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than that due to increased competition and surplus of supply over demand.
Senator WHEELER. Do you mean to tell me that the profit on anthracite coal is only approximately 33 cents a ton?
Mr. STEPHENS. Yes, sir. Senator WHEELER. When you buy anthracite coal do you buy it mine run?
Mr. STEPHENS. No, sir. We buy broken, egg, stove, nut, pea, buckwheat, rice, barley, cloverseed, and boiler.
Senator WHEELER. If that is the case, then there could not be any objection, it seems to me, to your giving me the price, for instance, that you buy stove coal for. Mr. STEPHENS. No objection at all.
Senator WHEELER. Will you give me the price that you pay for stove coal or the coal that is most used by the housewife?
Mr. STEPHENS. The coal that was most used by the housewife a few years ago is rapidly getting to the point where it is not now used. Senator WHEELER. I am talking about now.
Mr. STEPHENS. To-day a great many homes are still using so-called domestic sizes, egg, stove, and nut. A very large number, however, mix in a certain amount of pea coal or buckwheat coal with those domestic sizes, and more and more they are beginning to burn buckwheat in self-feeding boilers with some type of blower or automatic feed attachment.
Senator WHEELER. Give me any one brand-nut coal or pea coal or whatever you call it.
Mr. STEPHENS. Take No. 1 buckwheat. Senator WHEELER. What kind of coal is that? Mr. STEPHENS. That is practically the largest of the so-called steam sizes. It is the type of coal that is intended to be consumed in self-feeding boilers and in all of these new automatic-feed devices.
Senator WHEELER. What I want particularly now is stove coal. Mr. STEPHENS. The trouble is you want to pick out stove coal. If I were in the dry-goods business I would handle all kinds of dry goods. In the coal business we handle all sizes. On some you get a small profit and on others you do not.
Senator WHEELER. Give me the stove first. Mr. STEPHENS. And may I come back to buckwheat later? Senator WHEELER. Yes, or any other kind. Mr. STEPHENS. Stove coal is $9.35 a gross ton at the mine. Senator WHEELER. You mean by that, 2,240 pounds! Mr. STEPHENS. Yes, sir. The freight on that is $2.39 to tide. The towing, including insurance, to alongside the yard, is 43 cents a ton.
I would like to say in connection with that price that coal can be freighted at less than 43 cents a ton, but by the time you figure your insurance on coal and your demurrage on boats we find we are better off to deal with concerns which have good captains who pay good wages, and we pay them, perhaps, 5 cents a ton more than we can get towing done for; but we do not have our coal stolen, and we consider that it is a better proposition.
I say that because somebody might say that 43 cents is too high; that it can be done for less. We know it, but that is what we pay. That makes $12.17 alongside. That is practically $10.80.
Senator WHEELER. What do you sell it for?
Mr. STEPHENS. Yes. I have reduced it to the short-ton basis, the original cost. That shows a margin on that particular size of $3.95 à ton.
Senator WHEELER. Now you can give us the others.
Mr. STEPHENS. No. 1 buckwheat costs $3 a ton. Freight to the piers, $2.27; towing, 43 cents—making $5.70; $5.09 per net ton alongside.
The average selling price on No. 1 buckwheat in our territory is $6.90 net, or an average margin of $1.81.
Senator WHEELER. What do you pay on chestnut?
Mr. STEPHENS. Chestnut is practically the same as stove. Egg is practically the same as stove.
Senator WHEELER. What is your pea coal ?
Mr. STEPHENS. Pea coal, $5 a ton; $2.27 and 43 cents, making $7.70 gross; $6.88 net.
Senator WHEELER. What do you retail it at?
Senator COUZENS. Why in one case do you say the average and in another case you fix the list price of the coal!
Mr. STEPHENS. Because there has been a surplus of No. 1 buckwheat.
Senator COUZENS. So the best buyer gets the best price in the case of No. 1 buckwheat?
Mr. STEPHENS. That is true of everything that I know of.
Senator COUZENS. That is not true of stove and chestnut where you sell to the consumer. You have a maintained list price in that connection. When you have given us the price on stove and chestnut you fix the list price that you all sell at?
Mr. STEPHENS. I did not fix any price that we all sell at. I told you the price we sell at.
Senator COUZENS. But you used the regular standard price?
Senator Couzens. But you said in the case of No. 1 buckwheat your average price was given, saying that you had to have several prices to get an average.
Mr. STEPHENS. No. 1 buckwheat represents a certain amount of wholesale business. It is sold on a different basis from retail deliveries of small lots. I am giving you the average of return to us based on our cargo deliveries and net ton or small unit deliveries.
Senator COUZENS. What are your maximum and minimum?
Senator COUZENS. So between those prices you fix a price dependent upon the volume that you deliver. Is that the idea?
Mr. STEPHENS. Yes. Where we deliver a cargo we deliver it on bill of lading basis. We run the entire cargo going out to the consumer. He buys on a bill of lading basis. Any shrinkage is absorbed by the consumer, and it is a single transaction. We use big trucks and simply load them to capacity and shoot them out. Where there is an individual delivery of a 2 or 3 or 5 ton order it represents a much more costly piece of business.
Senator GoFF. You are only speaking about your own costs, are Mr. STEPHENS. Yes, sir.
Senator Goff. You are not speaking about any of your competitors ?
Mr. STEPHENS. I can only speak for our own costs.
Senator GOFF. If you have a competitor who has a lower overhead than yours he undersells you?
Senator COUZENS. Oh, no; he does not do that.
Mr. STEPHENS. That depends on a great many things. You are correct, Senator Goff. With the competitive situation as it is, that is the result. If you eliminate all competition, perhaps your statement would be true. If the Government regulates prices, then there will be no underselling.
Senator GOFF. It would be the same to everyone?
Senator COUZENS. It is practically the same to everyone now. If I start out to buy 5 tons of chestnut or stove coal for my home, I could travel up and down the island and I would get the same price quoted all along the line, would I not?
Mr. STEPHENS. No, sir; you would not.
Senator COUZENS. There are different advertised prices for the same standard of coal ?
Mr. STEPHEN$. Yes.
Mr. STEPHENS. No; but I have seen them. There is one concern that sells its coal at 25 cents a ton more than we do. They make a 25-cent discount to those that pay before the 10th of the month following the receipt of the bill. Therefore those who pay before the 10th of the month pay the same price that our customers do, but those that do not, pay 25 cents a ton more.
I know another concern that advertises the same price that the Stephens Fuel Co. does, but gives a 25-cent discount to anyone who pays within 30 days.
Those are two specific instances that I can think of.
Senator COUZENS. Generally that is based on a discount basis. But I mean, the quotation is the same. There may be a discount.
Mr. STEPHENS. No. The quotation in the first case is 25 cents a ton above our published price.
Senator COUZENS. That is only done to get in the money. In the final analysis, the net result is the same, is it not?
Mr. STEPHENS. No, sir. He only gets a certain percentage of his money in; and those that do not pay him before the 15th of the month
pay 25 cents a ton more than the people that buy from us. Senator COUZENS. That is a penalty for not paying the bill promptly.
Mr. STEPHENS. It is a difference in cost to the consumer, whatever
you call it.
Senator Couzens. But the quotation is pretty uniform, outside of the question of discount, is it not? Is it not pretty uniform outside of the question of discount?
Mr. STEPHENS. Not as uniform as we would like to have it, sir. We would like to see them all on the same basis and compete on the basis of quality and service.
Senator COUZENS. You buy all on the same basis, practically, do Mr. STEPHENS. No. We do not. We would like to do that also.
Senator COUZENS. You would like to have the prices regulated, then?
Mr. STEPHENS. Yes; but we hate to see the Government do it.
Senator WHEELER. Instead of the Government's doing it you want to have the industry regulating it?
Mr. STEPHENS. I think that would be the ideal condition; yes, sir.
Senator WHEELER. You want the retail coal dealers to regulate the price that they sell their coal for to the general public and you want the operators to regulate the prices that they sell it to the dealers for?
Mr. STEPHENS. Subject to existing Federal laws which, in my opinion, are sufficient to protect the public at all times.
Senator WHEELER. What particular law do you have reference to now?
Mr. STEPHENS. The Sherman Act, the Clayton Act, State laws, the New York act, and such.
Shall we go back to the cost figures, sir! Senator WHEELER. Yes. Mr. STEPHENS. I have shown you where we are selling three sizes of coal on a margin varying from $3.95 to $2.62 and $1.81. There is one element that enters into the $3.95 apparent margin which must be taken into account, and that is the breakage in handling domestic sizes. Those sizes break and create what we call degradation. We have to screen out the breakage from those sizes before we deliver them. We have to pick up those screenings and run them through a rescreening plant and resize them. The rescreening consists of a little pea coal, much more buckwheat, still more rice, and most of all, dust.
We buy dust from dealers at $1.50 a ton. That represents weight which they have paid for in their domestic coal—$12.17 alongside. They sell it for $1.50 to $1.75 in their bins.
That loss that we call degradation or degradation loss on domestic anthracite will certainly average somewhere from 60 cents to $1 a ton, depending upon the methods of analysis.
That loss should be taken from the apparent margin of $3.95, which brings the actual margin on those sizes down to $2.95 and $3.35.
In other words, to arrive at the margin of the retail dealer, to arrive at the basis of his charge to the public, you have to analyze the percentage of domestic sizes, the pea coal and the steam sizes that he handles, and on that percentage you arrive at his average margin.
That brings me back to my statement that to-day in the metropolitan city of New York I .doubt whether you would find the average retail dealer showing a net profit at the end of the year, after payment of Federal taxes, in excess of 35 cents a ton.
Senator WHEELER. Your thought about the matter-as I take it from reading this paragraph wherein you state, “I doubt very much that Congress will choose to alienate the consuming public in order
to curry favor," and so forth—is that the general public is entirely satisfied at the present time?
Mr. STEPHENS. In the matter of prices of soft coal they certainly should be, and I believe they are, unless there are enough of them who are public-spirited enough to be willing to pay more than they are now paying in order to see the soft-coal industry pull itself out of its present difficulties.
Senator WHEELER. When you are speaking of the general public are you just speaking of the railroads, or of the public as a whole?
Mr. STEPHENS. The public as a whole is getting its coal cheap to-day. Anybody that can buy such coal as that described at $7.75, with a heating content or British thermal units content running somewhere from 14,600 to 15,000 British thermal units, is getting a wonderfully fine coal and getting it very cheaply.
Senator WHEELER. That is all, so far as I am concerned.
Mr. STEPHENS. Senator Wheeler, I would like to have Mr. Clark, one of our vice presidents and president of the New England Dealers' Association, be given an opportunity to speak very briefly, particularly with respect to the retail angle. I have covered the matter from the general standpoint.
STATEMENT OF WILLIAM A. CLARK, VICE PRESIDENT AND MEMBER OF THE GOVERNMENTAL RELATIONS COMMITTEE OF THE NATIONAL RETAIL COAL MERCHANTS' ASSOCIATION; ALSO PRESIDENT OF THE NEW ENGLAND COAL DEALERS' ASSOCIATION, WITH HEADQUARTERS AT BOSTON, MASS.
Mr. CLARK. With your permission, Mr. Chairman, I will sit down and will take but a very few moments.
I am vice president of the National Association and a member of the Governmental Relations Committee of the National Retail Coal Merchants' Association, and am also president of the New England Coal Dealers' Association.
I am going to talk about New England entirely.
In my official capacity in New England I represent a group of the retail coal merchants who sell about 80 per cent of the domestic coal used in New England. These firms previous to the war sold Pennsylvania anthracite almost exclusively for domestic purposes. Bituminous has been more or less forced upon the New England consumer for all purposes during and since the war. We New Englanders are slow to move but our opinions are hard to change when once formed. We believe almost unanimously that the Federal Government should not enter into the management or undertake to dictate as to our business affairs.
This proposal to regulate the bituminous-coal business touches upon a most important business matter from our angle. We retailers or distributors of coal to the homes have much to contend with under present conditions, but under the proposals of this bill we would expect to have even more difficulty and trouble. Our competitor to-day, in a broad way of speaking, is another concern like our own, situated in relationship to business in practically the same way ihat we are ourselves. If I understand the proposal in this bill correctly regarding the Government agency under the licensing system we will enter into most serious complications.