instance, in the State of Missouri, unless it was an interstate commerce transaction.

Secretary DAVIS. No.

Senator HAWES. So that regulation of the mine is a State function, apparently.

Secretary DAVIS. Yes, sir.

Senator HAWES. Until it becomes an interstate commerce transaction.

Secretary DAVIS. And with this suggested movement now, of bringing our electric plant to the mouth of the mine-you take it in St. Louis, if they would move the electric plants from St. Louis to southern Illinois coal fields, and send the power from the coal by wire, it would make it much more difficult for us to regulate or control.

Senator HAWES. Yes.

The CHAIRMAN. How far might we go, Senator Hawes. Suppose that in the interest of stabilizing a great industry, and in conserving a natural resource we should put the mining of coal under strict regulation-how far could we go to prevent the transportation of any coal mined in any mine that refused to obey the regulations and stood on the individual's rights to mine the coal?

Senator HAWES. I do not think we can do it, Mr. Chairman. Senator WHEELER. Well, how far could we go to prevent them from consolidating, unless they complied, after a permit from the Government, with certain regulations?

Senator HAWES. Well, that could be put in the act of permissive consolidation.

Senator WHEELER. How far can we go toward preserving a great natural resource, that is being wasted, to the people of the country? Senator HAWES. Well, the natural resource would belong to the State, apparently.

Senator SACKETT. It belongs to all the people.

Senator WHEELER. It belongs to all the people, in the final analysis. The CHAIRMAN. That is a constitutional question.

Senator SACKETT. Yes.

Secretary DAVIS. The Senator could not succeed by selling the coal he produces from his mines to the people of Kentucky, could you, Senator?

The CHAIRMAN. He could not anyhow.

Senator SACKETT. No; we have tried it already.

The CHAIRMAN. Are there any other questions? [After a pause.] If not, we are very much obliged to you, Mr. Secretary Davis, for your kindness.

Secretary DAVIS. May I sit here and listen for a moment?

The CHAIRMAN. Oh, surely. If you have other views with regard to the provisions of this particular bill, after you have consulted with your solicitor and other gentlemen in your department, we would be glad to have you come back.

Secretary DAVIS. And if you have any questions just send them to me and I would be glad to answer them.

Senator HAWES. I will say, Mr. Chairman, that any criticism of the bill or any analysis of the bill on the part of the Secretary or his solicitor would be extremely interesting to me.

The CHAIRMAN. Very. When I asked Secretary Davis to come here, Senator Hawes, in response to a request of certain members of the committee that were present at that time I did not ask him to discuss the bill itself but to give us a general résumé of the coal situation as he now sees it in order to refresh the recollection of the members of the committee in regard to the hearings we have already had and the facts brought out.

Senator HAWES. I realize that the Secretary will have a very difficult task to analyze any bill and give us a definite opinion upon all clauses of it, because I know it is embarrassing the minds of the committee.

Senator SMITH. Mr. Chairman, have you submitted this bill to the Department of Justice for an opinion

The CHAIRMAN. No. I thought it would be best for us to hear it analyzed by its proponents and its opponents, and then if we intend to boil down the provisions of this bill into some concrete proposition we can refer that to the Department of Justice.

Senator SMITH. Yes.

The CHAIRMAN. We are very much obliged to you, Mr. Secretary. Senator WHEELER. Are there any other witnesses?

The CHAIRMAN. Mr. Lewis, have you anybody that you would like to go on to explain the provisions of the bill from your standpoint between now and noon?

Mr. JOHN L. LEWIS. I am prepared to make a statement on behalf of the mine workers on the entire subject, but it will possibly take an hour or perhaps more, and I am perfectly willing to pass it up for the present if the committee prefers.

The CHAIRMAN. Well, I think we had better wait for another meeting, because I think when you begin to make your statement you will want to conclude it at one hearing.

Senator SMITH. You would like to have your statement complete in one hearing and not broken in by recess?

Mr. LEWIS. Yes; quite so, Senator.

Senator SACKETT. The trouble is that at this meeting we have certain Senators present who might not be present at the next meeting or there might be different Senators present.

Senator SMITH. I would like to have them all here when Mr. Lewis is heard.

Mr. LEWIS. I would like to have it go over until to-morrow if you prefer.

Senator SACKETT. To-morrow is Saturday and I have a meeting on consolidation of railroads. I know the matter pretty well and can read it in the record.

I

Senator WAGNER. I can not be here to-morrow.

The CHAIRMAN. I thought, after consulting with several gentlemen, that if we begin to-day we might conclude these hearings by the holiday recess. I did not like to ask a lot of people to come here from out of the city and not have any hearing on Saturday. I was assuming that if we had a hearing on Friday we could have one on Saturday and go right straight through to a conclusion before the holiday recess.

Senator SMITH. Would it not be convenient for us to have a meeting in the afternoon so as to expedite this business? Senator WHEELER. Do you mean this afternoon?

Senator SMITH. Yes.

The CHAIRMAN (after consulting with the members of the committee present). We will meet this afternoon at 2 o'clock in the committee room at the Capitol.

(Thereupon at 11.25 a. m. a recess was taken until 2 o'clock p. m. the same day, Friday, December 14, 1928, the committee to meet in the hearing room at the Capitol.)

AFTER RECESS

The committee reconvened at 2 o'clock p. m. in the hearing room of the committee in the Capitol, Friday, December 14, 1928.

The CHAIRMAN. The committee will be in order. You may proceed, Mr. Lewis.

STATEMENT OF JOHN L. LEWIS, PRESIDENT OF THE UNITED MINE WORKERS OF AMERICA

Mr. LEWIS. May I say merely in qualification of the right to speak on this subject, Senators, in behalf of the United Mine Workers, that the executive board of the United Mine Workers of America has indorsed the text and principles of the Senate bill 4490 since we met last spring. The international policy committee of the United Mine Workers of America, a much larger body, assembled in July this year, likewise by unanimous vote indorsed the text and principles of Senate bill 4490.

As regards myself, since we last met I have been reelected as president of the United Mine Workers of America for an additional period of two years from April 1, 1929.

The CHAIRMAN. What was the vote on that, Mr. Lewis, may I ask?

Mr. LEWIS. Unanimous. I have prepared a statement here which I think will prove to be of interest to the committee, not unduly long, and I have tried to deal as comprehensively as possible with the essential facts relating to the necessity for this legislation.

The hearings before the full Senate Committee on Interstate Commerce during the last session of Congress developed conclusive proof that the bituminous coal industry had drifted into such uneconomic and disorderly operation, that nothing short of Government regulation could possibly be relied upon to adjust this basic industry to business and labor standards consistent with American enterprise. Operators testifying before your committee admitted that the industry is selling the bulk of all coal produced below production costs. The same operators admitted that they were making no concerted effort to stop this wasteful dissipation of capital assets. Six months have passed since Congress recessed and during all this period not one single coal association, not one single leader in the industry, has come forward with any proposal to correct the disorderly conduct of "King Coal."

If the operators know the present-day condition of the industry, then it must be admitted by coal management that the industry is by far worse off to-day than was the case when the hearings before this committee were recessed last May.

Since the adjournment of Congress, the United Mine Workers of America have accepted wage reductions ranging from 17 to 33 per cent in the unionized coal fields, not because the economic conditions and possibilities warranted such decreases but due solely to the fact that the lack of leadership within the industry resulted in no effort being made to stop ruinous competition, external or internal.

The uneconomic wage now forced on the mine workers is but another result of the incompetence of the leadership which has prevailed in bituminous coal since the industry was first classified as an important industry, or more than 70 years.

Operators testifying before your committee endeavored to show that the earnings of the mine workers were comparable with those paid in other industries and that the charge by the union that low wages, distressful living conditions, and in general an un-American labor relationship prevailed, was ill-founded propaganda. I want to quote from a speech of Fred W. Shibley, vice president of the Bankers Trust Co., New York, who delivered the principal address before the National Coal Association Convention, November 15, 1928, at Cleveland, Ohio. Quoting Mr. Shibley:

Nobody is happy in the whole bituminous coal industry. The correlative facts are that a fair return is not being earned upon the capital actively employed in the coal industry and that labor is not being permitted to earn wages commensurate with the cost of living in this country or comparable with the wages paid by successful industries.

* * *

There is no industry in this country in a more deplorable condition at the present time than the coal industry. The coal industry is one of the greatest national_industries. The agricultural industry is the greatest of all industries. There can be no extended national prosperity until the farmer and the producer of coal each receives his fair share of the national dollar of income.

Operators know in most cases when they are selling coal at less than cost of production but their stockholders are not alive to the wasteful destructiveness of such action. Their only excuse is that everyone is doing it, a poor excuse in the extreme.

Here you have straight-shooting criticism of one of the country's leading bankers, attributing the plight of coal direct to the men who manage bituminous-coal production. His statements are unqualified. Certainly the remarks of Mr. Shibley can not be characterized as "the wail of a union-labor leader speaking in behalf of barrack dwellers whom he seeks to hold in line that he might control a labor trust and perpetuate himself in political office." Yet there is little difference in the language used by mine-union officials and that used by Mr. Shibley, financier of Wall Street. The conclusions of these two divergent forces are identical. And then Mr. Shibley goes on to ask some very pertinent questions of the bituminous-coal operators. Quoting him again:

Do coal operators know their true costs?

Do coal operators realize that they are drifting toward a great cataract known as bankruptcy?

Do consumers of coal realize what might happen to them if a large number of coal operators were obliged to discontinue operations for want of working capital?

Do railroads appreciate their obligation to the coal industry?

Do public service corporations properly evaluate the service of coal producers and their indirect contribution to their success?

Do manufacturers realize the importance of restoring from three hundred to five hundred million dollars represented by increased earnings and increased wages in the coal industry to consumer purchasing capacity?

Do the great majority of the people know that by paying 50 cents a ton more for the coal they use, they would receive indirect dividends greatly in excess of this modest increase in sales price?

Finally, does labor know the truth about the coal situation? Do the miners realize that the people who are keeping them in a hand-to-mouth condition of existence are the operators who sell below cost and the consumer who purchases at less than cost? Do they know that they can never prosper as long as these two people trade on so uneconomic a basis?

To the last question of Mr. Shibley's, addressed to labor, the United Mine Workers give an emphatic yes. The leadership of the union has been fighting an uphill fight for 40 years to correct the very abuses which he has detailed in his questions; yet despite all that has been done by the union, buttressed by investigations by States and the Federal Government, and despite all the warnings of economic agencies, the bituminous-coal operators of America have refused to adopt any intelligent plan to put the house of coal in order.

As an industrial code to correct the existing abuses in the production and distribution of bituminous coal, Mr. Shibley proposes corrective trade practices which are identical with those suggested by the United Mine Workers of America, the United States Coal Commission, and various economic agencies. Mr. Shibley states the program thus:

No overproduction of coal.

No sales of coal to the public carriers or to anyone else at prices less than the cost of production.

No shipments of unsold consigned coal.

No duplication of sales effort.

No unfair and unethical sales practices.

No expansive invasion of unnatural sales territory, and consequently no uneconomical haulage charges.

Under such ideal conditions as have been outlined capital would receive a fair return, labor would be satisfied. There would be no strikes for the same reasons that there are no strikes in the automobile industry. Methods of production and distribution would be standardized and economies effected that would result ultimately in very cheap prices to consumers of coal.

Instead of purchasing necessitous coal at prices yielding a profit to no one, the public service corporations and manufacturers generally would find that in paying an equitable price for coal they were stimulating consumer capacity for their own service and products, that the business of the nation was being strengthened and the national prosperity increased. Miners, like other well paid workmen, would contribute to the national purchasing power and the deposits in savings banks.

And right here it should be stated that the predictions recently made of a broadening national prosperity by Charles M. Schwab and Henry Ford can never materialize as long as certain classes of capital and labor are pauperized through a persistence of uneconomic conditions.

The time has come to show up the coal operator, who, in ignorance of his costs, sells his product constantly below the cost of production.

The time has come to educate the consumers of coal to pay a fair price for the product in their own interests. A great deal of education will be necessary along this line.

But many large industries refuse to recognize the economics of the situation. They continue to play the necessities of one coal operator against the pitiable condition of another, beating down the price to a ruinous level while they rejoice at the efficiency of their purchasing departments.

These people in many instances are manufacturers of the machinery and equipment used by the operators, or of the merchandise consumed by the miners. They are killing the goose that lays the golden egg, but they do not know it, or cynically they disregard the fact.

Certain large consumers know they are paying an unfair and uneconomic price for coal, but public opinion has not become so aroused that they are ashamed of brow beating coal salesmen.