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BITUMINOUS COAL COMMISSION

TUESDAY, JANUARY 15, 1929

UNITED STATES SENATE,
COMMITTEE ON INTERSTATE COMMERCE,

Washington, D. 0. . The committee met, pursuant to adjournment on yesterday, at 10 o'clock a. m., in room 335 Senate Office Building, Senator James Couzens presiding.

Present: Senators Couzens, Fess, Pine, Glenn, Wheeler, and Wagner.

Senator COUZENS (presiding). The committee will please come to order.

STATEMENT OF WILLIAM P. BELDEN, GENERAL COUNSEL, OHIO

COAL OPERATORS' ASSOCIATION, CLEVELAND, OHIO

Mr. BELDEN. Mr. Chairman and gentlemen of the committee, I represent the Ohio Coal Operators' Association. I appreciate the great responsibility and the burdens that you gentlemen have. I am not going to make a long speech to you, but I want you to know that we do not come here in any controversial spirit. We want to be of help if we can.

Mr. Chairman and gentlemen of the committee, we are tremendously in earnest. After all the investigations there have been of the coal industry it is time for clear thinking; it is time for us to get a clear understanding of what we really can do and what we can not do in this matter.

Let me sketch in general outline the field that I intend to cover so that no member of this committee can think that I have come here to tell you that a stone wall stands across the end of this investigation beyond which no one can go.

All agree, Mr. Chairman, that this industry is overextended. All agree that there are ills which have got to be adjusted. How are we going to set the house of coal in order? That is our problem. There has been presented here a measure which contemplates Government regulation. I do not need to tell this committee that so far as the transportation of coal in interstate commerce is concerned the Congress has supreme power; but, gentlemen of the committee, the bill which is proposed here goes beyond the regulation of transportation and invades the field of production, and under the guise of regulation of interstate commerce covers all the substantial financial management of the mines.

Now, gentlemen of the committee, I am going to submit a theme to you which I think runs through all the subject and which we must all recognize and recognize frankly if we are going to get anywhere. The coal industry, the production of coal now, is not a public utility. It is a privately owned enterprise, and so far as the courts of the land have gone to-day I say without fear of contradiction that the production of coal is not a public utility and is not impressed with a public interest. Therefore, you are placed in a different situation than in

Senator GLENN (interposing). Pardon me. Why do not the public have an interest in this great industry, which is so vital?

Mr. BELDEN. Economically, Senator, it has, and I am going to point out in a moment why you may have a great task before you. I am simply outlining the pathway which you must follow. I am just contrasting, for example, the coal industry, which is privately owned, with the railroads, which are public utilities. There, when you regulate labor, when you regulate the operation of the railroads, if you increase the expense, you may fix rates and increase their income. You may say as to a railroad the rate which it may charge and the rate which its customers must pay is so-and-so; but not yet have we reached the point where you may fix the price which the coal operator may charge for his coal and the price which the customer must pay therefor.

Now, gentlemen of the committee, I think this bill, and I may just sketch it now in general outline, is unsound economically. That is one thing. And also it is unconstitutional. It is unsound economically because it introduces the element of divided responsibility. My thought is that either the boards of directors of these companies these coal producers-have got to be intrusted with the management of their mines and the working out of the ills of the industry, just like other industries, or else, if coal is of such supreme importance to the country—and it may be, and I do not introduce this thought as an obstructionist-if coal is of such supreme importance to the Nation—and it may be-then, as Senator Glenn has suggested by his question, you are faced with the proposition of conservation, of taking over this industry and of restricting its production, of governing its operation, of conserving these great deposits of coal for future generations; and if so, how are we going to do it?

Our system of government, gentlemen of the committee, is what it is, and the power to enlarge the authority and duties delegated to the Federal Government rests in the people. A conspicuous illustration is that of the eighteenth amendment, by which the people determined what should be done with an industry, and in that case it was to destroy it.

Unquestionably the power rests with the people to authorize the National Government to take over the industry. Is that a startling thought? What is the difference to-day between coal and oil and water power? It is simply this: That the coal deposits are in the older States. They passed into private ownership before their tremendous importance to the public was discovered. Oil is confined more or less to the public domain, still owned by the Government, and great reservations of oil lands are set up. The Government does not operate, it is not in the oil business, but it makes leases; and, Mr.

Chairman and gentlemen of the committee, by those leases it can regulate the production of oil as it sees fit. That suggests the pathway which must be followed here if the Government is going to take the management of the mines.

Now, let me return to this bill: Let me show you how it is proposed here to invade the realm of private management, and let me point out to you as business men and as lawyers the effect of this divided responsibility; and let me say to you gentlemen that I want to convince my good friends on the other side of the table just as much as I do you members of the committee, because this is not a petty controversy between these gentlemen and us; it is a great national problem, and it is one that can never be worked out unless we see first what can be done and then go forward courageously along the right lines. Nothing is ever settled until it is settled on a proper basis. Now, I am not going to take up all the details of this bill; I promised you I would be brief, and I intend to be brief, but let me suggest one or two things: We are accustomed in Ohio, Illinois, and all other States, under States statutes, to supervision of our mines from the standpoint of health, ventilation, safety of our employees; we are familiar with mine inspectors who go through our mines. That is fitting. But this kind of supervision that is proposed in the bill before you relates to the financial management, not to the regulation of matters of health and ventilation.

What are the powers of the Federal Government with a subject of this kind? All you lawyer members of the committee know that you have just two. The great central Government, which is supreme in all matters of national importance in dealing with questions of this kind, has two general powers:

(1) The emergency power, such as was exercised during the World War, and under which it might do anything. But no emergency exists in reference to coal. Coal is being furnished to the public in abundance and at low prices.

(2) To regulate interstate commerce, and that is a power granted by the Constitution. Is this a bill merely to regulate the transportation of coal or does it pass over into the field of production of coal ?

Mr. Chairman and gentlemen of the committee, I have been impressed with the thought that in the hundreds and hundreds of pages of testimony that have been taken here, and the hours of your time which have been so patiently given to this tiresome subject—what have we talked about? How little have we talked about the transportation of coal, and how much have we talked about the production of coal ?

Now, it is proposed by this bill to create a commission to supervise the transportation and the production of coal. And such commission is going to issue licenses to operate. There are two kinds of licenses: (a) Primary licenses and (6) secondary licenses.

Let me speak first of the primary licenses. What are the things which the commission is to inquire into before granting a primary license? I read from the proposed bill, section 4:

In considering the request for licenses said commission shall have authority to inquire into all matters relative to the mining and shipping of coal by said applicants.

Now, listen: including the quality of coal to be marketed, the wages paid miners, general production and distribution costs, capital invested, and the reasonableness of the prices which may be fixed at any time by such pool, association, merger, combination, or consolidation.

These are the kinds of questions the proposed commission is going to consider. And what power is given to it when it does consider them? This proposed commission is to be given absolute and uncontrolled discretion to grant or refuse licenses. And if it may consider the kind of coal which we are producing in Ohio, why may it not say: “There is too much of that kind of coal being produced, so we will not license any more.” Why may it not turn to our West Virginia friends and say: “We do not like the way you deal with your labor. You can not have a license.” And why may it not turn to our Illinois friends and say: “ You are too near to some of our best markets. You are taking them away from others, and you fellows can not operate." Don't you see that there is no criterion, no procedure, no measure for the rights which we have It is made a government of men, not a government of law.

Senator WHEELER. Would it not be a question of public welfare? For instance, the Interstate Commerce Commission at the present time has the power and the right to grant a license to a railroad to extend its lines, or to build a new railroad, and they frequently deny such applications on the ground that they do not want a new one, that it is not in the public welfare that the proposed line should be built.

Mr. BELDEN. There is just this difference: Concededly your great body has the power to legislate in reference to the railroads, and so you create an administrative agency and delegate power to it. I ask you as a lawyer if you can find in the decisions of our courtsand take the gasoline case handed down by Mr. Justice Sutherland dealing with an analogous situation,

Senator WHEELER (interposing). I appreciate the point that you are making, and I want to say that, in my judgment, it is exceedingly questionable, to my mind at least, whether or not we can do this, but when you were speaking of the injustice that might, perhaps, be done to coal operators, I do not think that is the paramount thing that we should take into consideration. I think we must consider the public welfare, that that must come first, and if we create a commission should not that commission be empowered to say: “ You should not open up a mine here now because it would not be in the public interest, for the public welfare." So I can not see any point in your statement that the commission might do this or that.

Mr. BELDEN. It is a legalistic argument. The Supreme Court said in the Wichita case, dealing with a Kansas situation, that the legislature could not delegate to a commission absolute power over a matter of this kind without fixing some criterion which would govern the rights of applicants.

Senator WHEELER. Well, you are proposing to say that this bill has not done that; is that your contention?

Mr. BELDEN. Yes; but I am not concerned so much about a correction of details. I think my friend over here (Mr. Warrum) has done quite as well in the preparation of this bill as possibly could be

expected in preparing a bill of this character. I am not concerned so much with whether one detail or another could be improved upon as I am with the general principle on which the bill rests.

Mr. WARRUM. Might I interrupt you?
Mr. BELDEN. Certainly.

Mr. WARRUM. For the purpose of proposing to assist you in the analysis you are making of the bill. This section 4 relates to the authority that the bill, if it should become a law, would give to the commission to inquire into matters where coal operators are seeking to form a marketing pool for the purpose of having some agreement or merger or consolidation, over which the Congress has some control as indicated in the Clayton Act and the Sherman Antitrust Act. If you do not want to form a marketing pool, if you do not want to form a merger, you will operate under a secondary license, and then you will have no inquiry under the one you are talking about. Section 4 of the bill deals with mergers.

Mr. BELDEN. It does, but there is some provision, and I am speaking about that, which also appears in the second section of the bill,

which says:

The commission shall have authority to inquire into all matters touching the mining and shipment of bituminous coal by said pool or association and the members thereof.

And such commission may provide rules and regulations dealing with these matters.

And so it is that we would have a commission empowered by express terms further on to supervise the mining of coal; and I say to you that if a commission may inquire into these subjects, if it may make rules and regulations governing them, then such commission might invade the field of questions which boards of directors of the coal companies now determine as they sit around their tables.

Senator WHEELER. I was just going to say that that was the very complaint which was made when the Congress first passed the interstate commerce law, and when the various State regulatory bodies were created to deal with the railroads. That is the identical argument. And I do not believe that even the railroads themselves to-day would want to go back and operate without the Interstate Commerce Commission; that we should do away with the Interstate Commerce Commission and the most of the State regulatory bodies throughout the country.

Mr. BELDEN. I will say that I think that is correct, and it is my pleasure to represent one railroad, and I think that we railroad men feel, generally speaking, Senator Wheeler, that that is true. And yet we must keep in mind all the time, and that is the crux of this proposition, that the production of coal, the mining of coal is a private industry rather than a public industry. And so long as the courts of the land have declared in express terms that the mining and production of coal is a private industry, that it is not impressed with public interest, and that it is not interstate commerce, then we have got to take the law as we find it.

The Washington Post was criticizing your honorable body the other morning for not dealing with the coal question, and saying that it required hard work and so the statesmen do not touch itbut that is hardly a fair statement of a body that has been working

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