Page images
PDF
EPUB

the international policy committee of the United Mine Workers of America, a much larger body, in July, 1928, likewise by unanimous vote, indorsed the bill. (R. 24.)

The hearings before the committee at the last session developed conclusive proof that the bituminous industry had drifted into such an 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 admitted selling the bulk of their coal below cost and were making no concerted effort to stop wasteful dissipation of capital assets. (R. 24.)

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, due solely to the lack of leadership within the industry. The uneconomic wage now forced on the men is another result of the incompetence of the leadership which has prevailed in the bituminous coal industry for more than 70 years. (R. 25.)

The plight of coal is due to the men who manage bituminous coal production. (R. 25, 26, 27, 28.) The operators have refused to adopt any intelligent plan to put the house of coal in order. Remedial trade practices would no doubt solve the major mine problems, but operators have demonstrated that the 5,000 separate units of the coal industry can not be brought together under a voluntary cooperative plan that would tend to stabilize production. (R. 25, 26, 27.)

Operators have spent millions in freight-rate wars and wasted millions in futile competition. They have not contributed money or applied constructive business thought and ability toward a solution of coal's vital, fundamental, and economic problems. It is utterly absurd even to entertain the thought that the time will ever come when the bituminous-coal industry can establish sane business relations through corrective measures brought about by its own free application. (R. 27.)

The cost of carrying the excess capacity of bituminous-coal mines is estimated at $105,000,000 annually. Coal is being sold at a loss averaging in 1927 742 cents per ton. Comparing 1923 and 1926, Kentucky, Virginia, and West Virginia increased production but sales realization decreased. The coal companies are bankrupting themselves and wasting the surplus capital of entire mining communities and bringing about general depression. (R. 28.)

The prevalent practice of selling bituminous coal below the cost of production shows that no hope of progress can be expected through voluntary cooperation of operators within the industry. Other evidence shows the helplessness of the coal operators to prevent overproduction. (R. 30, 31.)

Coal consumption does not depend on the price of coal to any great extent ; sales campaigns and price reductions can not boost coal consumption. Coal operators have not learned the value of the product, and their marketing and selling methods are uneconomic and annoying and unsatisfactory to the consumers. A continuation of this situation is certain. (R. 31–32.)

The future offers absolutely no hope for coal prosperity. The industry is guilty of incompetent management and of technical engineering incompetency. The railroads have profited for several years at the expense of the coal industry by the purchase of their coal supply, amounting to more than 25 per cent of the total production, at and below cost. The whole sales policy revolves on an uneconomic axis, because screenings, constituting 30 to 40 per cent of total production, sell at from 30 to 50 cents per ton less than cost of production, when the combustion equipment of large consumers demands screenings. (R. 32–34.)

The destructive competition existing is not due to the inevitable operation of the law of supply and demand as testified by operators. Such law operates only as a regulator of production under conditions of scarcity; it can not possibly serve to remedy the ills resulting from overproduction and free-for-all selling attempts. (R. 35.)

In such controversies as this one hears a good deal about the rights of private property. The right of private property is safeguarded by society, because the right to own is the right to manage, and usually those competent to acquire property are best qualified to manage business. But when management is incompetent it has betrayed the reason for the existence of property rights. By discrediting one species of ownership public respect for all ownership may be weakened. (R. 35-36.)

The average coal leader persistently refuses to do anything of his own accord, yet at the mere mention of Government action to stabilize the industry he proclaims his right of self-determination in opposition to Government direction and possible rescue. (R, 36.)

It is claimed by operators that the coal problems are not aided by investigations, 16 of which have been made since 1913. That nothing has been accomplished through investigations rests squarely upon the operators, who have refused to accept responsibility for improvements which the investigations have shown to be imperative. Coal operators do not seem to comprehend that the future holds nothing more than present profitless operation unless Government regulation can be invoked. Since failure on its own resources is firmly established, the only recourse is Government regulation. (R. 36.)

The oil industry has been through similar throes of demoralization, but is now taking steps to remedy its evils, and great improvements have resulted. It is plainly evident that the oil industry is headed straight for the folds of Government control, showing greater intelligence than is shown in coal. (R. 37-38.)

Coal is a public utility, and by resort to Federal injunctions coal operators have established the coal business as a public utility engaged in interstate commerce. The bituminous-coal industry should be viewed as a utility engaged in producing a basic necessity and operating as an interstate commerce unit. (R. 38.)

Notwithstanding the wonderful things that may be accomplished through the proper and thorough utilization of coal, American coal operators do not seize the myriad opportunities offered. (R. 41.)

The National Coal Association voted to oppose Government regulation, but the resolution does not express the hopes and aspirations of a very large number of operators who are tired of aimless drifting down the bottomless pit of a disorganized industry. (R. 41.)

Some operators will advocate before this committee amendments permitting organization of selling pools without any form of Government regulation. But the American public is not ready to permit incompetence and piracy to exercise a free reign over our coal reserves without maintaining Government regulation. (R. 42.)

The necessity for Government control was clearly proved by the testimony before this committee during the last session. That testimony failed to develop any plan, save Government regulation, as a means of substituting intelligent direction for primitive management. The mere existence of some court decision that might becloud governmental power is no indicator of the practicality and desirability of Government control. (R. 42.)

It is a governmental duty to accept the universally accepted fact that coal is a public utility, and enact legislation providing sound Government regulation. This meets the first requirements. It does not bestow any new powers upon the Government; it merely provides for a wider and more intelligent use of the present powers of Government over public utilities. Nothing new or revolutionary is contained in the bill. (R. 44.)

(Mr. Lewis follows his statement with an analysis of the bill, beginning on page 45 of the record.)

The United Mine Workers of America, by Henry Warrum, attorney:

This bill deals exclusively with corporations engaged in shipping coal in interstate commerce; it is predicated on the power of Congress to license and regulate such corporations. It does not affect corporations engaged only in mining coal, and does not regulate or license individuals engaged in either mining or shipping coal. (R. 231.)

A corporation is an artificial person having no legal existence outside the sovereignty creating it. (Bank v. Earl, 13 Pet. (U. S.) 519, 538.) A corporation created by one State has no right to operate under another sovereignty. (Citing cases.) (R. 231.)

There are but two limitations upon the State's right to exclude foreign corporations.

(1) A corporation can not be deprived of the right to transact interstate commerce in another State. The States have surrendered to Congress the sovereign right to exclude a foreign corporation or to license or regulate it with respect to interstate commerce; that right now rests in Congress. That corporations engage in interstate commerce without license or regulation, is because the failure of Congress to act is an implied recognition of their existence and consent to their operations. (Northern Securities Case, 193 U. S. 345; Hale v. Henkel, 201 U. S. 43.) (R. 231.)

(2) Conditions imposed shall not deprive the corporation of any constitutional rights. (1

(Hanover Fire Insurance Co. v. Carr, 272 U. S. 494; Liberty Warehouse Co. v. Burley Tobacco Association, 276 U. S. 71.) (R. 231.)

A State can not endow a corporation with the right to transact interstate commerce. A corporation is as foreign to the national sovereignty as it is foreign to the sovereignty of another State. When it undertakes to exercise a franchise under the national sovereignty it becomes subject to license and regulation if Congress sees fit to so require. This right in Congress arises out of the inherent nature of sovereignty; the power of Congress over corporations is greater than its power over natural persons. The bill is drawn upon that theory of law and can only be discussed intelligently upon that theory. (R. 233.)

The bill does not affect the individual (natural person), with the exception that section 2 permits an individual shipper to join the marketing pools. This is not a requirement, simply a permission. (R. 233.)

The admission of a foreign corporation to a State does not prevent the State from later excluding it or requiring it to be licensed or regulated. Since the power of national sovereignty must be analogous to that of State sovereignty, Congress has not lost the right to regulate or impose conditions upon corporations heretofore shipping coal in interstate commerce. (R. 233.)

The bill is not class legislation in dealing only with the bituminous coal industry. (Heisler v. Thomas Colliery Co., 260 U. S. 245; Watson v. State Comptroller, 245 U. S. 122; Gorisb v. Fox, 274 U. S. 604; Radice v. New York, 264 U. S. 292; Miller v. Wilson, 236 U. S. 382.) It is not class legislation in dealing only with corporations. (Hammond Packing Co. v. Arkansas, 212 U. S. 322.) (R. 233-235.)

Some relief to the chaotic condition of the coal market might be granted by permitting combinations to agree upon prices. The bill simply establishes two general checks upon this permission: One, with relation to prices and the other with relation to wages. The commission is also empowered in various ways to stabilize, encourage, and promote the business of the primary licensees. No corporation is obliged to join the pools or mergers. (R. 235--236.)

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. (Swift & Co. v. U. S., 196 U. S. 375; Stafford v. Wallace, 258 U, S. 497.) (R. 238.)

In the Red Jacket case (18 Fed. (20) 839), the court held the United Mine Workers 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 commerce. The Supreme Court refused to review this decision and it has been accepted as the law in other Federal judicial circuits. (R. 238.)

The bill is not drawn upon the theory that the coal industry is impressed with a public use; it is drawn upon a different theory—that Congress may license and regulate corporations when they exercise rights and franchises under the national sovereignty. (R. 239.)

The clause of the fourteenth amendment guaranteeing a natural person the immunities and privileges of a citizen does not apply to corporations. An individual, a natural person, has the right to transport his person or his property anywhere in the United States and there conduct his business, subject only to general regulation. This is not true as to a corporation, the right of which to do business in another State is limited and subject to the acquiescence of that State, (Hammond Packing Co. v. Arkansas, 212 U. S. 322; Hooper v. California, 155 U. S. 148, 152; Crutcher v. Kentucky, 141 U. S. 47). (R. 240-243.)

If the corporation is engaged in interstate commerce, it can not be excluded from another State or licensed or regulated in that respect. It follows that if Ohio can not regulate or exclude an Illinois corporation in so far as it is engaged in interstate commerce, then Congress, with paramount power over corporations exercising franchises within the national sovereignty, can license and regulate corporations engaged in interstate commerce. (R. 243.)

The real contention of West Virginia is that it resents Federal regulation of corporations that it creates. It undertakes to authorize its corporations to project themselves into other States and to function under the national sovereignty. In Hale v. Henkle (201 U. S. 43) it is said, “and in respect to this [the regulation of interstate commerce] the General Government may assert a sovereign authority to ascertain whether such franchises have been exercised in a lawful manner with due regard to its own laws. :*

The powers of the General Government in this particular in the vindication of its

own laws are the same as if the corporation had been created by act of Congress.” (R. 244, 245.)

A corporation created by one sovereignty can not project its activities in another sovereignty except by acquiescence, and if that is true in the relationship that exists between State sovereignties, there is no reason why the national sovereignty can not impose a license and regulations upon corporations created by a State that undertake to exercise corporate franchises under the national control. Since the State is paramount in dealing with a foreign corporation, like paramount power in relation to interstate commerce must exist in Congress to license and regulate corporations when they undertake to exercise their corporate franchises under the national sovereignty. (Northern Securities case.) (R. 247-252.)

The child-labor laws would have been sustained if they had applied only to corporations. (R. 253.)

If a corporation sold its coal within a State to an individual to distribute it, either by the corporation or by the individual, the provisions of the bill would not apply. (R. 254, 255.)

This bill was prepared by the United Mine Workers, because no other method of regulation had been suggested. It is drafted primarily to give the operators relief. The opponents of the bill should have offered constructive suggestions. (R. 255-258.)

It is true that by the bill “it is intended that any real freedom of action shall be made impossible by making the privilege of fixing prices so valuable as to make the surrender of independent control of business imperative. The whole act hinges upon this proposition.” (R. 259.)

(Then follows an analysis of the bill, section by section (pp. 259 to 266).) It is proposed to amend the bill by adding another section, 1312, as follows:

"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." (R. 267.)

(Then follows a discussion between Mr. Warrum and members of the committee as to various provisions of the bill (pp. 269-284).)

The provisions of the bill concerning labor and those applicable to the secondary licensees do not deprive anyone of constitutional rights. (R. 285–287.)

The United Mine Workers of America, by T. C. Townsend, attorney :

If the power exists in Congress to regulate corporations engaged in mining, producing, and shipping coal in interstate commerce, the fact that Congress has not exercised such power is no denial of its existence. (Flint v. Stone Tracy Co., 220 U. S. 108.) (R. 288.)

The mining of coal as such is not interstate commerce; the bill does not undertake to regulate interstate commerce except in so far as it is conducted by corporations hereafter created and engaged in the mining and shipping of coal in interstate commerce. (Flint v. Stone Tracy Co., supra ; Osborn v. Bank, 9 Wheat. 739; Pennsylvania v. West Virginia, 262 U. S. 601.) (R. 288.)

A State can tax a corporation organized by Congress to engage in a private business. The power to regulate is as broad and comprehensive as the power to tax; therefore Congress can regulate a corporation engaged in interstate commerce. (R. 288.)

To the objection that the bill is unconstitutional in attempting to regulate employment contracts, the answer is that the “ yellow-dog ” contract is contrary to public policy. (R. 288, 289.)

Answering the objection that Congress can not do by indirection what it can not do directly, namely, regulation of the mining of coal, under the guise of a system of licensing corporations shipping coal in interstate commerce, such is not the design, purpose, or terms of the bill. It deals only with corporations undertaking to exercise power over which the Congress of the United States has exclusive control. No State can pass a law which interferes with or burdens interstate commerce. (Oliver Mining Co. v. Lord, 262 U. S. 179.) (R. 289.)

The bill is not an attempt to regulate interstate commerce; the right of regulation is based on the right of Congress to reach corporations, as artificial persons. (R. 289.)

The exclusive power of Congress to regulate interstate commerce may reach so far as to indirectly and incidentally affect local subjects. (R. 289, 290.)

If the bill is a valid exercise of the power of Congress, then the provisions governing the weighing of coal or the payment of the miners' wage or authorizing a commission to recommend methods of conservation and make suggestions relating to marketing the product all would be incidental to the main object. (Flint v. Stone Tracy Co., 220 U. S. 108, 163.) This bill affects coal corporations engaged in interstate commerce, a subject over which Congress has exclusive control. (R. 290.)

The bill does not provide for fixing prices except a maximum price, and then only as a condition imposed on the primary licensees for the privilege of forming marketing pools. (Stafford v. Wallace, 258 U. $. 495.) (R. 290.)

The objections that the bill does not prescribe a standard and that it is vague and indefinite and proposes to punish criminally without sufficiently specifying the crime go only to the administrative features and do not affect the principles involved. (R. 290.)

The case of Pennsylvania v. West Virginia (262 U. S. 599) settles the right of Congress to enact legislation based upon the theory of conservation of coal. (R. 291.)

(While the brief referred to by Mr. Townsend in his oral argument is not printed in the record, an examination thereof discloses that it contains no point of importance not referred to in his oral argument and, therefore, no attempt is made to make a synopsis of it.)

ON BEHALF OF OPPONENTS TO THE BILL

I. PRACTICAL AND ECONOMIC

Gus W. Dyer, professor of economics for 25 years, Vanderbilt University, Nashville, Tenn. :

The Constitution is the expression of a philosophy of human life constituting the American theory of industrial life and of the relation of Government to industry. Its central and supreme thought is the largest possible freedom to the individual with the least possible interference from government. (R. 135.)

The ideal of the American theory is self-government in all relations to life; the only legitimate ground of governmental restraint is unwarranted interference with the legitimate freedom of others. Such is the meaning of freedom of contract, which is the very foundation of our industrial system. (R. 135.)

The founders of the American system set up two governments—self-government and organized government; organized government must be the servant, not the master, of self-government. (R. 135.)

The ideal of these two governments is best expressed by Jefferson in the Declaration of Independence. The inalienable rights of life, liberty, and the pursuit of happiness there stated mean the pursuit of business activities as well as other activities--working, buying, selling, making contracts, and so on. The expression of these inalienable rights is within the field of self-government. Organized governments are instituted, not to restrict the individual in these rights, not to dictate to him how to mine coal, how to make his contracts, and how and when to sell his coal, but to protect him against such interference.

The function of an umpire in a football game-not to tell the team how to play the game, but to see that the game is played straight, to protect the freedom of each player, and of each team against the others—well represents the function of government in the field of industry. (R. 136.)

The American theory is that the highest and best social welfare comes through protecting the freedom of the individual. The position that this freedom may be restricted in the interest of the great majority or in the interest of the individual's own welfare is totally without foundation from this American point of view. (R. 136.)

The American theory of government applies to normal citizens and not to the abnormal, who must be taken care of by the Government as charity. Also the Government may engage in general social welfare so far as such activities do not infringe on the inalienable rights of self-government. (R. 137.)

This theory of government comprehends a certain economic system, the American system of industry, that has its foundation in the Constitution and in the Declaration of Independence. (R. 137.)

The American system of industry attempts to free the individual from every man-made regulation and law possible. Its theory is that the regulation of business by the natural laws of competition and of demand and supply, under

« PreviousContinue »