerce. In other words, what it may not do directly it may not accomplish by indirection. (Hammer v. Dagenhart, 247 U. S. 251.) In that case Congress undertook, by a purported regulation of interstate commerce in the products of factories employing children, to regulate the conditions under which the goods were produced. The court held that it could not be blind to the fact that Congress was attempting to do by indirection that which it was forbidden by the Constitution to do directly.

3. One of the principal contentions underlying the bill, as we interpret it, is that Congress has the power to exclude from interstate commerce such articles as it sees fit, irrespective of the inherent characteristics of the articles, and that since it has the power to exclude them it follows that Congress may permit their shipment in interstate commerce upon such terms and conditions as it sees fit. We can not concede this. The power to deny does not always include the power to permit on any and all terms. No proposition is better settled in law than that a State, in the exercise of the powers attaching to its sovereignty, may exclude absolutely corporations chartered by other States from doing a local business within its borders. It is also true that a State may permit such corporations to carry on their affairs within its limits upon such reasonable

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terms as it sees fit. But it does not follow that the State may impose conditions which involve the surrender of fundamental rights. Thus, in the case of Fidelity & Deposit Co. v. Tafoya (270 U. S. 426), it was held that the State of New Mexico, although having the power to exclude a foreign insurance corporation from doing a local business within its borders, had no authority to admit such corporation on the condition that it would surrender its constitutional right to select those to whom it would pay commissions for procuring business for it. The court, in that case, employed the following language: Coming, then, to the merits, we assume in favor of the defendants that the State has the power and constitutional right arbitrarily to exclude the plaintiff without other reason than that such is its will. But it has been held a great many times that the most absolute seeming rights are qualified, and in some circumstances become wrong. One of the most frequently recurring instances is when the so-called right is used as a part of a scheme to accomplish a forbidden result. (Frick v. Pennsylvania, June 1, 1925, 268 U. S. 473; 69 L. ed. 1058; 42 A. L. R. 316; 45 Sup. Ct. Rept. 603; American Bank & T. Co. v. Federal Reserve Bank, 256 U. S. 350, 358; 65 L. ed. 983, 989; 25 A. L. R. 971; 41 Sup. Ct. Rept. 499; Badders v. United States, 240 U. S. 391, 394; 60 L. ed. 706, 708; 36 Sup. Ct. Rept. 367; United States v. Reading Co., 226 U. S. 324, 357; 57 L. ed. 243, 254; 33 Sup. Ct. Rept. 90.) Thus the right to exclude a foreign corporation can not be used to prevent it from resorting to a Federal court (Terral v. Burke Constr. Co., 257 U. S. 529; 66 L. ed. 352; 21 A. L. R. 186; 42 Sup. Ct. Rept. 188), or to tax it upon property that by established principles the State has no power to tax (Western U. Teleg. Co. v. Kansas, 216 U. S. 1, 54 L. ed. 355; 30 Sup. Ct. Rept. 190), and other cases in the same volume and later that have followed it."

Also, in the recent case of (Williams v. The Standard Oil Co. of Louisiana) (decided January 2, 1929), involving the validity of a Tennessee statute fixing the price of gasoline, the Supreme Court of the United States in holding the statute valid said:

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'Nor need we stop to consider the further contention that appellees being foreign corporations may not carry on their business within the State except by complying with the conditions prescribed by. the State. While that is the general rule, a well-settled limitation upon it is that the State may not impose conditions which require relinquishment of rights guaranteed by the Federal Constitution."

In addition, the following cases are authority for the proposition that a State may not permit foreign corporations to do business within its borders on condition that they will submit to the imposition of taxes to which they are not constitutionally liable: (International Paper Co. v. Massachusetts, 246 U. S. 135); (Locomobile Co. v. Massachusetts, 246 U. S. 146); (Looney v. Crane, 245 U. S. 178).

The bill, as has been pointed out, compels corporations desiring to engage in the mining and shipment of coal to apply for licenses and to agree to abide by the conditions imposed, including the condition that they shall not make a certain character of employment contract; that, as to primary licensees, the commission shall have authority to inquire into "all matters touching the mining and shipment of bituminous coal," and may fix the maximum prices to be charged by members of a pool or marketing association; and, as to secondary licensees, that they shall "make annual report in the manner to be prescribed by the commission."

It will hardly be claimed that Congress could now constitutionally impose and enforce any of the foregoing conditions merely in the exercise of its authority to regulate interstate and foreign commerce. The fact that licensees are required to waive their right in respect of them argues that if the congressional power does not now extend to them. All relate to production, and to production alone. But it is sought, by threatening to deny to corporations the right to engage in commerce, to have them waive their constitutional rights in respect of these matters. Such an alleged waiver is obviously made under the severest form of compulsion and lacks any elements of an ordinary binding agreement. Under the principles just discussed and the decisions cited it must be clear that Congress may not constitutionally extend its jurisdiction to matters of production by such a scheme of "waivers." The consent of a citizen can not confer upon Congress power not conferred by the Constitution.

As to the employment contract which the bill seeks to outlaw the Supreme Court said in Hitchman Coal and Coke Co. v. Mitchell (245 U. S. 229):

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This court repeatedly has held that the employer is as free to make nonmembership in a union a condition of employment as the working man is