a state of individual freedom, is more conducive to social welfare than any artificial regulations that can be devised by man. The American system of government is preeminently a system of regulation by natural laws, and only in fields not open to these natural laws, such as, monopolies, is the Government justified in exercising additional regulation. (R. 137.)

The law of demand and supply, under a state of freedom, regulates the prices of commodities and services on the basis of their value, thereby regulating the relative amounts of production, prices rising and falling as production decreases or increases. The same is true as to wages. (R. 137.)

The operation of the law of supply and demand is constructive and highly beneficial to the general material welfare, since it tends to keep every man where most needed. Profits on capital are regulated by these natural laws in the same way as wages and prices of commodities. (R. 138.)

Capital is not able to make enormous dividends by any inherent power to control production, costs, and prices, under conditions of free competition. Dividends paid for use of capital must be distinguished from compensation for superior business direction, although both are included in the corporate dividends paid to stockholders (R. 139). No group of men can get together enough capital to control any important field of indstry; Henry Ford, with his unlimited capital, can not even control the field of cheap automobiles. (R. 140.)

This bill provides that the price of coal shall be fixed on the basis of fair wages to labor and fair return on capital. To fix prices so every coal company could make a stipulated dividend, regardless of efficiency, on the capital invested would be about the most stupid and most unjust thing that could be done in regulating business. (R. 140.)

The automobile industry is operating under the American theory of freedom in industry; it is as logical to apply this bill to automobiles as to coal. (R. 141.) If a political commission had dictated to Henry Ford and General Motors how to run their business, and had limited them to a "fair dividend" on capital invested, old Ford cars would be selling at perhaps $2,000 to-day and Henry Ford would be a little-known manufacturer.

Such a principle penalizes efficiency and great public service and rewards inefficiency and industrial parasitism. It would tend to drive both brains and responsible capital to other fields and leave the essential coal industry, in the hands of the inefficient and irresponsible. (R. 141.)

The obvious purpose of this bill is to repudite the standard of value fixed by the law of demand and supply, as applied to labor in the coal mines, and substitute a standard fixed by the needs of the employees, known as a "fair wage." (R. 141.)

Under the American system of freedom of industry there is but one standard of value; it applies to everything-commodities and services. It is fixed by the operation of the law of demand and supply. The value of a commodity is what it will sell for in the open market; the value of labor is what it will bring in the open market. (R. 141.)

Labor, although not a commodity, is valued in the same manner as a commodity in a free market. A commodity is stored-up labor. When the farmer sells a bale of cotton he is as truly selling his labor as the man who sells his services to dig coal. Both valuations are fixed by the same law. (R. 141.)

Value is not fixed by bargaining power, either as to commodities or as to labor. A millionaire, with all his supposedly superior bargaining power, is unable to obtain the services of an average illiterate negro cook at less than the market value. (R. 142.)

All of us live by working and exchanging our commodities or services for those of thousands of others; money merely facilitates these exchanges. Justice demands that in these thousands of exchanges there must be a single standard of value. The American single standard of value is that fixed by the law of demand and supply. If you introduce a second standard to be used by some and not by others somebody will be robbed. (R. 142.)

The great majority of American people have their services and commodities valued by the American standard. When the standard of the needs of the worker in an industry is introduced in place of the American standard of values, to that extent the new standard increases the wage-earner's compensation above what it would be under the law of demand and supply, and he is permitted to use short weights in his exchanges and demand full weight from all who operate under the American standard. This means that the millions of consumers working under the American standard are compelled to take the

money from their pockets and present it as a gift to those who have not earned it in order that this privileged group may be lifted to a higher plane of compensation than the one they occupy. (R. 142.)

Capital and employers do not pay wages, but consumers pay the wages. Under our system there can be but one fair wage, and that is the wage fixed by the law of demand and supply. (R. 143.)

In some industries there has been a departure from the standard of demand and supply, illustrated by the Adamson law, which lifted railroad employees out of the law of supply and demand and put them on a basis of need. (R. 144.)

If the compensation of all workers were pushed up in the same proportion, nobody would be benefited; a sufficient number must be left on the American basis if there is to be a contribution to a privileged group. The compensation that any group receives above the wage determined by the law of demand and supply is not wages but charity. (R. 145.)

Employers can not arbitrarily hold wages below the standard fixed by the law of supply and demand in any community. There never was a time when it was so easy for working people to move from place to place or when workers were so well informed on wages as to-day. (R. 145-146.)

American industries generally are operating successfully under the American theory; never before have such efficiencies in industry existed. (R. 146.) Nothing is quite so deadly to efficiency in business as unwarranted interference with freedom in management; freedom is the greatest inspiration to efficiency. (R. 146.)

It is difficult to exaggerate the disastrous economic effect that would in all probability result from such political control of the coal industry as is proposed in this bill. The direction of the economic process of production in private enterprises is never a proper function of government under the American system. (R. 146.)

Specialists are necessary in every industry, but this bill provides for a political commission instead of specialists. This is antagonistic to every sound principle of business efficiency. (R. 147.)

Anything that impairs efficiency in the coal business at the present time is unusually dangerous to the industry, since oil, natural gas, and electricity generated from water power are active competitors. (R. 147.)

The power given to the proposed commission to arbitrarily revoke the license of any coal company would introduce a hazard in the coal business that would add tremendously to the cost of production and tend to destroy efficiency. It is a well-established principle in business that the greater the hazard or risk the greater the dividends must be, all of which would tend to increase the cost of coal which the public would pay. (R. 148.)

Those who hold to the socialistic, paternalistic theory do not believe in the American theory of individual freedom; they would put the individual under the direction of the Government and would also have the Government assume the responsibility of taking care of the individual. (R. 148.)

George J. Anderson, of New York City, president Consolidation Coal Co.:

An article, How Much Coal Is Enough, by Mr. Anderson, was published in the December, 1928, Atlantic Monthly, and certain parts thereof were placed in the record with the consent of the committee by A. M. Belcher, abstract of whose statements appears elsewhere herein. The following is a synopsis of that portion of the Anderson article placed in the record:

The consumer of bituminous coal justifiably demands of the industry: (1) An adequate and continuous supply; (2) a reasonable price. The consumer now has no grounds for complaint on account of either of these demands. (R. 174.)

The consensus of opinion is that the coal industry suffers because there are "too many mines and too many miners"; the root of all evils is excessive capacity. (R. 174.)

Assuming that a dictator for the coal industry might lawfully be created, he would encounter many difficulties. (R. 175.)

The annual consumption of bituminous coal in this country is something over 500.000,000 tons; the present mines can supply twice that amount. Different uses in the same market require unlike fuels; similar coals are restricted to different markets by freight rates; costs of production vary in different mines. These facts make difficult the dictator's selection of the requisite number of

mines which should remain in production to supply the demand for coal. (R. 175.)

The industry employs about 590,000 men; the maximum need, on an evenly balanced operation, would be about 440,000. About 150,000 too many men are engaged in mining coal, on that basis. (R. 175, 176.)

The foregoing figures assume that the needed mines will produce continuously and that the needed number of men will work continuously, producing an even, regular flow of coal from the mines to the consumer. But the demand for coal is seasonal. The average swing between spring and fall daily production is nearly one-third. For each of the 12 years-1914-1926-the absolute difference between high and low monthly production, regardless of season, was nearly 50 per cent. Further, since bituminous coal is used chiefly for industrial purposes, the amount consumed is governed by general industrial conditions. For instance, April, 1923, required nearly 67 per cent more coal than April, 1921; November, 1926, nearly 62 per cent more than November, 1921. (R. 176.)

There is a seasonal swing of 30 to 50 per cent between seasons in each year and a cyclical swing of over 60 per cent between the same seasons in different years. Combining them shows a spread between the daily output of April, 1921, and that of November, 1926, amounting to nearly 120 per cent, and yet, 18 months after, in April, 1928, the latter output would have been 85 per cent too much. July to June, 1926-27, coal production was over 107,000,000 tons greater than in the same period, 1927-28. (R. 176.)

These swings in coal consumption require a reserve army of at least 150,000 men, practically the exact number mentioned above as the excess over the number required. Through the past 12 years normal annual requirements changed but little. (R. 177.)

The same sort of difficulties have faced other industries, but distinctive difficulty of overcoming them as to coal is twofold. First, the inability to store coal; and second, the problem of sizes. The latter problem arises from the varying demand for different sizes. The production to meet the market demands for certain sizes results in the production of a surplus of unwanted sizes which handicaps the whole industry. (R. 177.)

Labor represents at least two-thirds of the total cost of coal. The intermittent employment due to variations in consumption, creates a most difficult problem if wages are to be fixed with any regard to annual earnings and a given standard of living. Mining wages are an integral part of the national wage structure; the daily wage of the miner can not be lifted much above the daily wage of workers in other industries. Wage scales above the prevailing levels bring in more men, where there are already too many, to accomplish in a shorter time the work which already offers too much idleness, and to divide among still more men the annual earnings which are now too small. (R. 177-178.)

Ten years ago the Fuel Administration, after an examination of costs and with due regard to the consumer, fixed prices averaging 80 cents a ton above the present market. So a present dictator must conduct the business with $400,000,000 less return than the operators were declared entitled to 10 years ago or must advance prices to the consumer. (R. 178.)

In addition to these problems, the question remains, What shall be done with coal railroads, collier fleets, docks, and other enterprises now existing and dependent upon the industry? (R. 178.)

The present problem of control is basically one of flood control, due to the excess of productive capacity, which holds more mines in operation than can be profitably sustained and more men than can be fully employed, producing more coal than can be adequately sold. Anyone may be pardoned his inability to see clearly how a hasty levee of political sandbags will sustain this economic flood. (R. 179.)

We must fight our way back to economic health without the quick and easy remedies of dictatorship. (R. 179.)

Coal operators, although paying the highest wages, mining by the most advanced methods, and selling the coal at a lower cost than it is sold in any other section of the world, have been assailed for "inefficiency." (R. 179.)

The coal industry must look largely to self-government, and the keys to the quickest relief are in its own hands. Closer cooperation between districts, mergers of existing properties, a new attitude of mind, can all be vital elements in the cure of the industry, and the greatest of these is a new attitude of mind. Mergers, especially in the ownership of natural resources, require difficult appraisals and prolonged negotiations. (R. 179.)

National Coal Association, by E. L. Greever, attorney, Tazewell, Va.:

If the committee so desired, operators can be procured from every one of the 91 mining districts in the United States; but the National Coal Association is in a position, because of its nation-wide contacts, to express the general predominant opinion of the bituminous industry on this subject. The last annual meeting of the association in November, attended by several hundred operators, adopted unanimously a resolution condemning the bill. (R. 181.)

Its opposition to S. 4490 is based not upon a desire to obstruct but upon its belief that the bill is not sound from a constitutional or an economic standpoint, and it feels that it is its duty to give to the committee the reasons for its opposition. (R. 182.)

Since the production of coal is not interstate commerce, the adoption of this bill would constitute a wide departure from all former theories and practices and would give the Federal Government a control over the production of coal which it has never heretofore had and which it has always been believed it never could have. (R. 182.)

It would constitute a precedent under which all industry would pass under like control. (R. 182.)

No assurance can be given of competent and efficient management. It would result in great expense and would lessen efficiency in the production of coal, causing an increased cost of production, all of which consumers would have to pay. (R. 182.)

The events leading up to the present situation are summarized: During and immediately following the war, coal production was affected by many disturbed and abnormal conditions-greatly increased demand both at home and abroad, strike following strike, shortage of cars, and other transportation difficulties. Under these conditions potential capacity greatly increased; the nonunion districts became able to supply the total demand of the country. Since 1923 transportation facilities have been adequate, there have been no strikes, many mines in the union districts have changed to a nonunion basis, and the strike has lost its power to decrease production. This sudden freeing of the industry from former restrictions on production found operating mines with a potential capacity vastly greater than the market could absorb. As productive capacity increased the normal expansion in consumption was checked by improved preparation of coal, improved methods of combustion, and improved machinery. Such economies, for example, reduced requirements of steamdriven public utilities in 1927, 31,000,000 tons, compared with consumption at the 1919 rate; and of railroads, 42,000,000 tons, compared with the 1920 rate; and similar reductions in all forms of industry, although no figures are available on the latter. The use of substitutes for coal is increasing, such as water power, which displaces at least 31,000,000 tons, fuel oil, which displaces 110,000,000 tons of coal, and also the rapidly expanding use of natural gas. The determinable loss of market amounts to 215,000,000 tons, with other undeterminable losses from similar causes nearly as great. In 1913, 70 per cent of the power generated in this country was produced by bituminous coal; in 1927, 55 per cent. Under these conditions the law of supply and demand and competition drove the price of coal down to the present low level. (R. 182, 183, 184.)

It is no easy task for the industry to adapt itself to such rapidly changing conditions, so extreme in their nature. There is no justification for much of the criticism against coal producers; they are actually keen and resourceful business men, and their progress in mining methods, preparation of coal, and efficiency and economy generally, can hardly be equalled in any other line of business. (R. 184.)

The price of coal received by the producer can not be increased except by lessening the market pressure of excess productive capacity. No Federal power can control or lessen competition with such a productive capacity constantly seeking a market; the situation can only be met by the industry itself. (R. 184.)

The charges that the bituminous coal industry is demoralized and in a chaotic condition mean nothing more than that too much coal is produced. It is recognized by everyone that the alleged cut-throat competition is due solely to the production situation; and there would be no such competition in bituminous coal under any other circumstances. (R. 184.)

The only remedy is to reduce the pressure of excess productive capacity by one of two ways:

(a) By the industry itself in accord with economic laws, with the aid of associational work, including trade practice standards and trade practice conferences with the Federal Trade Commission;

(b) By drastic governmental intervention and control as advocated by the proponents of the bill. Presumably licenses would not be granted to all applicants; if they were, the fundamental difficulty would not be removed. The very first act of the proposed commission, by refusing licenses to operating companies, would be to "take"—that is, destroy-private property without due process of law. (R. 185.)

In determining from a practical standpoint whether or not the bill is desirable and beneficial legislation, regard is to be had as to what it would actually do. A short analysis of the bill, section by section, will develop the objections thereto :

Section 1 creates a bituminous coal commission, leaving out all other coal and all competing fuels. (R. 185.)

Section 2 provides for a bargain between the Government and coal producers, the producer receiving certain legal favors in return for the surrender of the right to conduct his own business. The Government should never grant special favors in consideration of the surrender of private rights. The object is to secure absolute Government control over private business by making the privilege of fixing prices so valuable as to make the surrender of private control imperative. One class of citizens could not contract under the same law as another in fixing the price of their coal. The privileges ostensibly granted are subject to the limitation: (1) The applicant must accept the provisions of the act and comply with regulations of the commission; (2) the commission is given authority to inquire into all matters touching the mining and shipping of coal; and (3) the commission reserves the power to fix maximum prices. So restricted the operator is assured of nothing. (R. 185-186.)

Section 3 makes the commission practically the manager of the corpus of the operator's property since sale, merger, or consolidation is prohibited without a license from the commission. This restriction on ownership becomes effective whether the owner accepts the provisions of the act or not. (R. 186.)

Section 4 further controls the rights of those "accepting" by giving the commission general control over them. In considering requests for license the commission may inquire into all matters relative to the mining and shipping of coal by the applicant, including quality, wages paid miners, costs, capital invested, and reasonableness of prices. This must be construed as giving the commission unrestricted power to refuse any application for license on the commission's disapproving any of the things mentioned. The commission may "require" applicant to provide direct selling agencies for direct sale to the consumer whether it desires to enter that business or not. Thus no license can be obtained when the commission sees fit to refuse it, and so the power and dominion over coal properties and their operation would pass to the commission. (R. 186, 187.)

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Section 5 amplifies the power of fixing maximum prices at which coal may be sold by marketing pools and other licensees. (R. 187.)

Section 6 prohibits corporations from entering the bituminous coal business without a license. It also provides that an existing corporation to obtain primary license must file its application and acceptance of the act "within three months after the act goes into effect." The declared purpose in thus fixing the time limit, as stated by Mr. Lewis, is to prevent a test of the act by litigation. This is plain intimidation. Not satisfied with taking away from owners the control and management of their property and business, an attempt is made also to take away their 'day in court." Legislative tyranny could go no further. (R. 187.)

Section 7 authorizes the commission to recommend methods, inventions, and devices for safety and economics in mining operations, to zone the country and allot markets to definite producers, and to govern furnishing fuel to the railroads, forbidding them their freedom of contract with coal producers. This section then gives a monopoly of mine labor to the miners' union and to do so goes to the unheard-of length of abrogating and making illegal all individual contracts of service containing a provision that the employee shall not join a union, thus embodying a prohibition against the freedom of contract for services which has always existed, has been regarded as a priceless possession of the workingman, and has been repeatedly stamped with approval by the Supreme Court of the United States. (R. 187, 188.)