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BITUMINOUS COAL COMMISSION

WEDNESDAY, JANUARY 23, 1929

UNITED STATES SENATE,
COMMITTEE ON INTERSTATE COMMERCE,

Washington, D. C. The committee met, pursuant to adjournment, at 10 o'clock a. m., in the minority conference room, 335 Senate Office Building, Senator James Couzens presiding.

Present: Senators Couzens (acting chairman), Glenn, Wheeler, Hawes, and Black.

STATEMENT OF HENRY WARRUM, ESQ., OF COUNSEL FOR THE

UNITED MINE WORKERS OF AMERICA-Resumed

The ACTING CHAIRMAN (Senator Couzens). Mr. Warrum, you may proceed.

Mr. WARRUM. Mr. Chairman, every lawyer knows that in the framing of contracts or the drafting of ordinances or laws or other legal documents that are intended to determine human conduct the experience of a business man is far superior to that of one of merely professional training, because such experience enables him to foresee conditions that may arise, complications and problems in the enforcement of the contract, or the application of the law.

The constructive suggestions and inquiries made by the chairman yesterday have led to and suggested a very short new section to this bill, which we recommend :

SEC. 1342. A corporation shall be deemed to be engaged in shipping its bituminous coal in interstate or foreign commerce if it sells and ships its coal in such commerce directly or through the instrumentality of an agent, factor, or broker.

I think that under that, still, if the producer sold to an individual outright, and that individual after buying it engaged in commerce, he would not come within the provisions of this law; and I assume that it would always be a question of fact whether or not the producing company was doing business through the instrumentality of a factor, broker, or agent. They may try to cover it up. Certainly if they retained an interest in the coal, if the broker was selling on a commission and the company retained an interest in the coal that was being sold and shipped in interstate commerce, under this section there would be no question about their coming within the purview of the act; and that form of leakage or that hole that Senator Couzens suggested might be available for them to find a "northwest passage” around the law would be stopped.

Senator Sackett, who I regret is not here, raised a very interesting question to this effect—whether or not the exemptions and privileges that are allowed these corporations engaged in shipping coal in interstate commerce to form their marketing pools would be held class legislation, and void for that reason as an exemption from restrictions that rested upon other business. My response to it yesterday was that that whole question would be determined by the rules governing class legislation, and that the rule is, as laid down in the colliery case that we cited, where anthracite coal was taxed and bituminous coal was omitted, yet the Supreme Court of the United States held, as did the Supreme Court of Pennsylvania, that the law was not class legislation because it rested upon a subject, it related to a subject matter, to which the attention of the legislative body could be directly drawn.

Senator WHEELER. I do not think there could be any question about that at all.

Mr. WARRUM, Very well; but another answer occurred to me afterwards, Senator, that is so plain that I should like to get it in the record. I am sorry Senator Sackett is not here. That is the fact that not only has the Federal legislature but the State legislatures generally have exempted farm marketing associations. In 1926 you passed the agricultural bill that permits farmers and those engaged in raising dairy products, and nuts, I believe, and fruits, and things of that kind, to form their marketing associations. That has been held constitutional; and in a very recent case, of which I have only the advance sheets of the United States Supreme Court, where a case from Kentucky-Liberty Warehouse Co. v. Burley Tobacco Growers' Cooperative Association-was determined by the supreme court, the State of Kentucky had granted what the warehouse company claimed were special privileges to the tobacco growers for the purpose of forming marketing associations, and encroached upon what they called their constitutional right.' The Supreme Court said [reading]:

It is stated without contradiction that cooperative marketing statutes substantially like the one under review have been enacted by 42 States. Congress has recognized the utility of cooperative association among farmers in the Clayton Act.

Then they quote from the decision of the Supreme Court of Kentucky to this effect [reading]:

In the court below it was said:

“We take judicial knowledge of the history of the country and of current events, and from that source we know that conditions at the time of the enactment of the Bingram Act"

That was the Kentucky statutewere such that the agricultural producer was at the mercy of speculators and others who fixed the price of the selling producer and the purchasing price of the final consumer through combinations and other arrangements, whether valid or invalid, and that by reason thereof the former obtained a grossly inadequate price for his products."

This whole quotation reads exactly like the situation that prevails in the bituminous-coal industry as revealed by the evidence.

Senator WHEELER. Did you set that forth in your brief? Did you file a brief? I did not get a copy of it if you did.

Mr. WARRUM. Yes; I did file a brief. We have cited that on another proposition.

The tobacco company insisted that its constitutional rights were being impaired in this, that it was not allowed the immunities and privileges of citizens of all the States; and the answer of the Supreme Court to that is very terse: “A corporation does not possess the privileges and immunities of a citizen of the United States within the meaning of the Constitution." In other words, they were subject to control; but on this other proposition I have not cited it, although the case

Senator WHEELER. I noticed that counsel for the coal operators were relying a good deal upon a decision recently handed down, the other day, by the Supreme Court in the West Virginia oil case. I have forgotten what the titles of the cases were.

Senator BLACK. Was it not a Tennessee case—a gas case?

Senator WHEELER. No; I thought it was West Virginia. Perhaps it was Tennessee.

Mr. WARRUM. No; it was Tennessee.

We may be in error about it, but, as we feel, the criticisms and objections that have been made have not been intended to be constructive, but destructive. Nothing has been brought here to suggest amendments; but out of that character of criticism we found some changes that perhaps might be made in the bill, because the bill is not claimed to be a work of supreme effort from the legal point of view, or perhaps from the administrative point of view.

They have argued that it was the purpose of this bill to enable the commission to supplant the control that the board of directors of corporations taking out a primary license would have over their business. No such purpose was ever intended. The only function that the commission would exercise with reference to the affairs of a primary licensee—that is, those who join marketing pools or form mergers and combinations for the purpose of standing together, increasing their economic bargaining power with reference to their prices, wages, and so forth—is a control that relates directly to interstate commerce. But there is a word here [reading]:

The mining and interstate and foreign commerce of such licensees shall be kupervised, encouraged, and promoted by said commission

I suggest that the word “supervised,” since it gives offense, and it may properly be said to suggest some definite prudential control over the affairs of these corporations, should be stricken out.

Elsewhere, the authority of the commission relates simply to recommendations, directions. It is intended to give these corporations a chance to stand together, to come together, without fear of violating any law; to join hands so that they can look the purchasing agent of a railroad or a public utility in the face and deal with him on equal terms.

It has been asked by Senator Glenn, "What is the opposition to this bill?” The answer to that question will, I think, lead directly up to the inquiry made by Senator Black: “What benefit does labor get out of this bill?

In the first place, we realize that in the drafting of a bill of this kind, such is our peculiar governmental system, our theory of government, that we can not ask for immediate benefit for the laboring

man, whether it is in a regulatory measure of this kind or in a protective tariff, or what it may be. The benefit must be conferred upon the business interests, on the theory that if the business is profitable and made prosperous the laboring man is in a position at least to demand better wages, better working conditions, and a higher standard of living and compensation.

Senator WHEELER. To get a few crumbs from the table ?

Mr. WARRUM. To get a few crumbs from the table. That is invariably the case in all measures of this kind.

We know, as the gentlemen representing the operators know, that the business is tremendously distempered and demoralized; that it is the victim of a tremendous cutthroat competition among themselves; that they are so desperate that they have resorted, as Secretary Davis says here, to a method of mining the cheapest coal they can get, until 40 per cent of the real coal reserves of this country are being left beyond recovery in the mines.

We know, and the evidence here shows, that in an effort to carry on their mining under the disturbed economic situation that prevails in the coal industry, they are turning upon their labor and deflating it; that they are actually selling their labor instead of their coal; that this is the situation: That the competition is so keen, and the pressure of the highly organized consuming interests of this country, like the public

utilities and railroads, is so potent, that an operator figures that he can get an order, say, for 100,000 tons if his miners will accept a certain wage; and he goes to them with that proposition if they are not organized and not operating under å standard labor union scale; and that a neighboring operator, or one in a neighboring field, competing for the same tonnage, goes to his men and says, “If you will take 5 or 10 cents less a ton, or 50 cents less a day"—if he does not say it directly, he says it to them indirectly; he figures it out either with himself or with them"why, I can get that contract.”

The result is that for years, in the unorganized territory at least. operators have been selling what I say is their labor in the market rather than their coal product.

Under this bill the primary licensees have a right to form their marketing associations, their selling pools, to get together without any fear of violating the law, form their mergers and combinations. advance their economic bargaining power; and all we ask is that if that enables them to convert the trade from a buyer's market to a seller's market, enables them to rationalize and stabilize their industry through this privilege of increasing their economic strength by a union of hands, by a concert of action, that that privilege be afforded labor in dealing with them; that it is not fair to grant those privileges to the operators of this country, and then say that they can continue to impose upon their labor this “ yellow dog “contract, this individual service contract, but that they ought under conditions of that kind to allow their labor to speak through organizations that it selects.

They say that this bill in this relation is an attempt to deliver the industry over, body and boots and baggage, to the United Mine Workers of America.

The United Mine Workers of America have been proponents of this investigation and of this bill; but I read it and ask you wherein

it is necessary, under the provisions of this bill, that the labor join this particular organization.

Senator WHEELER. You never knew of any legislation being passed which turned any industry over to labor; did you!

Mr. WARRUM. I never did. [Reading:] It shall be the duty of such licensees and their employees to exert every reasonable effort to make and maintain agreements concerning wages and working conditions and to settle disputes in connection therewith; and in the making of such agreements the licensees may negotiate through an operators' association

In the making of these wage contracts-and the employees shall be entitled to deal collectively by 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 inine workers employed by such corporations to organize and maintain their union shall not be denied or abridged.

Under that bill, what is to prevent the labor at the mine of any particular licensee or any number of licensees from joining this socalled “ save the union” organization that, according to the testimony last spring, was subsidized by the Pittsburgh Coal Co. for the purpose of becoming, in the ranks of the mine labor of that community, a rival to the United Mine Workers of America? What is there in the language of that bill that would prevent the mine labor at the mine of any of these licensees from forming what Mr. Rockefeller says is the ultimate ideal of the labor movement, a company union, if you please?

All we ask is that they may be given the right to bargain collectively.

It is true that they fear that proposition. Why? Because there is no miner in this country, union or nonunion, who is so ignorant as not to know that the mining industry is one that calls for a standizatio of wages if wages are to be protected at all.

You have a company union at one mine and a company union at another, and it is still subject to the exploitation that I spoke of a moment ago; but if they deal with a national union, as the miners know, there is a standard of wages fixed-true, with differentials determined by a variety of things—distance from the market, the freight that the coal that they produce and their employers produce will have to pay, the character of the coal, the character of the seams, and all that-but with those differentials a standard wage protects the miner against constant depression here and constant exploitation there. That is the thing that labor asks, and that is all it asks, from the primary licensees of this bill.

Now, take the secondary licensees.

Senator COUZENS (presiding). Before you leave that subject, may I ask you a question ?

Mr. WARRUM. Yes, sir.

Senator CouZENS (presiding). The other side the other day, in discussing this question, referred, I think, to the language on page 4, section 4. It says (reading]:

The commission shall have jurisdiction of and general control over such marketing pools, cooperative-selling associations, mergers, combinations, and consolidations. In considering the request for such licenses said commission

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