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and forces are not a passing thing of to-day; they are a constant factor, constantly growing. It is a constant fact, for example, that the Nation can not consume the potential output of coal. We can not hope that consumption will ever catch up with maximum production. Overdevelopment we have with us as a fixed fact. It is not a new problem. Several years ago the experiment of a series of suspensions was tried "to deplete an overstocked market.” At that time the miners worked but a few days each week, and the Ohio report of that period gave their annual earnings as less than $375. Thus the miners themselves made their own contribution to solving the problems of coal. They made the sacrifice at heavy cost to themselves. And they made the sacrifice in vain, for the evils went right on.
Overdevelopment or underconsumption, whichever you choose to call it, is with us year in and year out. For years it has been the chief menace to the industry, and for years the problem has never been approached and tackled. I have long believed that one apparently simple way to remove overdevelopment would be the closing of the less profitable mines, the industry absorbing and conserving the coal in these at present high-cost mines. I say the way is only apparently simple, because it is impossible to induce the owners of these less profitable mines to accept a loss, and neither will the industry at large tax itself by a small immediate amount to effect this large ultimate gain.
The fact remains, nevertheless, that if the warring elements were brought together, if disastrous competition were to cease, if unity prevailed and a sane, practicable workable method of cooperation were established, the evil of overdevelopment in the mining of coal could be stopped.
Taking the existing overdevelopment in bituminous coal for what it is, the poorly productive and superfluous mines are innocently contributing to a condition of disorder and unrest that has every legal right to exist, though in my opinion not a moral leg to stand upon. I need not call the Senator's attention to the fact that we have no legal or constitutional right to compel the owners of these superfluous mines to cease the operation of their properties. It has been estimated that it costs the industry more than $100,000,000 to carry this waste of superfluous mines. But as coal lands are often taxed on a valuation of $500 to $600 an acre, the owners of these mines are driven to run them if only to pay the taxes.
We do have an ethical right to ask the industry to absorb these mines. If that will not avail, the menace will have to yield in the end to inexorable economic law and the ancient rule of the survival of the fittest. By that rule, the owners of these superfluous mines stand to lose all' in the end, where the industry could save them that by a payment of a reasonable sum to go out of business now. Thus the owners of these superfluous mines should present no insuperable obstacle to stabilization of the industry. Again the failure is one of a lack of initiative and leadership.
The secretary of the National Coal Association in a circular, the other day, sent out to its membership pointed out that they had
800,000 tons of unbilled coal on railroad sidings at mines. Do you wonder, then, Senators, why it is that we have this everlasting beating down of the price of coal? Anything that affects the treasury of the coal company affects the pay envelope of the worker.
To prove the uneconomic conditions of bituminous coal, let me quote here from my address to the American Mining Congress on December 10, 1925. It applies to Illinois, and it is applicable to the entire coal industry:
I am informed by the United States Bureau of Labor Statistics that in Illinois there are 338 coal mines with railroad tipples aside from the 694 local wagon mines. The 338 shipping mines operated, on an average, 139 days in the year. As a matter of fact, only 55 per cent of them operated for even that average of 139 days, and 10 per cent operated for only 60 days during the year. Yet if the largest 84 of these 338 mines in Illinois had been operated for 300 days during the year, they could have produced 77,733.800 tons of coal, or 7,000,000 tons more than all the shipping mines did produce in 1924, and 5,000,000 tons more than was produced by both the shipping and local wagon mines in the same year.
The meaning of this is that 253 of the 338 principal mines in a single State represent, as capital invested, an unnecessary expenditure of money, and they prevented the necessary number of mines from producing an adequate amount of coal, with the necessary number of men employed for a reasonable number of days during the year.
The turnover in the coal mines of Illinois is 85 per cent. Conditions like this are not confined to any particular State and can only result in unprofitable returns.
Let me also quote to you the proportionate loss in man-days in the industry, as set forth by the Geological Survey:
In 23 years, 1900 to 1922, 207,414,000 man-days were lost as a result of strikes in the coal fields, the bulk of the loss being due to suspensions during wage negotiations. But in the same period, in the same fields, 1,282,670,000 man-days were lost through other causes. In other words, 14 per cent of the loss in the bituminous mining field for 23 years was due to strikes, and 86 per cent to other causes--no markets, car shortage, mine disabilities, etc. These calculations are on the basis of a workable year of 308 days.
This loss of a billion and a quarter man-days in a score of years, from causes other than strikes, makes the strike loss look small by comparison. And with this lost time, while we hear a lot of noise about coal shortage in every strike, the Nation goes on, and after a settlement we always catch up in coal production.
Our annual output of bituminous coal at the begining of the twentieth century was about 212,000,000 tons. To-day it is approximately 525,000,000 tons in a normal year.
In 1926 the survey shows the daily average capacity was equivalent to 821,000,000 tons for a full-time year. Our national industries and domestic needs require a little more than 500,000,000 tons of soft coal per year.
With mines, men, and equipment capable of producing in 1926 nearly 300,000,000 million tons more than our requirements, is it any wonder that the bituminous coal business as a whole is faced with the most serious problem present in any American industry.
Regarding the fact of “arrested demand” for coal because of the increasing use of other sources of energy-oil, gas, and water power, coupled with “fuel economy” brought about by efficiency of fuel utilization, the Geological Survey shows that “ the use of fuel oil and crude oil burned direct as fuel increased from 296,000,000 barrels in 1920 to 411,000,000 barrels in 1925.” This increase is equivalent to a loss of 30,000,000 tons of coal. Dr. S. A. Taylor, of Pittsburgh, an authority on coal and a close student of economics, gives a very cleancut statement of the increasing introduction of substitutes and of the decrease caused by the more efficient use of coal. And I would
suggest to you gentlemen that it would be well to invite Doctor Taylor to come before you. Doctor Taylor says:
The amount of coal necessary to produce a kilowatt-hour of power or its equivalent was, under the old conditions, close to 442 pounds, while in the large central power plants a kilowatt-hour is now produced with about 142 pounds of coal, or even less. Savings of coal in this way this year will amount to about 125,000,000 tons. The pursuit of economy in coke making also reduced the amount of coal used.
In 1925 the yield of gas available for use in lieu of coal was equal to 35,000,000 tons, and it is estimated that this has increased now to about 40,000,000 tons of coal displaced. The use of coal tars instead of coal, by the steel compavies in 1925, was equal to 15,000,000 tons, and at the present time would be considerably more than that amount. Using crude oil for heating instead of coal, further displaced 200,000,000 tons of coal. Steamships and railroads cut down the use of coal through economies, use of fuel oil and substitution of electricity resulting in 1925 to around 65,000,000 tons less than would have been used had the methods of 1910 been continued. The railroads saved close to 70,000,000 tons this year over 1910. All these savings and substitutions amount to 415,000,000 tons.
If these improvements in the use of coal had not been in effect, the demand for coal would absorb the full productive capacity of our mines to-day. This reduction of the market by nearly half is the pinch felt by the operators and miners alike.
But the operators are constantly introducing labor-saving machinery into the mines. With this new machinery the productive power grows. That lessens the number of miners to produce it. We now have in the bituminous coal mining industry 240,000 more miners than is needed. With the spread of labor-saving machinery I am of the opinion that from 50,000 to 100,000 more will be dropped.
As an indication of the advance of labor-saving machinery, it may be pointed out that in 1900 24.9 per cent of all the coal mined was mined by machinery, while in 1926 71.7 per cent was mined by machinery. The pick miner is rapidly disappearing.
A great public benefit will result from these improvements, because it is conserving coal, and in the end is going to lower the price of coal. Ultimately, I believe, the propagation of by-products will take up a lot of the men now displaced in mining.
Here we have one of America's greatest industries with over ten billions of dollars invested in it and more than 3,000,000 people dependent on it for a livelihood. There are over 9,000 bituminous coal mines with 7,011 of them active. The 7,011 mines have a capacity, with the existing force of employees working 308 days a year, of 821,000,000 tons of coal. I believe that a complete survey would show a capacity of a billion tons. Our consuming market is around 500,000,000 tons.
Coal operators from certain districts have talked with me about the appropriation already made by Congress of $1,000,000 to recondition certain ships to haul coal, and say that if they could get their coal to the ports at a reduced rate, that would create an export market of 10,000,000 tons in addition to the present market.
As I see it, the only way out is to consolidate the present companies. If the number of corporations were reduced to 100 or 200 producing concerns, I believe there would still be reasonable competition.
The so-called captive mines, owned by the steel, glass, and automobile industries, have steadier work than the other mines. They
serve as an example of how coal can be produced- at a profit. We all know that the United States Steel Corporation even during the time the Jacksonville agreement was in effect paid more than was provided under that agreement. And it is safe to say that with proper leadership and organization within the industry, all coal could be produced as cheaply as in these captive mines. They show what can be done if we would eliminate all but reasonable competition.
It seems to me that there is trouble with coal in nearly all the countries. The secretary for mines in New South Wales, Australia, told me that he will not grant a permit to open a mine that has not a market for coal outside of the present market unless the miners are to come from an already producing mine.
The CHAIRMAN. Have they that kind of law in New South Wales?
Secretary Davis. Yes; that is, he is clothed with the authority to do what he told me was his policy. I am sure that you Senators, as well as the executive branch of the Government, are anxious to bring about stabilization in coal, so that it will enable the industry to earn reasonable profits for the operators and to pay a wage to the miners that will permit them to live according to our American standard. To bring about stabilization I believe the American people would not object, if it is necessary, to a modification of the antitrust laws, or to the establishment among the operators and miners themselves of a code of ethics and fair practices to guide the industry. What the public wants is a continuous flow of coal at reasonable prices.
While I went over the bill hastily when it was first introduced, I had not given much attention to it until your chairman called me the early part of the week and asked me to appear before your committee. The bill now is in the hands of the different officials of the Department of Labor, including the solicitor, for close study. And I have not discussed the matter with Mr. Lewis or with representatives of the operators, and before I express myself on the bill I would rather have a report from the officials of the department at least. The Solicitor for the Department of Labor is making a close study of the bill, and there are one or two phases of the proposed bill that I particularly desire our solicitor to advise me about.
I want to conclude by saying this: That I know the many obstacles to be overcome, the radical changes that will be necessary to accomplish this program. But the result-stable employment, stable output, stable markets-will mean satisfactory and constant employment for workers, satisfactory and profitable returns for operators, and a steady and regular flow of coal to supply the needs of industrial and domestic consumers.
In any plan of the character mentioned the earnest cooperation and aid of the rail and transportation companies, the manufacturing enterprises, and the public-utilities companies would be essential. But all of these and the interests of all our people would be tremendously benefited by a constructive plan that would "cure the ills" and result in the stabilization of this most important basic industry.
I think I have complied with your request, Mr. Chairman.
The CHAIRMAN. Have you ever consulted with the different persons interested in this industry, and do you know whether or not you care to give your opinion on the bill itself?
Secretary Davis. Well, I would not object to it; I have no objection to expressing myself on any public matters after I have acquainted myself with the facts, but I do not want to try to express myself on something that I know
very little about. Senator SACKETT. Mr. Chairman, may I have the Secretary for a moment or two? I would like to discuss certain questions with him.
The CHAIRMAN. Certainly, Senator.
Senator SACKETT. Mr. Secretary, I have not taken any part in this coal matter, because I have rather a personal interest in the coal business. But in your statement you show, rather particularly, two things: One is the great overproduction of coal in a normal way, and another is the great loss in the market that has taken place in the last 10 years
Secretary Davis (interposing). In the last 18 years. Senator SACKETT. In the last 18 years; and if it had not taken place the probability is that the business would have grown up to absorb the amount of coal produced.
Secretary Davis. Well, I quoted Professor Taylor on that.
Senator SACKETT. It was very keen, and showed the point very well, indeed. And now it is always difficult for the Federal Government to find a ground upon which it can interfere with these private businesses privately owned in these coal mines, and in one part of your statement you drew attention to the fact that the present methods of mining were extremely wasteful, which is a very true thing.
Have you considered the question whether the Government, through the operation of one of its departments, could take control of the method of mining a natural resource so as to assure to the future generations a saving of the greatest amount of that waste? For instance, some department, like the Bureau of Mines, having the right to consider the opening of every coal mine to insure the production of the coal in the least wasteful manner; and that the Government bureau could be extended to require any operator to follow the direction of that department before it produces coal?
It would be possible then, under that, to make an extreme case, to require the operation of the mine to consist of the driving of tunnels to the back end of the property, and that no room work or large production could take place until that tunnel were completed; and then the coal brought from the back to the mouth and the entire body of the coal removed. That is a method of mining which is practiced in some places, and which is very much more economical of the natural resource. The effect of that sort of production might be to remove what you might call “snow bird” mines, which frequently start up and mine the nearest coal and produce in great quantities for a short time, but have no stability in the market. It would have the effect of reducing this 40 or 50 per cent of coal left in a hill to 10 or 15 per cent, and at the same time give the Government, through the requirement which it should place upon the mining of coal, a very complete control of the number of mines that