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Repudiation of contracts.--Among the most important repudiations of contracts was the action of the Consolidated Coal Co., the largest producing company in the Fairmont field of northern West Virginia. On June 1, 1925, notwithstanding its agreement did not expire until March 31, 1927, this company posted notices of wage reduction, followed by the importation of strike breakers, eviction of union miners, employment of mine guards, and injunctions. Shortly thereafter the Bethlehem Mine Corporation, a subsidiary of the Bethlehem Steel Co., with mines in West Virginia and Pennsylvania, repudiated its contract. The Rochester-Pittsburgh Coal & Iron Co., a subsidiary of the Buffalo, Rochester & Pittsburgh Railroad, abrogated its agreement with the union. In August, 1925, the Pittsburgh Coal Co. of western Pennsylvania posted notices of wage reductions and abrogated its contract. (R. 376, 388.)
The result was to increase the pressure on the market of coal produced at low wages, with a succession of wage cuts to meet the growing competition.
The provision of the Jacksonville agreement relating to its term was follows (R. 437):
"This joint conference of operators and miners of Illinois, Indiana, Ohio, and western Pennsylvania, as now constituted, hereby reaffirm the wage scale contract now existing between the United Mine Workers of America and the coal operators whose interests are represented in this conference, and hereby extends the same for a period of three years, from April 1, 1924, to March 31, 1927, in all of their terms, provisions, and conditions. If is understood the execution of this interstate agreement extends, without further negotiations, the district and subdistrict agreements now in effect in the districts affected."
It was admitted by many operators that there was no legal or moral justification for these breaches. In a letter by the President to Mr. Lewis, of December 5, 1925 (R. 380), the following was stated :
Some few months ago certain employers, parties to the contract, represented that, due to the agreement, their mines were operating at a loss and requested that the Government undertake to secure a revision of the contract downward. This, as you are aware, the Government officials refused to do, as they rightly decided that any alteration must be mutually agreed by the parties to it and that it would be wrong for them to intervene to alter established contracts.
“I profoundly deplore the breaking of any contract whenever this is the case, especially as the faithful compliance with agreements between employers and employees is the sole hope of collective bargaining—a principle now accepted in American life.”
Cutting of wages.—The repudiating companies, like the nonunion companies of West Virginia, established the system of individual service or “yellow dog' contracts in employing their miners. Operators of Pennsylvania and Ohio resorted to the same device after the strike of April 1, 1927, following their l'efusal to renew the union scale. The increased competition of coal thus produced found its reaction in wage cutting. Since the Pittsburgh Coal Co. abrogated its contract it has made three wage reductions. The testimony shows that wages as low as $2.85 per day are being paid in some of the nonunion fields. (R. 1507.) In some mines a further deflation of the miners' wage was accomplished by increasing his day's work from 8 to 9 and 10 hours. (R. 1577.) The basic scale under the Jacksonville agreement was $7.50 per day.
Secretary Davis stated to the committee :
“The result is that producers of coal are in fierce competition. To capture the market they have cut prices. In cutting prices they have lowered wages. They have also reduced the days of operation. Too many miners employed received but part-time work and, in most instances, with low wages. Wages in some sections are as low as around $3 a day, ranging from that in other localities to $4 and $6 a day.” (Supplemental Record, December 14, at p. 5.)
Wherever employers exercise a free hand, other methods of deflating wages have been used in some instances. The 8-hour day has been lengthened to 9 and 10 hours. The miners have been paid in scrip receivable at company stores. The subcommittee that visited Pittsburgh learned that the company issued scrip redeemable at the stores and that the miners were discounting this for cash at the rate of $10 in scrip for $7 in money. (R. 67–92.)
Mr, Tetlow testified that he had “made a careful examination of the entire southern West Virginia field and I do not know of a check-weighman at a single mine tipple in that fiield.” (R. 145.) He testified further that it was the common practice to pay by car measurement instead of weight and that in this way the men were robbed of their true weights. (R. 1453.) Upon this statement being questioned the record shows the following at page 1454 :
“ Mr. TOWNSEND. That was the case of Tony Rhodes v. Miller Pocahontas Coal Co., case No. 5939, decided by the Supreme Court of Appeals of West Virginia upon a writ of error and supersedeas from the circuit court of Wyoming County. The plaintiff received a judgment for $3,000, covering the years 1921, 1922, 1923, and a portion of 1924, based upon these facts: That they deducted for the weight of the car 2,500 pounds. The coal was loaded by the car. The sealer of weights and measures measured and estimated the capacity of the cars, 26 in number, and he stated in the record that the weights of the cars ran from 2,040 pounds to as high as 2,450 pounds. And yet all during this time 2,500 pounds had been reduced from the weight of each car of coal on account of the car, and the miner sued for the difference and secured a judgment for $3,000, which was affirmed by the Supreme Court of Appeals of the State of West Virginia. That record is here if anybody would like to see it."
Capital losses.—The testimony reveals that notwithstanding wage reductions the capital structure is being constantly impaired. But one operator, the Island Creek Coal Co., of Logan County, W. Va., testified to profitable operations during the period of the last three years. Bankruptcies and receiverships by bituminous companies are frequent.
The capital losses of operating companies are the most pronounced in the nonunion fields. They are undoubtedly (lue to internal competition more than competition between various fields. Take the Red Jacket Coal Co. that has operated for five years nonunion, with a Federal injunction protecting its employees from contact with the union. Its deficit in the last five years is about $1,200,000. (R. 1877.)
Cooperative marketing is regarded as illegal and there is a signal failure of any substantial merging or consolidation of coal properties. The United States Coal Commission (p. 272 of its record) says (R. 416) :
The consolidation, grouping, or pooling of bituminous mining operations should be not only permitted but encouraged with a view to insuring more steady production, less speculative prices, a wider use of long-term contracts with consumers, better living conditions, more regular employment, and lower costs.
“ The existing legal barriers to such an economic arrangement should be removed, the necessary protection to the public interest being retained by requiring supervision of the financial structure of the consolidation, as is preescribed in the transportation act for railroad consolidation."
The bituminous industry is discredited with the banks and investment houses both by its past performance and present outlook. The remorseless war of competition goes on without lessening the number of combatants and the burden of degradation is borne by some 3,000,000 miners and dependents.
Waste of coal reserve.-The disordered market has its reaction in a singular waste of coal reserves. Reporting for the year 1921 the United States Coal Commission stated :
“In the production of 368,573,000 tons there were left in the mines or lost to future recovery, 196,168,000 tons, of which 109,605,000 were avoidablema quantity equivalent to the production in 1921 of the States of Illinois, Alabama, Indiana, and Virginia."
It was repeatedly stated in the committee's investigation that 40 per cent of the coal deposits now mined is being wasted beyond future recovery. This is due to the desire to recover the cheaper mined coal to meet the low market quotations. Considering depletion charges against the capital structure, this may not be an operating economy, but it is the inevitable result of the disordered industry and it creates a problem of public interest. Secretary Davis stated to the committee:
“ Under present conditions one glaring evil of the industry is wasteful mining methods. Coal is one of our precious patrimonies. Yet I am informed by those in position to know that fully 40 per cent of the coal is left in the ground as a permanent waste. Two years ago it was found that in producing a little more than 500,000,000 tons for the calendar year, approximately 400,000,000 tons had been left in the mines as pillars, stumps, or thin and not immediately profitable layers of coal. It will never afterwards be profitable to go into the mines to recover these leavings."
Mr. Belden, representing the Ohio operators, said to the committee that 50 per cent of the coal mined by the companies he represented was being lost.
A purchasers' market. It is becoming more and more true that the coal industry is helpless as operating under a “purchasers' market," and that the purchasing power of the substantial tonnage is highly organized. In a "COL
fidential coal bulletin” issued December 18, 1926, by the National Purchasing Agents Association, shortly before the joint conference of miners and operators to negotiate a new scale, it was announced (R. 404):
“The time is ripe for all prchasing agents to insist upon the coal operators, who are supplying them with coal and who increased their contract price due to the wage increase, taking immediate steps to lower wages and reduce the contract price accordingly. In a number of fields the coal operators have already either laid plans or taken steps to reduce wages and have been successful in their endeavors.
" The coal market does not warrant the present high labor wage in that the demand for coal is not of sufficient strength to warrant paying labor a bonus for production."
The abject condition of the operators was manifest to the committee in their testimony. While admitting their constant losses from sales to railroads and utilities at below production cost, and their helplessness to enforce profitable quotations, they palliated this constant driving down of prices. Seldom was indignation shown and on the whole they have not merely been apathetic but hostile to suggestions for their relief. This foolish marketing is not a matter of sole concern to the operators, for it is immediately reflected in the wages and working conditions of the miners. So notorious is the situation that Secretary Davis said to the committee:
* The same waste appears in the marketing of coal. Some grades are sold at cost or below, while the operator relied for profit on the domestic or spot coal markets. : " In selling coal at cost or below the operators raise the excuse that this is forced upon them by buyers of coal in the large. Certain concerns, such as transportation and public-utility companies, take advantage of the competitive state of the mining industry to offer the lowest possible price in the certainty that some operators in need of business will accept the offer. The price offered may be below the cost of production, but at times the operator accepts it merely to keep his mines going and his working force intact. Yet the acceptance of this low price in one locality has a tendency to make such price general. The companies offering this minimum price are only taking a natural business advantage of the disorganization in coal.”
Policy of railroads.-On the basis of the charge by the miners' union, the Senate resolution directed the committee “to ascertain whether the railroad companies and their officials have been or are, by agreement or otherwise, endeavoring to depress the labor cost of coal produced by union mine labor.”
Testimony was offered to show the hostility of certain failroads against the union. Mr. Penrod, an Ohio operator, testified that Mr. Owens, a Chicago purchasing agent for the Pennsylvania Railroad, advised him in April, 1927, that he would continue to give him fuel orders if he would not recognize the union. (R. 670.) Thomas Sagle, another Ohio operator, testified that Mr. Owens told him “that he would pay me nor no other operator any price that would justify the Jacksonville scale." (R. 660.) Mr. Owens denied these statements. In his testimony was offered a letter from Mr. Philippe, his chief of the railroad-fuel department, dated April 5, 1927, which contained the following (R. 2951) :
"If Mr. Appleton is going to produce coal on a nonunion basis it follows that the price should be reduced accordingly, and I think that we should not agree, therefore, to pay more than $1.80 per net ton, and I should be glad if you will be governed accordingly."
Owens further testified that since April 1, 1927, he had bought little coal from the mines that had previously supplied him in Indiana; that he was paying $1.60 for the mine run and $1.90 for the egg coal (R. 2953); that he knew nothing of wage scales and did not premise his prices on wage scales (R. 2957); and further that he did not care how cheap it was or whether the men who mine it are receiving a decent wage. (R. 2958.)
Frank Mellott, an operator and banker of Bellaire, Ohio, said that after April 1, 1927, his company, Shinck Coal Co., made an agreement with the union to continue operating at the union scale pending final settlement of the wage scale; that his mine had been furnishing coal to the Baltimore & Ohio Railroad for more than 20 years, as well as tender coal for local railroad fuel use; that when he asked the company for a new contract “they asked what scale we were going to pay, and we told them the Jacksonville scale, and the party talking to us told us they did not think the company would be interested, but that they would take it up and let us know; and by the middle of April they asked us to cease coaling engines." (R. 809.)
W. R. Woodford, president of the Rail & River Coal Co. of Eastern, Ohio. testified that his company was wholly owned by the Canadian National Railways; that they ran union until April, 1925, and they shut down as unable to compete with adjoining fields. (R. 920.) The coal was for the Canadian Railroad. “They could buy their coal'in West Virginia and Kentucky, but in West Virginia principally, for so much less that they could not afford to take our coal” (R. 921); that they got Fairmont coal at $1.30 a ton (R. 922); "that it is costing the Canadian National Railways $35,000 a month to keep its mines idle over and above the saving that results from buying the coal in West Virginia” (R. 933); and that this railway is paying from $1.25 to $1.35 for West Virginia coal (R. 924).
It is further shown that when the Pittsburgh Coal Co. repudiated its contract and organized its coal and iron police the president of the coal company, Mr. Warden, wrote to the Pennsylvania Railroad and secured leave of absence for Captain Searsch, of the railroad police, to have six months in order to organize the coal company's guards. (R. 545.)
It was admitted by all parties that the price of railroad fuel coal had steadily diminished until in Indiana, Ohio, and Pennsylvania the average price was $1.90 per ton; and it was further admitted by all operators that this represented a price below production cost. The answer of the railroads was that they were taking advantage of the market and its decreased quotations due to increasing competition. This, of course, was without regard to the fact that the decreasing quotations had to be translated into decreasing wages of some 500,000 miners.
Mr. Harriman, of the Clearfield Bituminous Coal Co., a subsidiary of the New York Central, testified that the railroad policy in respect to fuel coal was to
get our cost down more nearly to that of others who were willing to sell coal at a lower price." (R. 507.)
Mr. C. D. Young, general purchasing agent, Pennsylvania Railroad, testified: This was one year after the strike of April 1, 1927. The mines of Indiana were still union, but the mines of eastern Ohio had gone nonunion on a basic scale of $5 per day. Young testified that his road was buying no coal in Indiana but that it was taking coal from eastern Ohio to Indiana for locomotive service; that 25 per cent came out of storage and 75 per cent was purchases; that the eastern Ohio mines were 400 miles from his Indiana fueling points, and that it cost 50 cents a ton to transport the coal, that he paid about $1.75 for this coal, which, plus 50 cents carriage would amount to $2.25, cost in Indiana. (R. 2999–3000.) Yet no offer was made for Indiana coal that any way approached that price, but as many witnesses testified, the offer in Indiana was $1.90.
It is obvious from all the testimony that the railroads were “bearing" the coal market through their economic purchasing power and because of its demoralization.
In five years, according to the testimony, the railroads have been purchasing their coal in the territory investigated at from 10 cents to $1.40 per ton less than production cost.
W. H. Conway was appointed receiver of the Brady-Warner Coal Co., of Fairmont, July 29, 1927. He testified that he got $1.30 per ton for run of mine coal from the railroads (R. 1546) ; that he found it necessary to sell to the railroads through brokers who sold the same coal in turn to the Lehigh Valley Railroad for $1.50 per ton; and that the production cost of this coal was $1.30 a ton.
Mr. Ott, a receiver of the West Virginia Coal & Coke Co., stated that the sales realization at these mines per ton shrank from $3.19 in 1923 to $1.54 in 1927, and that this shrinkage represented a similar loss on railroad fuel service. These are but typical of the general testimony.
Mr. Bray, of the Cambridge Collieries Co. (Cambridge district, Ohio), testified that in 1923 his railroad fuel tonnage was 1,551,755 tons, which brought $4,056,726.70; that in 1925 this tonnage had fallen to 297,867, with a realization of $517,110.23; and for 1926 to 260,839, which brought $586,110.81. (R. 2160.)
So notorious and ill advised has been the practice of the railroads that, as early as December 10, 1925, the Secretary of Labor, speaking to the American Mining Congress in Washington, D. C., said (R. 403):
In the pioneer days of each coal district the railroads encouraged the devel opment of mines; often their cooperation in fuel purchases based on a smalt margin of profit created or helped to create along these lines mining communities and centers of population running into the thousands. These communities,
in turn, contributed no little to the prosperity of the railroad through freight consumption and passenger patronage.
"It does seem to me to be a strange policy, if true, for the railroads, in order to save a few cents a ton on their coal purchases, to transfer their patronage to mines of other railroads and thereby bring about a suspension of operations which destroy the earning and purchasing power of communities to which in earlier days they had so materially contributed to their development. Is it wise for the railroads to ignore their contribution to the maintenance of prosperity of communities located on their own road?
"Other systems not guilty of going off their own lines for the purchase of their fuel are reported as too prone to fix the fuel price without due regard to the cost of production. This, if true, in turn not only contributes to the reduction of the purchasing power of their local communities but forces general industrial disturbances in the effort of the employer and employee to adjust wages and working conditions to enable them to conform to the mandatory demands of the railroad's lower prices.
"I am inclined to the belief that it would be helpful to the coal industry if all the coal roads showed a greater degree of cooperation that will insure to the mines located on their roads a reasonable profit on railroad fuel.
“Railroad rates are formulated to enable the railroads to earn a return on their investment. Would not the bituminous coal industry in all States be in a much healthier condition if the railroad fuel prices were also gauged so that the coal companies could realize a profit on their railroad fuel loadings? The latter suggestion is as essential to the prosperity of the coal mines as the first is to that of the railroads."
Yellow-dog contracts.--A typical " yellow-dog ” contract used in West Virginia is found on page 1846 of the record. The clause in point follows:
“ I am not now a member of the United Mine Workers of America, the I. W. W., or any organization of mine workers, and will not during this employment join or affiliate with any such mine labor organization, because I believe the. preservation of the right of individual contract, free from interference or regulation by others, and payment in proportion to services rendered to be to my interest, to the best interest of the public, and of all industry; and I enter this employment with the understanding that the policy of the company is to operate a nonunion mine, and that it will not knowingly employ anyone belonging to such union or organization and would not give me employment under any other conditions."
These contracts prevail throughout the nonunion fields and are the basis for injunctions preventing the miners' union from organizing their employees by peaceful persuasion. The "yellow dog” contract adopted by the operators of Ohio who have gone nonunion, is found on page 704, its clause being as follows:
“ Employer agrees that it will not operate its said mine as a closed union shop during the term of this agreement with employee, and that it will not during the term hereof enter into any agreement with any union affiliated or connected with United Mine Workers of America. Employee agrees that he will not, while he is an employee of employer, make any effort amongst its employees to bring about the unionizing of employer's said mine or of any other mine owned, leased, or operated by the employer or the unionizing of any of employer's employees, and that he will not at any time take any action designed or tending to place said mine or any other mine owned, leased, or operated by the employer upon the closed union-shop basis, and that he will not at any time foment, advocate, or take any part in any strike of employer's employees.”
This agreement is likewise used for the basis of injunctions against peaceful efforts to unionize the men or asking them to cease work, (R. 2270.)
Plainly the right to exact these agreements is asserted under the right to freedom of contract. They are the result of economic helplessness and distress on the part of the workmen, and their real effect is to deprive the workman of his freedom of contract. They are resorted to by operators who desire a free hand in fixing wages. A typical illustration is found in the testimony of D. W. Boone, of the New River Export Smokeless Coal Co., of West Virginia, who testified (R. 1576) that his men did not have the right to join a labor oragnization, and that while he agreed with them to pay prevailing wages of the New River coal fields, he had not done so; that his basic wage would be about $3.75 and that he required 10 hours' work (R. 1577); that he paid the miner for a ton of 2,240 pounds and sold to consumers a ton of 2,000 pounds (R. 1582); that in some of his mines the miners worked as far as 2 miles