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stated that they can see no correction of the prevailing destructive forces, except through the medium of Government regulations.
Some operators will come before this committee and advocate amendments to the Sherman law, to permit the organization of selling pools, free to operate as the operators may decide, without any form of Government regulation. But I am quite sure that the American public is not ready to permit the incompetence and piracy such as the coal industry has manifested in the past to exercise a free rein over such vast and basically necessary resources as our coal reserves without maintaining Government regulation.
At the present time we are consuming millions of tons of specialpurpose coal annually for steam and domestic uses that should be held in reserve. For let it be known that our high-grade coals can not be linked with the aggregate coal deposits about which America is so proud to boast. These deposits are exhaustible, and at the present rapid rate of misuse, added to the criminal waste in recovery under our present mining methods, we will reach that state of depletion before many years that will cause our Government conservationists to wonder how the unconcern of an enlightened people could have suffered the execution of such an extravagant onslaught of a natural resource so valuable as our special-purpose coals.
The United Mine Workers hold that the public welfare demands Government regulation of the bituminous coal industry.
It is our opinion that the necessity for Government control was clearly proved by the testimony before this committee during the last session of this Congress.
The mere existence of some court decision that might becloud the right of the Government to assume regulatory powers is no indicator of the practicality and desirability of Government control. Laws can be enacted that will enable the Government to assume regulation, whereby uneconomic mines will be eliminated, healthy competition promoted, an American type of labor regulations established, conservation of special-purpose coals assured, and the public guaranteed a continuity of a fair-priced coal supply. Industrial America can not afford the price that the cancerous condition of coal will eventually levy as a result of its maladjustment to American enterprise. The interdependence of our separate industrial units, and the necessity for evenly distributed progress is recognized by President Elect Hoover, when he said:
Behind every job is a vast, intricate, and delicately adjusted system of interlocked industries dependent upon skilled leadership. The forces of credit, ccmmunications, transportation, power, foreign relations, and what not must all be kept in tune. Break this chain of relationship at any point and the whole machine is thrown out of order,
Certainly no one will claim for coal the smooth functioning that President Elect Hoover deems essential on the part of each industrial unit to the accumulative success of all American industry.
The testimony before your full committee failed to develop any plan, save Government regulation, as a means of eliminating the primitive management and the substitution of intelligent direction. Some few operators assented to Government control, but many, fearful of what the other fellow would think of their surrender to Government, dissented. It remained for a large consumer who has
to deal with a subsidiary produced coal, as well as to make purchases from hundreds of operators in various States, to admit frankly that Government regulation was the solution.
Wm. C. Bower, purchasing agent of the New York Central Railroad, by reason of the benefits he knew resulted from Government regulation of railroads, testified as follows:
Senator WAGNER. Have you thought about a possible remedy, something to bring about a situation where the operators would get a fair return on their investment and the miners get a wage which we call a living wage, so they would be free from exploitation? Have you thought of a remedy to solve that problem?
Mr. BOWER. Senator, I have been here since the beginning of the hearing, and I think the best solution would be to form a coal commission, something like the Interstate Commerce Commission; and give that commission the right to permit consolidation of coal companies, and their operation under their supervision.
Gentlemen, are we not really indulging in conversation about. ancient history when we discuss the need for governmental regulation of coal as if it were any longer a matter of choice? The decision has already been made. Coal is already regulated in one sense, regulated toward waste, anarchy, and chaos by the creation of an unbalanced relationship between a producing industry under economic laissez-faire and consuming industries regulated by Government and buttressed by governmental safeguards and implied public support and authority.
To continue such a relationship is to put the lion and the frightened witless lambs in the same cage.
The Federal Government has brought into existence a quasi public railroad industry and the State governments have created public utility industries which are virtually arms and branches of government, with the arms and branches sometimes running the show.
These two quasi public industries are buyers of 35 per cent of all soft coal mined. In most price situations the marginal 5 per cent or less determines the price level. It is proposed to control the level of agricultural prices by control of the exportable surpluses of certain crops, the experts being but a small percentage of total production as to some of them. That is evidence enough of the complete control of coal which has already been set up, a control with no safeguards for that industry or the public It is a dictatorship by the organized and regulated buyer which determines the prices of coal for all consumers, a dictatorship which has demonstrated the power of life and death over many of the units of the industry, a large majority in fact.
Recognizing the failure of the coal industry to adjust its own affairs, the two major political parties incorporated platform planks pledging correction and helpful legislation. To refresh our memories on these party declarations, let us reproduce here the platform. planks:
The Republican Party platform declared: The party is anxious, hopeful, and willing to assist in any feasible plan for the stabilization of the coal-mining industry which will work with justice to the miners, consumers, and producers.
Senator WHEELER. That was before election,
Mr. LEWIS. The Democratic Party platform declared :
Bituminous coal is not only the common base of manufacture, but it is a vital agency in our interstate transportation. The demoralization of this industry, its labor conflicts and distress, its waste of a natural resource and disordered public service demand constructive legislation that will allow capital and labor a fair share of prosperity with adequate protection to the consuming public.
The CHAIRMAN. Good.
Senator WHEELER. The Democrats are here to carry out that plank.
Mr. LEWIS. Direct examination of the ills of the coal industry has enabled the United Mine Workers to present the plight of coal to this committee intrusted with the decision of protecting the public welfare in matters affecting interstate commerce.
Despite the baseless demand for “ less government in business," the United Mine Workers insist that it is a governmental duty to accept in law, as well as in theory, the universally accepted fact that coal is a public utility, and enact the necessary legislation providing sound Government regulation. I believe the Watson bill now being considered meets the first requirements.
I do not believe that this bill seeks to bestow any new powers upon the Government, as it merely provides for a wider and more intelligent use of the present powers of Government over public utilities by promoting and protecting the public interest in coal to the same degree that has been reflected in transportation through the regulạtory powers vested in the Interstate Commerce Commission.
I can find nothing new or revolutionary in the bill now up for consideration. The bill simply embodies the expressed belief of many witnesses who have already testified before your committee that Government participation should be in the form of a coal commission, a somewhat similar structure to that of the Interstate Commerce Commission. The basic powers of the commission would be:
1. License and regulate coal corporations, partnerships, and firms engaged in interstate commerce.
2. Mergers and consolidations are permitted, in fact encouraged, but are in nowise compulsory; likewise, selling pools and marketing agencies all to be under regulation of the Federal coal commission.
3. The bill in no manner seeks to destroy property rights or impair contract obligations.
4. The whole theory of the bill is that relief to the coal industry, both miners and operators, as well as fair play to the public, must come through stabilization of the industry.
The benefits to be derived from Government regulation of the coal industry may be briefly summarized as follows:
1. Prohibit the shipment of coal on consignment that gluts markets and depresses prices.
2. Remove the conditions that foment futile competition and results in coal companies selling capital assets and labor,
3. Revamp the bituminous coal industry on American business standards.
4. Restore to coal miners throughout the United States their constitutional guarantees.
5. Uniform standards of safety and working conditions.
On behalf of the membership of the United Mine Workers of America, and also on behalf of the thousands who are compelled to toil in the coal mines of many States and are denied their constitutional guarantees, I commend Senate bill 4490 to your committee for
favorable action as meeting the first requirements of Government regulation.
Senator WHEELER. I feel that in view of the fact that the Republican Party put that plank in there, we ought to pass the Watson bill out of this committee by an overwhelming majority in a very few days.
Mr. LEWIS. Senator, I think that is a very excellent suggestion.
Senator GOFF. Do you think that we should ignore entirely the Democratic platform?
Senator WHEELER. No, indeed. Speaking for all the Democrats, I know that they are all in favor of it.
Mr. Lewis. Senator, I have prepared just a brief analysis, paragraph by paragraph, of Senate bill 4490, which I could read into the record if it be of any value, just as to what the bill is.
The CHAIRMAN. Have you copies of that? Mr. LEWIS. Yes; I have enough for the committee. The CHAIRMAN. What have you there? Mr. Lewis. I have finished with my address, except this analysis of the bill, which is brief.
The CHAIRMAN. Yes. Now, does Mr. Warrum or one of your lawyers expect to take up and make a legal constitutional analysis of the provisions of this bill?
Mr. LEWIS. We are quite prepared to do that, Senator, at the convenience of this committee.
Senator WHEELER. I think it ought to be done. The CHAIRMAN. What have you there, Mr. Lewis? Mr. LEWIS. This is just a plain statement of what, in my opinion, the bill will do by paragraphs. This is not a legal argument at all. The CHAIRMAN. Very well. Senator Hawes. I think that ought to go into the record. The CHAIRMAN. It ought to go into the record; yes. If the committee wants to hear it now, we will be glad to hear it. You may proceed, Mr. Lewis.
Mr. LEWIS. This is an analysis of Senate bill 4490.
ANALYSIS OF SENATE BILL 4490
It has been repeatedly stated by members of the Senate committee, during the hearing, that adequate leg slation to benefit the bituminous industry should take the form of a Federal commission. This is so because in a general grant of power the commission could promụlgate rules and exerc'se a supervisory control better than could be accomplished by mere statutory regulations, and authority to relieve and stablize the bituminous industry must be coupled with power to protect the public.
The method of dealing with the subject through the license and regulation of corporations engaged in shipping and selling soft coal in interstate and foreign commerce, was resorted to because of the difficulty attending the exer(ise of congressional authority over mining as such. It is believed that Congress has implied authority to license and regulate corporations that engage in this interstate commerce and that by the exercise of this power such substantial relief will be granted and reforms accomplished as will tend to ultimately stabilize the industry and put it upon a rational basis.
SECTION 2 OF THE BILL
Section 2 provides for the formation of marketing pools under a license to be issued by the commission, for the purpose of avoiding the cut-throat competition that is now destroying the capital assets and deflating the labor
of the bituminous industry. In this section, persons and firms, as well as coroporations, are allowed to join such marketing associations under license. The privilege is given to individuals and partnerships engaged in shipping bituminous coal in interstate commerce in order to avoid any question that such individual shippers have been deprived of privileges granted to corporations. In all other matters the bill deals strictly with corporations as such,
Whille the bill provides later for mergers and consolidations, it is no doubt true that many operators may prefer to continue their separate ope tions, and in many cases they have no opportunity to join or form actual mergers or consolidations. In such a case they are allowed to form marketing pools under the control of the commission as to the maximum prices without fear of violating the antitrust statutes.
Section 3 permits the merger or consolidation of two or more corporations engaged in shipping bituminous coal in interstate commerce with the license and consent of the commission and without regard to the antitrust laws. Such combinations are going on throughout the industry and they naturally make for economical operation and distribution, serving both themselves and the public; but the bituminous coal industry has been backward in this respect for many reasons, among which is the fear of the antitrust laws among the operators and in the investment houses that are sought to promote such mergers.
Section 4 provides specifically for the control by the commission over such marketing pools or mergers, giving the commission authority to make investigation before license is issued, and, among others, to inquire into the marketing facilities of such pools or mergers to the end that the public shall be as directly served as possible, with an elimination of the spread of profits" that now marks the sale of bituminous coal.
The commisson is given authority in such case to fix the maximum price. It is believed that the price itself may not be fixed, that is, the minimum price; but the power to fix the maximum is exercised for the public benefit and is a check on monopolistic practices. These maximum prices are fixed upon hearing, in which the various factors of production and distribution are inquired into. To preserve members of the marketing pool or the merger from a confiscatory maximum price, a right of judicial review is given in accordance with the practices in such cases.
Section 6 provides that no corporation not engaged in shipping coal at the time the act goes into effect shall be permitted to engage in shipping such coal until it has taken out a license and accepted the control of the commission. It is provided, however, that any corporation already shipping coal at the time the act goes into effect may enjoy the provisions of the act and the benefit of the commission control by taking out such license; provided it does so within three months after the act goes into effect. This time limit is fixed for existing corporations to avail themselves of the privilege of a primary license in order that no such corporation can engage in litigation over the act, with the understanding that they are free at any time to apply for the primary license.
The theory of the act is to consider such corporations as comprising two groups; the first group containing new corporations and those that elect to join marketing pools or to merge or consolidate; and the second group is of corporations already exercising the corporate right and franchise of shipping bituminous coal in interstate commerce and who do not elect to join a marketing pool or to merge or consolidate with other corporations.
These two groups are suggested by the legal rights which may be claimed by corporations in either the one or the other group. In the first group the corporation assumes to exercise a new right or to form a new artificial person (corporation) by merger or consolidation, and it is believed that as to such corporations Congress has a more or less free hand in their regulation. In the second group, namely, of corporations already shipping coal, such corporations