STATEMENT OF RODERICK STEPHENS, CHAIRMAN GOVERNMENTAL RELATIONS COMMITTEE, NATIONAL RETAIL COAL MERCHANTS' ASSOCIATION

Mr. STEPHENS. Senator Wheeler, I think I will avail myself of your courteous offer and be seated. I am not an attorney, and I can probably speak more freely when I am seated.

I have prepared a statement of our position under two heads; first, a discussion of the bill, section by section. Incidentally, it will not be lengthy but contains a very brief summary of our objections to this bill, although we do go on record here and now as being opposed to the bill.

Proceeding with the discussion of the bill, section 1 creates a bituminous coal commission, and we ask why a bituminous coal commission? Why not an anthracite commission, an oil commission, or numerous other commodity commissions? Is Congress going to establish a commission to regulate business in every commodity where the supply of the commodity is in excess of demand or where a surplus of labor exists? We are opposed to any legislative program, generally on the grounds that it is patronalistic, unsound, uneconomic, and will substitute a Federal bureaucracy for individual initiative, and specifically, because, as proposed, it is unwarranted class legislation, preferential and unfair.

Section 2 permits marketing pools, cooperative selling associations for the purpose of agreeing on the market prices of soft coal; provides for licensing subject to acceptance of provisions of the act-commission to fix maximum prices.

Equivalent to a waiver of the Sherman and Clayton Acts in favor of producers in a specific branch of one commodity industry, itself a part of the general fuel industry.

Licensing feature represents a dangerous policy for the Government to embark upon. It is an attempt to remedy conditions arising out of war-time stimulation of demand, by legislation. Is the Federal Government to bolster up all natural resource industries by encouraging systematic restriction of production, and artificial increase in prices to the public? I believe I am right, am I not, when I assume that every existing producer of soft coal would be entitled to avail himself of the provisions of this act? If this legislation is intended to help producers of soft coal, such a thing might conceivably happen and with what result? The Government would find itself in the embarrassing predicament of having made itself a party to the perpetuation, by Federal license, of the very evil that it is presumed to be attempting to correct.

It amounts to an agreement between the Federal Government and United Mine Workers that the Government will make itself a party to a program of higher prices to be paid by the public to enable producers to support a surplus of mines and a surplus of labor, working part time for full profits and full wages.

Section 3 prevents mergers, except among corporations accepting jurisdiction of Bituminous Coal Commission and all provisions of S. 4490.

This constitutes an unwarranted limitation of the rights of business to merge under existing laws. It is equivalent to an attempt to force acceptance of Federal regulation, by denial of existing rights.

Section 4 extends the jurisdiction of the Bituminous Coal Commission to production, transportation, quality, wages to miners, prices, and extends such jurisdiction into the field of retailing.

The effect of this section would be to induce the formation of vertical trusts under Federal jurisdiction and would bring the retailer, now doing business in intrastate commerce, into competition with direct selling agencies under governmental patronage. This would create an unprecedented condition and would make a very embarrassing and dangerous economic situation.

Senator WHEELER. In what respect?

Mr. STEPHENS. You would create in a consumer market, in a retail market, two groups of retailers; one group affiliated with a marketing organization or a selling pool, with prices fixed by the Federal Government. The product which that retailing organization would distribute would be the product mined by those operating under what I would call a primary license provided under this bill at fixed prices. Other independent retailers would be buying from producers who had accepted only a secondary licensing provision with no fixation of price; two groups of retailers, one operating freely and the other operating under restrictions; and, in my opinion, it would make a very embarrassing and uneconomic provision.

Section 5 authorizes governmental control of selling prices of soft coal, with specific provision for equal representation of United Mine Workers with the producers, in conjunction with the commission.

It is a dangerously radical provision to accord labor such rights, in connection with the determination of profits and selling prices. Why is there no provision for equal representation of the public? Apparently it is intended that a committee of three parties shall be created to fix wages first, then to determine costs and allowable profits, on the basis of which figures the price shall then be fixed to the public. Labor hereby obtains the right to enter into a discussion of capital, improvements, costs, and policies, valuation of property, administration costs and methods, operating costs and methods. Determination of wages and of allowable profits will become a political matter, encouraging bargaining and trading between the three groups: Producers, union labor, and political appointees.

This section provides for the fixation of maximum prices, which shall provide fair wages for labor and a fair return to capital. Impliedly these so-called maximum prices will yield no more than a fair return on capital invested. The wages fixed will be minimum wages. Interpolating here, I ask whether this provision means a fair day's wage for labor or a fair annual wage. If the former, then this provision is a sham for a man can not support his family on a fair day's wage unless he is also guaranteed continuous employment. These maximum prices, yielding only a fair return on capital must become minimum prices also, or the provision for a fair return on capital also is a pretense and a sham. Therefore, this bill purports to guarantee capital a fair return and labor a fair wage, not on a daily basis, but throughout the life of the act, and this without limitation of the number of corporations, who may elect to become licensees of the Bituminous Coal Commission with respect to their productive capacity, the number of wage earners they may employ, or the state of the market for bituminous coal. I submit that this program can

only lead to disaster for the soft coal industry and will discredit any Member of Congress who lends himself to this unworkable, socialistic scheme of doubtful paternity.

Senator WHEELER. I do not think the retail coal operators ought to worry about the effect it will have upon the Member of Congress. I think most of us will feel that we are better able to judge that than the retail coal dealers of the country.

Mr. STEPHENS. Section 6 provides that no new corporation may engage in interstate commerce in bituminous coal without consenting to the jurisdiction of the Federal Government, and existing corpora- tions are given only 90 days to elect whether to accept the primary license feature of this act.

This represents a dangerously radical theory of Government. Under what provision of our Constitution is the Federal Government empowered to say who shall engage in interstate commerce and what commodity they may produce or distribute? Why bituminous coal to the exclusion of all other commodities?

Why a 90-day period? Why not accord the privilege, if it be a privilege, at any time during the life of the act? This provision looks queer. We see no justification for this requirement of haste. Section 7 provides that the commission shall supervise, encourage, and promote interstate commerce in bituminous coal, and that it shall recommend means of enhancing safety and attaining economies in mining operation.

This gives the commission blanket authority to enter into every phase of problem of the producing branch of the soft-coal industry. If it is to be helpful, why not help, similarly, other industries? If detrimental, why pick on the already "sick" bituminous industry? Section 8 provides for revocation of license to ship bituminous coal for failure to comply with provision of the act or any rules or regulations of the commission.

Section 9 provides penalties for illegal shipments of bituminous coal.

With respect to these two provisions we ask, on what grounds will the right to ship coal be denied? Because a producer is charging more than the maximum price set by the commission? If so, why deny the right to sell if the producer can convince his customer that his coal is worth more than the price set by the commission? Is the Federal Government setting a minimum price, and is the right to ship to be denied because the producer is selling for less than the price set by the commission? Or is the right to ship to be denied for failure to pay the wage level set by the commission? If that is the real reason, why not try to pass a minimum wage law for bituminous coal, and if it proves constitutional, you will next have to pass a national minimum wage law. What is the reason for requiring a decision with respect to a primary license within 90 days? This is Government regulation running wild. Section 10 requires secondary licenses.

This requirement is conditional on abrogation of rights to employ nonunion labor and requires that annual reports shall be filed with the commission, and that such reports to be made in the manner prescribed by the commission. Every producer of soft coal must obtain secondary license or go out of business, and such license can

be revoked on a 30 days' notice. This is equivalent to a “union labor law" in the bituminous-coal industry. If such legislation is constitutional, its passage will be a clear invitation to union labor to secure such legislation affecting every industry in the Nation.

Section 11 provides that Bituminous Coal Commission shall determine whether or not a carrier may build any new siding or switch to serve any bituminous coal operation.

How can this be justified as regards soft coal if not equally proper with respect to any industry that can show Congress that supply is in excess of demand?

Section 12 discusses the question of the unconstitutionality of the act. I am not a lawyer and am not going to present any argument on that point beyond what I have already expressed. I believe that point will be covered adequately by members of the legal profession who will appear before the committee. With your permission, Senator, I will proceed to our summary of objections to the bill.

Why should the bituminous coal industry be legislated for or against? Is there a shortage of supply creating an emergency involving public health, welfare, or safety? The answer is, "No." On the contrary, supply is in excess of demand. Is the public welfare threatened by excessive prices and is it intended to force prices downward in the public interest by legislation? Again the answer is "No." Senator WHEELER. When you are speaking of the public, do you mean the householder?

Mr. STEPHENS. Yes; the apartment householder industry. The public pays the bill wherever it goes, whether into industries or homes.

Senator WHEELER. You are a retailer. Why is it that the retailer; for instance, the person who buys 30 tons of coal a year, has to pay such a tremendously higher price than the railroads are paying for their coal?

Mr. STEPHENS. Because the individual householder does not burn the same kind of coal that the railroads burn.

Senator WHEELER. There was some evidence in the record as to what it costs to produce coal in the Pittsburgh district. I do not remember the exact figures. The testimony showed that while it was produced right near Pittsburgh, when it came down to town it was retailed by the retailer at a cost of $7 or $8 more than the price at which it was being sold to the railroads.

Mr. STEPHENS. I do not think that the total price to the individual consumer of soft coal within a reasonable radius of the mine is as much as $8 a ton. So the difference can not be any such amount as that.

Senator WHEELER. I may be mistaken. I know it rather shocked the committee to learn the figures at the time.

Mr. STEPHENS. If a railroad shipped its coal to a retail plant and that coal had to be unloaded into that plant, handled in trucks, trucked over the streets and dumped and then labor furnished to move it to its final destination, the price that the railroad paid would be substantially that paid by the householder.

Senator WHEELER. My recollection is that the evidence showed that it cost more to unload coal and get it into the basement of a house than it did to mine a ton of coal.

Mr. STEPHENS. Speaking of soft coal, it undoubtedly does.
Senator WHEELER. Why is that?

Mr. STEPHENS. Because of the numerous operations

Senator WHEELER (interposing). Of the retailer?

Mr. STEPHENS. Of the retailer.

Senator WHEELER. That is one thing that I was coming to. Let me ask you if it is not a fact that in your judgment there are entirely too many retailers in the coal business?

Mr. STEPHENS. Unquestionably yes, Senator; and if it is going to be a Government function to regulate such matters, we would like to come down here before you and have you eliminate some of our competitors.

Senator WHEELER. I do not know that we can eliminate some

of your competitors. I thought you represented the retail coal dealers.

Mr. STEPHENS. I do, yes; but all of us would like to see some of our other competitors eliminated. We do not want to be elim

inated ourselves.

Senator WHEELER. You are a coal retailer yourself?

Mr. STEPHENS. Yes, sir.

Senator WHEELER. I thought you were just an officer of the association,

Mr. STEPHENS. No, sir; I am vice president of the Stephens Fuel Co. of New York City. I have not been in business since 1853 but our company has.

Senator WHEELER. I should judge that you have not been.

Senator GoFF. Mr. Stephens, I want to ask you a question at this point. Have you computed the cost of the middleman, using that term in the broadest generic sense that it admits of, in the retailing of coal?

Mr. STEPHENS. Of course, Senator Goff, we can not compute their cost because we are not wholesalers ourselves, and for that reason we do not know the intimate details of their business, but the wholesale commission to-day seldom if ever exceeds 20 cents a ton, and wholesaling to-day is being done as low as 10 cents a ton, which would represent, presumably, their cost and some profit, if they are making any profit.

Senator WHEELER. Can you tell me of any coal that is being so purchased by the customers that buy for homes?

Mr. STEPHENS. My information on that point comes more from the record of testimony which has been presented before this committee and before other committees.

Senator WHEELER. There is no testimony before this committee that any housewife or any person buying it for the home has purchased it below cost.

Mr. STEPHENS. No, sir; there is none. I say the public foots the bill whether it goes through industry and they pay it in cost of products. or whether it goes to utilities and they pay it in cost of rates. The public pays the bills.

Senator WHEELER. If your theory of that were correct, then it would not make a particle of difference how all the coal went or how much the railroads or manufacturers paid for coal. The public would get the benefit of it.