Page images

representatives of their own choosing without interference, influence, or coercion exercised by their employers. No such licensee shall make it a condition of employment that the employee shall not join a labor union, but the right of the mine workers employed by such corporations to organize and maintain their union shall not be denied or abridged.'

This provision does not require the employees of any corporation to join the miners' union. They can have a company union if they prefer, or act through committees, or they can deal individually with their employer. The option is left with them. The opposition to the provision indicates the need for it and the testimony taken at this hearing fully justifies it. If these primary licensees expect by their pools and mergers to further increase their economic bargaining power, justice requires that their employees should at least be left free for collective bargaining on their part.

As to secondary licensees, namely, corporations that are now mining and shipping coal in interstate commerce, the conditions of their secondary license with relation to labor are as follows:

" If any such corporation desired to employ only nonunion mine workers, its 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; said employees shall have the right of assemblage for the purpose of peaceably discussing and hearing discussed principles of organized labor and collective bargaining; the employees of such corporations shall be paid in lawful money of the United States and be free to purchase their necessities of life where they choose; said employees shall be entitled to select a check-weighman to inspect the weighing of their coal and the weights and scales used by said corporation for the purpose of determining the wages of its employees shall be open to inspection by the agents of the Bureau of Standard Weights and Measures of the United States or of this commission."

There is nothing in this provision that impairs the obligation of a contract -or prevents an individual or a corporation from making individual contracts. The so-called individual (" yellow dog") contracts are terminable at will. This was recognized in the Hitchman case. A corporation may have the right to employ only nonunion miners; but it has no right to require the miner to agree that he can not quit his service and join a union. That the employees shall have the right of free assemblage to discuss the principles of organized labor and collective bargaining and be free to join a union is destructive of no constitutional right. On the contrary it provides for the protection of constitutional rights. And under the proof before the committee it is inconceivable that any legislation could be passed without Congress protecting these fundamental constitutional rights of the laboring man.

The requirement that the employees be paid in lawful money, be free to purchase their necessities where they choose, be entitled to select a checkweighman and to have the scales inspected by a Government official, are all constitutional rights of the miners. Such provisions do not deprive any coal corporation engaged in mining and shipping coal of any of its constitutional rights. The provisions are suggested by the testimony before the committee. They simply protect mine labor from the exploitation by token money, company stores, and false weights.

The brief of counsel for opponents is filled with general misstatements. There is nothing in the bill that warrants them in saying that its purpose is to destroy interstate commerce or to eliminate 40 per cent of the production of bituminous coal, or to deprive anyone of their property without due process of law. Such general charges ought to be followed by specifications pointing to particular provisions of the bill. The only provision that could be construed as limiting production is section 11, that no further switches or sidings shall be built for coal-mine development until directed by the Interstate Commerce Commission upon approval by the Bituminous Coal Commission. The Interstate Commerce Commission has its own legal discretion in the matter now. The Bituminous Coal Commission will exercise its preliminary discretion in connection with all the facts. It must be assumed that permission should be granted in all proper cases, as it would be refused in all cases that would contribute further to the waste of a national resource and the disorder of the bituminous industry. The limitation on production would follow the general stabilizing of the industry which the bill encourages.

Opponents' brief is based on the proposition that coal mining is not inter-state commerce. It ignores the fact that the bill is predicated on the legal right of Congress to license and regulate artificial persons (corporations) engaged in the mining and shipping of coal in interstate commerce. The bill


does not require any answer to the question whether coal mining is interstate commerce. The ruling law upon the subject undoubtedly is that the mining of coal when considered in connection with its shipment in interstate commerce, is a subject upon which Congress may legislate and has legislated. In Swift & Co. v. United States (196 U. S. 375 (1905)), the Supreme Court sustained a charge that certain packers were conspiring in restraint of trade, among other matters in relation to stockyard sales, where it was admitted that the transportation of the stock had been consummated by del.very of the stock to the consignee. Some time after this decision Congress passed the packers and stockyards act, in which Congress undertook to regulate the business of such stockyards. The act came before the Supreme Court in Stafford v. Wallace. (258 U, S. 497.) And the Supreme Court said :

" It is manifest that Congress framed the packers and stockyards act in keeping with the principles announced and applied in the opinion in the Swift

The recital in section 2, paragraph b, of title 1 of the act (section 183 of this title quoted in the margin leaves no doubt of this). The act deals with the same current of business, and the same practical conception of interstate commerce.

“Of course, what we are considering here is not a bill in equity, or an indictment charging conspiracy, but a law. The language of the law shows that what Congress had in mind primarily was to prevent such conspiracies by supervision of the agencies which would be likely to be employed in it. If Congress could provide for punishment or restraint of such conspiracies after their formation through the antitrust law, as in the Swift case, certainly it may provide regulation to prevent their formation. The reasonable fear by Congress that such acts, usually lawful, and affecting only intrastate commerce when considered alone, will probably, and more or less constantly. be used in conspiracies against interstate commerce, or constitute a direct and undue burden on it, expressed in this remedial legislation, serves the same purpose as the intent charged in the Swift indictment to bring acts of a similar character into the current of interstate commerce for Federal restraint. Whatever amounts to more or less constant practice, and threatens to obstruct or unduly to burden the freedom of interstate commerce, is within the regulatory power of Congress under the commerce clause, and it is primarily for Congress to consider and decide the fact of the danger and meet it. This court will certainly not substitute its judgment for that of Congress in such a matter unless the relation of the subject to interstate commerce and its effect upon it are clearly nonexistent."

In the Red Jacket case (fully discussed before this committee) the United States Circuit Court of Appeals for the Fourth Circuit (18 Fed. (2d), p. 839) held that the United Mine Workers were guilty of conspiracy in restraint of interstate commerce by attempting to persuade the employees of the 316 companies suing, to quit work and join the union. In that case there was no claim that the shipment of coal was being molested or that there was any attempt to interfere with the sale of coal in other States. The offense was. one that related to the mining of coal which was intended for interstate com

The Supreme Court refused to review this decision and it has been accepted as the law in other Federal judicial circuits.

Paraphrasing the language of the Supreme Court in the Stafford case quoted above, we say :

“If Congress could provide for punishment or restraint of such conspiracies after their formation through the antitrust law, as in the Red Jacket case, certainly it may provide regulation to prevent their formation. The reasonab'e fear by Congress that such acts, usually lawful, and affecting only intrastate commerce when considered alone, will probably and more or less constantly be used in conspiracy against interstate commerce, or constitute a direct and undue burden on it, expressed in this remedial legislation, serves the same purpose as the intent charged in the Red Jacket case to bring acts of a similar character into the current of interstate commerce for Federal restraint.

This court will certain y not substitute its judgment for that of Congress in such a matter unless the relation of the subject to interstate commerce and its effect upon it are clearly nonexistent."

It will certainly not be claimed that the Federal Government, either through Congress or the courts, is able only to lay its correcting and restraining hand upon the labor employed at the mines. And this is what it has done by the antitrust act. If Congress may legislate with reference to this labor it must have power to deal with the subject fully in order to deal with it fairly.



It is also urged by counsel for opponents that the bituminous-coal industry is not impressed with a public use and that there is, therefore, no reason for public control. In our original brief we have quoted from the United States Coal Commission report of 1895, at pages 259 to 262, setting out the extraordinary relation that the bituminous industry bears to our complex industrial life; and in which they conclude as follows:

" It is this indispensable service which the coal mine performs that gives the largest social value both to the property and to its product, and in turn this social value, in effect, grants to the public an interest in that use and creates a compe ling reason for public control.”

The bill, however, is drawn upon a different theory of the constitutional jower of Congress. It is the theory that Congress may license and regulate artificial persons when they assume to exercise rights and franchises under the national sovereignty.

Senator COUZENS. You may proceed with your statement.

Mr. WARRUM. The situation at the present time is this, as the chairman can well see, that since that brief was handed to us there has been a week of arguments, representing various points of view and various interests, raising various questions, comprising the views of economists and those not related to the coal industry, except indirectly perhaps, and the views of counsel for the coal operators and counsel for other associations. In the circumstances it develops that our argument can not be very well read; it has got to be built up from a discussion of the points involved, and we will try our best to cover the situation as we understand it exists.

The question before the committee now is, of course, not as to the necessity for legislation, if there can be legislation—and we assume that the reaction of the committee to that matter will be the natural reaction of any body that sits in the capacity as you do to the evidence that has been heard—but the primary question is as to the power of Congress to legislate in the manner outlined in this bill, together with the expediency and the power of the Congress in legislating in the manner that the bill indicates. That is to say, one of the questions will be whether or not the Congress has the power to regulate corporations engaged in interstate and foreign commerce in bituminous coal in the manner indicated; and the other is, whether or not the provisions of the bill violate any of the constitutional rights of the operators, or are of themselves improper as the exercise of legislative power though the power may exist in the Congress.

Senator COUZENS. Are you going to deal with the question of economics of the situation and the practicability of the operating features of the bill ?

Mr. WARRUM. I am not going to deal with the question of economics, but I do want to take up the sections of the bill before I conclude and indicate why they were drawn in the manner they were, and what we expect to gain by them. Does that answer your question, Mr. Chairman?

Senator COUZENS. Yes; but I not being a lawyer am more interested in the economic and practical features of working it out. We sometimes have bills that are idealistic but are impractical in their enforcement or operation.

Mr. WARRUM. I will try to deal with that, but I do not know that I will deal with it to the satisfaction of any member of the committee. Of course, the first question is as to the power of the Congress in the manner indicated in the bill to exercise authority such as is intended to be given here.

Senator COUZENS. All right. You may go ahead.

Mr. WARRUM. Now, this deals exclusively with corporations engaged in shipping coal in interstate or foreign commerce, and it is predicated upon the right of the Congress to regulate such corporations.

Senator COUZENS. What would be the situation if the bituminous coal mines were individually operated ?

Mr. WARRUM. They would not come under the provisions of this bill at all. If there is any individual who owns a mine he is exempted from the provisions of this bill, except in the one particular that I will call your attention to in a moment. The bill itself only deals with corporations.

Now, it is no doubt true, and the other side will claim it and we will admit it, and everybody knows it, that a natural person—that is, an individual citizen—is, under the fourteenth amendment of the Constitution, entitled to all the immunities and privileges of a citizen of another State. That provision does not apply to corporations, because they are artificial persons; they are not natural persons; they are created by a sovereignty, and limited, except by the acquiescence of another sovereignty, to transacting their business within the sovereignty that creates them.

An individual, a natural person, has the right to transport his person or his property anywhere in the United States he sees fit. He has the right to conduct his business anywhere he sees fit. If he is subject to regulation at all, if that is a matter of interstate commerce, he is subject to general regulation, to general rules regarding the matter of transportation, and the like. But as to a corporation, and in view of the very frank statement by the chairman that his is a lay experience, I want to discuss in a more or less primary fashion for a moment if I may without offense, without intending to be pedagogic, something about the character of corporations. A corpo. ration is a creature called into life by a sovereignty. A sovereignty breathes into it the breath of life. If it is a State corporation it has no existence, no right of existence, beyond the State in which it is created. Take an Illinois corporation, for instance, and if it is engaged in ordinary business it has no right to come to Indiana except under such conditions and regulations and license fees as the State of Indiana may provide. Indiana, in its code—and every other State in the Union has such a code--governs the admission of foreign corporations. Indiana has the right to absolutely exclude a corporation if it sees fit. The reason is laid down in a very early case and the holding is quite uniform and found in all of the law books, textbooks, and decisions—but here is a rather eminent judge in the early case of Paul v. Virginia, 8 Wallace, 168, in which Chief Justice Marshall speaks of the nature and incidents of a corporation in this manner:

A grant of corporate existence is a grant of special privilege to the corporation enabling them to act for certain designated purposes as a single individual, and exempting them (unless otherwise specially provided) from individual liability. The corporation being the mere creation of local law, can have no legal liability beyond the limits of the sovereignty where created

* *. The recognition of its existence even by other States, and the enforcement of its contracts made therein, depend purely upon the comity of those States-a comity which is never extended where the existence of the corporation or the exercise of its powers are prejudiced to their interests or repugnant to their policy. Having no absolute right of recognition in other States, but depending


for such recognition and the enforcement of its contracts upon their assent, it follows, as a matter of course, that such assent may be granted upon such terms and conditions as those States may think proper to impose. They may exclude the foreign corporation entirely

And they did in this case, and it was an insurance company from New York that undertook to do business in Virginia. It was excluded. That is happening every day in your own State. they may restrict its business to particular localities, or they may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interest. The whole matter rests in their discretion.

Senator COUZENS. In that connection I should like to ask you a question: Suppose a corporation were disbanded and its interests were put in the hands of a trustee, without having any corporate activity or any authority from the State, what position would that mine be in if it were in the hands of a trustee?

Mr. WARRUM. Well, I think if it is a trustee for the corporation

Senator COUZENS (interposing). I do not mean a trustee for the corporation.

Mr. WARRUM, A trustee for the creditors?
Senator COUZENS. No; for the individuals.

Mr. WARRUM. Oh, well, if it had ceased to operate in its corporate capacity I think it could go anywhere in the United States. I think it would have the right of a natural citizen.

Senator COUZENS. That is quite an ordinary process to put one's interests in the hands of a trustee.

Mr. WARRUM. If they were to abandon their form of doing business they could do anything they wanted to do.

Senator COUZENS. Then it is not difficult to get around this law.

Mr. WARRUM. It is not difficult at all. We made a careful survey, or as careful a survey as we could make, and we do not know of any concern, and I would say there are certainly none that is shipping more than a negligible amount of coal but what is doing it through corporate forms, and the reason is very obvious, if you please.

Senator COUZENS. Oh, I understand that that is true now, but I am talking about restrictions and handicaps. If they are now corporations they would soon find devious ways of getting around it.

Mr. WARRUM. I think not. And that comes back to the proposition I was urging on you when you interrupted me. The mining of coal is too hazardous in itself; the shipping of coal, as was brought out in the investigation here last spring, has too many responsibilities, too many financial risks, to allow of the business to be carried on for any length of time except under corporate form. It is true that all businesses are seeking corporate form on account of the fact that they are not limited to the life of any man or set of men. There is a disposition to avoid individual liability, and for other reasons. And in the coal business there is the hazard of mining coal that is a special hazard and that tends to affect the nature of the business.

We have made a careful survey of this matter, and as I say, we know of no individual who is engaged in the mining of bituminous coal, at least any considerable amount of coal, and shipping it in

« PreviousContinue »