RINDING POSTS CAN , BE CUT. If too tightly bound to photocopy, please take to the Circulation Desk personnel can remove plastic posts. V 338.2 •••••.••"•-••••••••••••••••••••.••••"••••.•••.••••••••••••••••••••••"••••"•••••.•••••••••••••••••••••••••••••••^•••••••"•"•"^ REPORT OF TESTIMONY GIVEN IN THE Inquiry Into the Coal Situation CONDUCTED BY THE U. S. Senate Sub-Committee on Interstate Commerce Hon. Joseph S. Frelinghuysen, Chairmaii A STENOGRAPHIC TRANSCRIPT Volume I August 26 to September 4, inclusive National Coal Association COMMERCIAL BANK BUILDING WASHINGTON, D. C. REPORT OF TESTIMONY GIVEN IN THE ulry Into the Coal Situation CONDUCTED BY THE U. S. Senate Sub-Committee on Interstate Commerce Hon. Joseph S. Frelinghuysen, Chairman A STENOGRAPHIC TRANSCRIPT Volume I August 26 to September 4, inclusive National Coal Association COMMERCIAL BANK BUILDING WASHINGTON, D. C. I INDEX J. D. A. Morrow Testimony August 26 5 No Price Combination ' 6 Coal Prices Have Not Advanced 8 The Price Charts 9 As to Hines' Price Insinuations 17 Car Shortage 19 Functions of the N. C. A 20 The "No Market" Situation... 22 Hines Must Furnish Enough Cars 24 American and Foreign Prices Compared 28 Where Coal Should be Stored 55 Testimony August 27 69 Testimony September 2 70 How Price Averages Were Obtained 70 August Prices 78 Labor Shortages 79 Method of Mine Rating 82 Mr. Morrow on the Stand Again 90 Pittsburgh District Costs 91 N. C. A. Aid to Geological Survey 95 Analytical Estimate of Nation's Coal Needs 97 Harry N. Taylor Testimony August 26 30 Coal Production Figures 32 The Labor Situation 33 Miners Formulating Demands 34 Miners' Present Wages 37 Foreign-Born Miners Leaving U. S 38 The Railroad Fuel Situation 39 Western Coal Costs 48 The "Snow Birds" 53 John Callahan Testimony August 26 57 Losses Due to Car Shortage 58 Car Repairs and Movement 59 Coal Movement Slow 62 Hines' Statements Inaccurate 66 Testimony September 2 82 Detailed Car Shortages by Mines 82 Slag in Open-top Cars 87 A. G. GUTHEIM Testimony September 2 lOO Wants tp "Play Safe" on Requirements...: 104 Thinks "War Powers" Necessary 106 Average Daily Car Movement 108 Wants Senate Committee to Determine What Country Needs 109 Frank McManamy Testimony September 2 110 H. Y. Saint Testimony September 3 ' 121 Allocation of Shipping Board Tonnage 121 Volume of Exports ^ 124 The Italian Situation 125 The World's Coal Shortage in Detail 128 Exports Not Stinting American Consumers 131 S. Pemberton Hutchinson Testimony September 3 132 A. P. Cameron Testimony September 3 135 G. B. Seyms Testimony September 3 139 Joseph S. Frelinghuysen States Position of Committee 140 C. E. Lesher Testimony September 3 142 Edgar Wallace Testimony September 3 155 George H. Gushing » Testimony September 3 159 Walker D. Hines Testimony September 4 163 Francis S. Peabody Testimony September 4 181 John H. Sherburne Testimony September 4 192 Tuesday, August 26, 1919, UNITED STATES SENATE Sub-committee of the Committee on Interstate Commerce, Washington, D. C. The Sub-committee met pursuant to call of the Chairman, in the room of the Committee, Senate Office Building, at 10 o'clock a m., Senator Joseph S. Felinghuysen of New Jersey (Chairman) presiding. Present: Senators Elkins, Myers and Walcott. The Sub-committee had under consideration the resolution introduced by Senator Frelinghuysen on July 18, 1919 (S. Res. 126) to make inquiry into the cause or causes which have brought about the enormous increase in the market price of coal. The Chairman: The Committee will come to order. This inquiry was ordered by the Senate in pursuance of .Senate Resolution 126, instructing the Committee on Interstate Commerce 'o make an inquiry into the present coal situation, costs, wages, and to consider the question of an adequate supply of coal for the coming year. The Chairman of the Committee has appointed a subcommittee, consisting of Senators Elkins, McLean, Myers and Walcott, and the Chairman, to hear witnesses and make a careful study of the situation. In that connection, I will place on the record the resolution (Senate Resolution 126) which was passed by the Senate; and, speaking for the sub- committee, I want to say that we have discussed this situation and feel that the important question before the committee is to ascertain the best methods to enlarge the production of coal for the coming year, in order to meet the demands, to prevent a coal famine, to prevcnTa shortage, and, in that connection, to provide coal for the consumer at a reasonable price. This inquiry is to be conducted in a broad spirit, with a desire by the Congress to make a study of the .question without any prejudice; to ascer- tain the facts, with no desire to punish anybody or to have anything sen- sational, but, as citizens of this common country, to do what we can to alleviate the present situation — join together in a broad spirit of coopera- tion, in an united effort to solve the problem; and the committee wants the suggestions of everyone — all the coal men, and anyone connected with this industry, or having anything to do with it — to see if we cannot join to- gether to bring about a solution of the problem. The committee must, of course, look into the questions of transporta- tion, car facilities, methods of distribution, the labor situation and the ex- port situation; and as we go along I hope the Committee will absorb enough knowledge of the coal situation so that they can decide what is best for Congress to do in the matter; but we want your help, gentlemen, and we W3»"* your suggestions. Now, I think the best thing for us to consider first is the question of bituminous coal, and I have asked Mr. Morrow, Vice President of the Na- tional Coal Association, to appear before the Committee and make a state- ment for that association as preliminary to the inquiry. Mr. Morrow, will you give your name and connections ro the reporter? STATEMENT OF MR. J. D. A. MORROW (Vice President, National Coal Association) Mr. Morrow: I would like to say at the outset. Senator, that we are very glad to meet your committee in the spirit which you have outlined for this inquiry this morning. It is our hope that we shall be able to make some concrete suggestions to you and to your committee, with a view to 5 improving the present situation in the bituminous coal industry. We also feel that the essential problem is to obtain sufficient production, and we wish to present the facts fully with respect to that particular phase of the situation. There are, however, some aspects of vhe present condition of affairs, and the present conception of it, that we feel should be cleared up first, so that we will all understand precisely the footing that we are on here at this time. In the first place, we speak for bituminous coal only. That includes lignite, sub-bituminous, and semi-bituminous coal, but does not include anthracite. And we speak for the producers of the coal; not for whole- salers or retailers, but for the operators of the mines. We desire, if we may, at this time, to speak with regard to the general conditions which prevail in the industry, and, unless necessary, to avoid cumbering your record and burdening you with a lot of details about con- ditions in this or that district, except so far as may be necessary to estab- lish the truth of any general statements that we make. If the committee finds it necessary to inquire into conditions in any given field, we will en- deavor to see that competent witnesses are present and that they have made the necessary preparations to present the facts to your committee adequately and correctly. Now, with that understanding of the manner in which we are limiting the testimony that we wish to offer, we would ask the privilege, later on, if desirable, of putting in any supplementary evidence that might seem to us necessary. If we find that in a general presentation of that kind we have omitted some details that eventually seem to us important, we want an opportunity to bring those in later. The Chairman: That will be allowed. Mr. Morrow: Thank you. No Price Combination Now, as I said, the essential problem, as we see it, is that of getting enough coal produced. However, there is some general idea in the mind of the public, which has been advanced by people who, perhaps, feel that they are well informed, that there is some kind of combination in the bituminous coal industry. We want to state, flatly, and emphatically, that there is no combination to maintain prices or to restrict production, or in any other manner to interfere with the natural influences upon the pro- duction and marketing of bituminous coal. We go further and say that the conditions in the business are such that it would be impossible for anybody to form such a combination, even if he would try. -There are about 5,000 separate commercial producers of bituminous coal, and those producers operate about 7,000 mines from which coal is regularly shipped. Now, in addition to those five thousand regular producers, with seven thousand regularly shipping mines, there are over 2,000 producers who come into the market with some 3,000 mines that they operate spasmod- ically. Those mines begin operating alid begin shipping coal whenever the price gets up sufficiently so that there is a profit that is attractive to those operators. Under such circumstances, in 1917, the Geological Sur- vey reports show that bituminous coal was produced from 16,634 mines, and there were, as I say, over 7,000 operators. In addition there are thou- sands of acres of bituminous coal lands along railways in the United States that can be easily opened up and new mines started at any time when conditions were attractive. Moreover, the operators in each district are subject to competition from the operators of other districts. 6 Now, under those circumstances, it should be apparent to any man who will stop and consider a moment, that it would be a sheer impossi- bility to effect any combination to restrict production or to maintain prices, that would get anywhere at all. It could not possibly be effective, because if it undertook to restrict production, other mines would be opened up by other men immediately. There are opportunities for them to open such mines — plenty of opportunities. Nor could they maintain prices success- fully, because these other men would be free to sell at any price they chose. The market is open. I want to make that statement clearly, be- cause the definite charge has been made, for instance, that the National Coal Association is such a ^combination. The charter and by-laws of the National Coal Asseociation are here and may go into the resord, if you wish. There they are, for the information of the committee (handing pamphlet to the Chairman.) The Chairman: Without objection, that v/ill be allowed, Mr, Morrow: Now, any other information in detail respecting the Association or its organization that your committee may desire, we will be very glad to give you. It is not a secret organization; we have nothing to conceal. We have 2,284 members, and they produced last year about 60 per cent of the total output of bituminous coal. There were some 2,700 other operators, not members of the Association, who were producing bituminous coal. The Association has nothing whatever to do with the prices of bituminous coal, further th-in to collect authentic information, as reliable as it can obtain, which covers past and closed sales in carload lots by the producers of bituminous coal. Those statements of actual prices are compiled into market summaries, which are published and dis- tributed among the members of the Association, They are also given to the coal trade papers, and are published there, and they take the place in the coal industry of the ordinary market reports that characterize other industries. For instance, before that service was begun, no consumer of coal could pick up a trade paper and find out authoritatively what the real prices were that obtained for coal at the mines. He now can do that. The operator did not know authoritatively what the actual -prices were. He knows now what they really are. Please understand that those reports do not cover prices which operators intend to ask, or bids that they expect to make, or quotations that they will put out, or anything except the actual record of sales which have been made; and, therefore, they show what the market prices of coal are, from day to day. In other words, they are precisely like the reports of the live stock market or the cotton market or any other market for commodities. Now, there are also some local associations among the bituminous coal producers of different districts. It is sometimes said that some of them might constitute some kind of improper combination. That is not true, for they have nothing to do with the sale, production or distribution of coal. Now, I make those statements emphatically because at least one mem- ber of Congress has stated that in his opinion there are combinations that are maintaining prices. We want to say to the committee that there is nothing of the kind in the industry and we would be glad to give you all the information along that line which we possess, and to help you make any inquiry into the industry that you may wisji to njake; but we want to assure you, at the outset, it will be but a waste of time, because there is nothing to find that is sinister or improper or wrong. The Chairman: Do you, as an association, fix any prices.? Mr. Morrow: None whatever. We neither buy nor sell coal, nor have anything at all to do with prices. We do not say to our members that the price should be higher, lower, or what it should be. The Chairman: Who fixes the prices of your members? 7 Coal Prices Have Not Advanced Mr. Morrow: It is entirely free to each operator who sells hia coal to fix whatever price he wants on his product. That is left entirely to him, individually. , Now there is one other matter that I wish to clear up definitely, and that is the prevailing impression that the prices of bituminous coal have advanced. That is a mistaken impression. It is stated in the preamble of this resolution to which we are speaking. It has been very generally asserted. It is the general impression, it cloes, not happen to be true. And we want to submit to your Committee m the beginning, the evidence of that fact in order that you may be s^.tisfied precisely as to the prices of coal before we take up the question of production. Thg Chairman: Are you referring to the prices to ultimate consumers? Mr. Morrow: I am referring to prices at the mines. Senator, f. o. b. the mines, Senator. The Chairman: Prices at the mines? Mr. Morrow: Yes, sir, they are the prices at the mines. A great part of the bituminous coal is purchased from the producers direct by the consumers. There is only about 16 per cent of it that goes to the domestic trade, and by the term "domestic trade" we include homes, apartment houses, hotels, moving picture Ghows, and everything of that kind. Their consumption is about one-sixth of the total production of bituminous coal. The remainder of it, it may pass through more than one hand, but to us the prices that are of immediate importance are the mine prices, and it is with those prices alone that we are dealing here. We are not undertaking to speak of retail prices. Now, individually, the 5,000 or 7,000 operators who are producing and selling coal from day to day The Chairman (interposing) : Whatever added cost there is in the freight rates and deliveries from the cars :it destination? Mr. Morrow: Not beyond the mines, that is correct. Now, we have charted the price of coal at the mines in a number of important coal ' producing districts, and I wish to submit those charts to the Committee and have them go into the record. Before putting them into the record, however, let me explain that wc have charted here the prices that have actually been obtained in the sale of coal since the 1st of April, during the months of April, May, June and July up to the 1st of August, and we have put on those same charts the maximum prices of coal which the United States Fuel Administrator had fixed in those districts. Let me explain for a moment that the United States Fuel Administra- tion prices, the maximum prices, were based on the cost of production re- gardless of quality, and that under the influence of the war demand those maximum prices, which were fixed by the Fuel Administration, quite gen- erally obtained. Under the influence of war time demands, all coals, good and bad alike, sold at these Fuel Administration prices, but when the United States Fuel Administrator removed his restrictions on prices, Feb- ruary 1st, the market was permitted to resume its normal function, and the United States Fuel Administrator in his announcement lifting the zone and price limitations, pointed out the fact that the higher quality coals in the open market might be expected to advance and the lower quality coals to decline. Preciselj^ that result took place, and in those districts which produce the higher grades of coal, and at those mines which produce the higher grades of coal, we find that prices went above the Fuel Adminis- tration levels, near those levels, declined but slightly from them. On the other hand, in those districts, and at those mines where poorer coal was produced, prices declined from those fixed by the Fuel Administra- tion. It just happens to be a physical fact with respeci to the production of coal in the United States that there is a great deal more low grade coal 8 produced than there is high grade produced. The consequence is that in most districts we have registered declines in prices on our charts here. They actually took place. Senator Walcott: You speak of high and low grade coals. In the trade do those terms have any definite meaning? Mr. Morrow: They have very definite meanings. For instance, the man who is buying steam coal wants heat units, and coal that is high in heat units will be a high quality coal, as far as his purposes are concerned, other things being equal; for instance, if it does not clinker or break up in handling. On the other hand, if a man is buying coal for a by-product plant he would want a somewhat different coal and he might be influ- enced by other characteristics of the coal. That will depend mainly on the use to which the buyer wishes to put the coal. The coal that suits his purpose is the coal that he is going in for and the coal he will pay more money for. The Chairman: In regard to bituminous coal, are there definite stand- ards, and certain classes of coal, or will one mine produce one kind and another a number of different kinds of coal? Mr. Morrow: There are a great many different knids of bituminous coal. There are no prescribed classifications. Different buyers have their own specifications that they ask the producers to comply with, or to meet as nearly as they can. Those specifications may refer to the percentage of volatile matter or fixed carbon, of ash, sulphur, and other data of that kind. It depends entirely on the use to which he may wish to put that coal. The Chairman: That is different in anthracite, is it not? The Price Charts Mr. Morrow: Not altogether different in anthracite. There is quite a little difference also, as I understand it, in the quality of anthracite that is produced from different mines and fields, but I would not want to speak on that question because I am not sufficiently informed on it. But with regard to bituminous coal we may have a wide variei,y within the same mining fields. Within the same mines frequently there will be such differ- ence in the quality of coal as to render it unfit in one part of a mine for a use for which the coal is suitable from another part of the mine. That is an extreme illustration, but mines in the same field frequently produce coal of sufftcient difference in quality to result in a marked difference in the prices that will obtain. So that a man who opens perhaps three or four mines along any seam of coal in a given field expecting a fairly uni- form output, may find that one mine turns out better coal than the other, and- they may have to sell the production at different prices, simply on account of the quality of the coal. That factor of quality has entered into the changes in price" since the first of February. Our records with respect to price did not begin until April 1st. This service of the National Coal Association in collecting authoritative infor- mation from the operators as to the prices they sold their coal for yester- day and the day before and last week, and putting it up in summarized market reports, was not instituted until thnt time. So we cannot state definitely what happened between February .1st and April 1st, but we pick up the price on April 1st and chart against it the United States Fuel Ad- ministration price for mine run coal in -hat district, which was in effect up to February 1st, and you can judge from the position of the two lines on the chart what must have taken place between February 1st or the sign- ing of the Armitsice, or some earlier date, and the date April 1, which we give you here. The Chairman: What percentage of the entire output of the country does that show? Is that all of it? 9 Mr, Morrow: No, sir. These reports cover probably 50 per cent of the commercial coal, the coal that is sold in the market. You see, there is a good deal that is not sold which is produced by operators that are affiliated with industrial concerns. They are the subsidiaries of those com- panies, and that coal is not sold in the ordinary sense. Other coal has been tied up in long-time contracts and is not in the market. So the total quan- tity of coal sold in any one year is decidedly less than the production, and the total quantity which is sold in these four months is not necessarily all of the output in those four months. Senator Walcott: They are the months from when? Mr. Morrow: From April 1st up to August 1st. Senator Walcott: When you spoke of the date February 1st what were you referring to? Mr. Morrow: That is the date the Fuel Administration price limita- tions came off. Senator Walcott: 1919? Mr. Morrow: 1919. Senator Walcott: You said that we could judge what must happen. Mr. Morrow: What must have happened. Senator Walcott: Well, between what dates? Mr. Morrow: Between February 1st and April 1st. Here is the chart for the Pittsburg district. On that chart there you will notice a dotted line straight across the page at 2.35 a ton. That was the United States Fuel Administration price for mine run coal. The heavy line is the average i)rice at which all coal on a mine run basis sold in the Pittsburg district during April, May, June and July. I have two things to say with respect to that Pittsburg showing. In the first place, the Fuel Administration liiie is lowei on the chart than it ought to l)e, because the actual average was a little higher than the mine run Fuel Administration price shown by the dotted line shown there. But be that as it may, you will notice that the Fuel Ad- ministration mine price is just about the prevailing price in that district. Please understand this distinctly. Compared with most other districts which compete with it, the Pittsburg coal is what we might call high grade coal. It is one of the better coals. It is one of those coals that buyers would normally seek. Look at the next chart which follows. It is the chart for Central Pennsylvania, to the east of the Pittsburg district. You will notice that the Fuel Administration price there is $2.95 per ton, but on April 1st, when we took up the record of current sales in the Central Pennsylvania field, the price was $2.81. It had dropped off 14 cents. During the month of May the average had dropped to $2.65. During the month of June it had gone down 2 cents further to $2.63. During July it went up to $2.74. We find an average of 62 cents below the price fixed by the Fuel Administration in that district. Central Pennsylvania is a complex district. There is some very good coal produced up there and some very poor coal. There is more of the poor coal than of the good. The poor coal went off in price and the higher grade coal went above the Fuel Administration price in the open market where the buyer could select his own coal and pay the price he chose for it. The net result is that the average in Central Pennsylvania is down where the heavy line shows. Take another district — Northwestern Pennsylvania. You will notice the Fuel Administration allowed $2.95 in that district, but see where the price was during these four months and where it was at the end of July. It shows a material decline below the I^uel Administration level. The Chairman: Northwestern Pennsylvania? Mr. Morrow: Northwestern Pennsylvania. The figures there show a decline. The last month the price was $2.31, or 64 cents below the Fuel Ad- ministration price in that field. Northwestern Pennsylvania is a district that is distinctly unfortunate in producing coal which is inferior to the other districts with which it has to compete. 10 The chart with reference to North and West Virginia I want to speak about a little later. I will remove that from its present position and place it at the end of the list and will take it up again. The chart which follows is the chart of Eastern Ohio, and that chart covers a field which competes with this Pittsburg district which is to the east of it. It does not produce quite as good coal as the Pittsburg. Senator Walcott: Is all Pittsburg coal high grade coal? Mr. Morrow: Yes, sir; speaking generally, it is. Senator Walcott: And the Central Pennsylvania? Mr. Morrow: No; there is a little high grade coal in the Central Penn- sylvania field, but there is a lot more poorer coal in Central Pennsylvania. Speaking generally, I would say in the main it is poorer coal and less de- sirable coal. See what the chart shows happened to the price. With a price allowance of $2.35 by the Fuel Administration, they dropped oflF during April to $2.23, in May down to $1.90. During June, with a lot of Lake coal sold, the price went back up to $2.05, and during July they went down to $1.89. That is the condition in that district. The Chairman: What are these mines in Eastern Ohio? Are they wagon mines? Mr. Morrow: Oh, no; these are regular commercial shipping mines. I do not suppose we have any sales from the little wagon mines included in these figures. The Chairman: Does that figure very largely in supply? Mr. Morrow: No, sir; it is a comparatively small percent; but it is concentrated in those periods of normal demand, so when you get a big demand you get a lot of that kind of coal. Senator Wolcott: Have you mentioned Northern West Virginia? Mr. Morrow: No, sir; I am going to take that up a little later. I want to move to another field, Illinois and Indiana. In that produc- ing district, which is separated from this Appalachian district which we have been discussing by two or three hundred miles, and we come into a fine coal field with a different quality of coal, distinctly, from that in Pennsylvania and these eastern fields. The first chart here is for Southern Illinois. You will notice that the dotted line is at $2.35, and that current rates get a little above that price, running as high as $2.45 during July. That is the highest grade coal that is produced in either of these states, the coal which is covered by this Southern Illinois chart. That is a field in which quality shows precisely its influence on price. The buyer preferred that coal. You will notice that the increase is not very large — $2.38, $2.43, $2.44 and $2.45. The chart which follows that is a chart for Central Illinois, just north of the Southern Illinois field, a poorer grade coal; and you will see what has happened there. The price allowance was $2.35, the same as that of the southern field, but the sales of that tonnage throughout April, May, June and July dropped down, during April, to $2.16; May, $2.35, June, $2.15; July, $2.17, 18 or 20 cents below the price the Fuel Administration had set for that district. ^ ^ Take Indiana, which also competes with this high grade coal. You will observe that the price has dropped off during April down to $2.21; during May, $16.00; June, $2.18, and down to $2.16. The Chairman: Is the Bon Air Coal Company one of your members? Mr. Morrow: Yes, sir. Their prices are included in this chart. The Chairman: There seems to have been considerable coal produced at a much less Mr. Morrow: There has been. The Chairman (continuing): Because they have a letter which they have submitted to me of their three mines in which it shows — — 11 Mr. Morrow: They have been able to sell their coal one cent under the Government price to 2.8 cents above the Government price in that period. The Chairman: There is another mine that shows a much less price. Mr. Morrow: In this mine here (indicating on letter) they have gone down to 15.8 cents, 16.8 cents and 17 cents under, and during July they dropped down 20 1/10 cents below. The Chairman: There is a further reduction. Mr. Morrow: Yes, sir, from 15 to The Chairman: That is a reduction which would seem to bring the average to your figures. Mr. Morrow: That is a fair picture, I might say, Senatcfr, of just about what happens. The Chairman: Is the reason for that that the coal produced in each of these mines is of a different quality? Mr. Morrow: That is right; and that company, if I remember rightly, is operating those mines in the same seam of coal. It is my recollection that it is; and since there is that difference in quality it reflects itself when the same company is trying to sell the coal. Senator Walcott : The company is in what district? Mr. Morrow : In Indiana. The figures are inchided right here in this chart (indicating). Senator Walcott : The Indiana fields are about on a par with the Southern Illinois or Central Illinois? Mr. Morrow : They are about on a par with the Central Illinois. We might say it is a similar quality of coal, but all comparisons of coal are more or less inexact.^ Senator Walcott : Yes. Mr. Morrow : But speaking comparatively, the Southern Illinois field is preferable coal. Now, to go down into Kentucky. We have come back into the Appalachian field. We have charted the prices for two neighboring Kentucky fields. One is the Harlan field. The Fuel Administration's prices were $3.55, and on April ]st their price was $2.65, then it went back to $2.56, and is now up to $2.59. That is a high grade coal. It is an excellent gas and by-product coal. The Hazard field, which is a neighboring coal field, is shown in the chart, and it has the same price set by the Fuel Administration of $2.55 for the bulk of its coal. Please observe what the price is. We found by charting the month of April that it was a little under $2.50 — $2.48. Lake sales occurring in May shoved the average up just above the old Government price, one cent over. Then it dropped off during June and further during July, when we find it $2.30 during the latter month. Senator Walcott: How does that field compare with the Harlan field? Mr. Morrow : It is inferior to the Harlan field. It is not quite so attractive a coal in the general market. Now I want to take up the smokeless field of West Virginia and the North- ern West Virginia field. This is typical of what has happened in West Virginia. The smokeless coal is recognized to be the finest bituminous coal on the Ameri- can continent and it is one of the finest coals produced anywhere in the world. It is a superlative coal. The Fuel Administration did not take quality into con- sideration when it fixed the prices of coal in those fields. It frankly admitted that it did not. It was the "cost plus profit" plan. We have averaged the Fuel Administration's prices here because they sub- divided it into four different districts at four different prices; but allowing for the tonnage of coal produced in the field at the Fuel Administration's prices the resultant correct average, as near as we can complete it, is $2.51 a ton. You understand that in some fields the prices were above that; in others they were somewhat lower ; that is, Pocahontas, New River, and "so on. In those fields that were producing this high grade coal the price advanced on the first of April, we found, to $2.79. These are contract sales. There is a difference, you see. 12 between this chart and the other chart, in this respect, that the other covered both sets of sales, current sales and contract sales, but as to that field in West Virginia our record on contract sales covers nearly all the production. Senator Elkins reminds me that that field is one from which the Navy de- rives its coal. The Chairman: From the smokeless field? Mr. Morrow: Yes, sir. The Chairman: What do they pay? Mr. Morrow: The Navy? The Chairman : Yes. Mr. Morrow: They pay $2.75 for their coal. This average, in all of the four months. Senator, April, May, June and Tuly, is $2.76,^ one cent above the price at which the Navy is buying its coal in that field. It is a very high grade coal, a coal which anv number of people prefer. If thev can get it they will pay more money for it. It is a field which foreign buyers have heard of, and when they come over here to buy export coal. — One was in my office yesterday. We do not buy or sell coal, but we refer these gentlemen to members of the Association who do. This man was from London, and was inquiring about coals. He wanted somebody who could sell him Pocahontas or New River coal. So we have an export demand and a domestic demand concentrated in those fields. The quality justifies the higher price. It has regularly commanded higher price in the open market. Compare that, please, with the coals in the Northern West Virginia field. This is a complex chart. There is some good coal in there which can get a higher price, and some much poorer coal. It is somewhat like the Central Pennsylvania cnal, again, in that respect. Speaking of the field as a whole in comparison with the smokeless field as a whole, this Northern West Virginia district will get lower prices in the open market than the smokeless operators will obtain. That is exactly what has happened on this chart. The Northern West Virginia field had a Fuel Administration price of $2.50. During the month of April the average of current sales was $2.29 : in May, $2.34, and in June, $2.17 and in July, $2.31. We have fissures for Southern Ohio, and I want to put a chart in this after- noon covering that. I will ask the reporter to make a note in the record to have the chart inserted immediately following Eastern Ohio. (The chart referred to will be found at a subsequent portion of these pro- ceedings.) Southern Ohio, comparatively speaking, is a low grade coal. The chart shows the following results : There are three or four Fuel Administration prices. The average of those prices was $2.60. The price went in May to $2.22; June. $2.17; ]u\y, $2.15. That does not include coal sold to the railroads at still lower prices. Senator Walcott : That is better coal than the Eastern Ohio coal? Mr. Morrow : No, sir. Senator Walcott: Inferior? Mr. Morrow : No ; it is much the same. I might say it is cl«se to the better Eastern Ohio coal in the open market. vSenator Walcott: Thev got more money, however, for it? Mr. Morrow : Yes. sir. Perhaps they are better salesmen down in that di<:trict; there mav have been a little biee-er demand. It is difficult to say just what the reasons are. There exists sometimes a preference in the open market. One district mav have a better car supplv than another. A number of factors of that kmd enter into it. Another thing that might have some influence, Senator, is the differcnrp in freight rates. One district may be able to ship on a lower rate and name delivered prices more attractive than another. I want to pnusf' here long enough to make this particular reference. The Direc- tor General of Railroads, in a letter to the Vice President of the United States, had this to sav with resnect to the prices of coal Senator Walcott: That letter is dated when? Document No. 73, 66th Congress. 1st Session, page 5 : Mr. Morrow: This letter is dated August 14. I am reading from Senate 13 "In the event any Congressional inquiry should be undertaken it would be desirable to ascertain the extent to which the demand has been due to the mainte- nance of high prices which discouraged the demand." I want to read another statement Mr. Butler: He is speaking of coal? Mr, Morrow: Yes, sir. Senator Walcott: Just a moment before you depart from that particular sentence. I will ask you this question, because you are familiar with these charts, as you have shown. Speaking generally from the chart, would you say that the prices of coal at the mines have been increased over the Fuel Administration prices and that therefore there existed a condition which might justify a statement that the de- mand has been reduced? Mr. Morrow: No, Senator; I want to say that that is not the case. I men- tioned at the outset, the district in which there is high grade coal produced, and those districts in which higher prices have obtained, are few. Most districts have suffered slight declines ; and while these reports here do not cover the details of the country, the fields are scattered in many other districts, the conditions obtain- ing apply in the other districts similarly situated, because if they had not reduced their prices also those fellows would have got all the business. The Eastern Ohio man, for instance, reduced his price, and the Southern Ohio man reduced his. If some West Virginia district which competes with those did not lower their prices similarly the Ohio man would get the business. There is no reason why they should pay the higher price, because they did not have to. Senator Walcott: Unless the freight rates made it to his advantage to do so? Mr. Morrow : Yes ; in which case it would work that way. In presenting these charts we believe we are giving you a view which is typical and and representative and that it covers enough of the tonnage and enough of the important districts, those districts which are really factors in the market, so that you may get a correct idea of what has happened in respect to price. I want to comment on the statement of the Director General "In the event any Congressional inquiry should be undertaken it would be desirable to ascertain the extent to which the absence of demand has been due to the maintenance of high prices which discouraged the demand." The mines have not been running full for the last six months. One of the chief reasons has been that not enough people were buying coal. Mines were running four days a week doing their very best to sell their coal for five or six days a week, and they could not find buyers. Senator Elkins : The steel mills also went off? Mr. Morrow : The steel mills went off and were out of the market. When we make an examination of that statement of the Director General we find that here is what has happened. We have tabulated the amount of decline from the Fuel Administration's figures, as to a number of these districts, and also the advance or increase in price from the higher grade districts and against this table I have set the percentage plus the lost time from operation of the mine from absence of demand as reported by the United States Geological Survey. It is very interesting. In Illinois, for instance, I have reports from those two districts, central and southern, taking the State as a whole. The two districts, when averaged, show a net decline of 4 cents from the Fuel Administration's prices. It did not go up; it went down. They lost 47.6 per cent in their running time. In Indiana the average price went off 17 cents, and they lost 50.6 per cent in their running time from April 1st to August 1st because the buyer was not in the market. In Central Pennsylvania, where we have an average decline of 26 cents a ton in those four months, they dropped 33.4 in running time, due to lack of orders. In Northwest Pennsylvania, where they had a reduction of 21 cents in the 14 price in those four months, their percentage of production, lost on account of no market, was 41 per cent. In the Hazard district, which 1 showed you had a decline of 10 cents in the price, they had a lack of business that cut it down to 21.1 per cent of their time. In Eastern Ohio, with a drop of 31 cents in the price they went off 22.1. They had a lot of Lake business which warranted summer operations. Senator Walcott: I might state that 1 know nothing about the coal situa- tion, and there is no significance in this question except that I am seeking infor- mation suggesting another line of thought. Is there any room to contend the decrease in operating time was due not to lack of demand, but because the prices had come down? But, in turn, that increase would be affected by the demand, and you are going around in a circle? Mr. Morrow : Yes, sir ; in a circle. Senator Walcott: Go ahead. Mr. Morrow : Take the high grade districts. Please bear in mind the Direc- tor General's statement, which is that higher prices discouraged the demand and kept the coal out of the market. I have read you the low price districts. Those are the districts which had bad running time as reported by the Survey The Chairman : In that connection is the Tultle Coal Company of Cincin- nati, Ohio, in the high grade district? Mr. Barker: The Hazard district in Kentucky. The Chairman: Manufacturing the Domino Block coal? Mr. Barker : Yes. The Chairman : In that connection, what were the average prices ? Mr. Morrow: In the Hazard field? The Chairman : Yes, sir. Mr. Morrow: I will read those to you. During April, $2.48; May, $2.56; June, $2.46 ; July, $2.30. The Chairman : In that connection I want to read into the record a letter which was sent me by Senator New of Geneva, Indiana, and ask your explana- tion as to why a price is asked which is far above the average price in that district. The letter is from the Geneva Milling & Grain Company, and I will insert it in the record. It is written by Adam Egly, Secretary and Treasurer, inclos- ing two letters from coal companies that will explain themselves. (The. letter from the Geneva Milling & Grain Co., referred to, is as follows) : LETTERHEAD OF GENEVA MILLING & GRAIN CO. Geneva, Indiana, Aug. 19/19. Hon. Harry S. New, Washington, D. C. Dear Sir : We are enclosing two letters from coal companies that will ex- plain themselves, the one firm' is asking $4.50 per ton for coal that they were glad to sell early in the season for $2.75 to $3.00 per ton. We have coal bought at prices ranging from $2.75 to $3.00, but they are not furnished enough cars to fill their orders, and therefore there is a big demand for coal among all opera- tors and they are raising the prices. If the railroads do not furnish more cars to the mines we believe that prices will continue to raise ; for a§ long as the de- mand is greater than the supply the prices will continue to go up. A short time ago an article appeared in the newspapers saying that Director Hines stated that there was no shortage of coal cars at the mines. All coal com- panies tell the same story of shortage of cars, and we believe that they are right. If you or the Senate could get the railroads to give the people more serv- ice and less promises, it would be a great help and benefit to the peoole of the country. Yours very truly, GENEVA MILLING & GRAIN CO., Per Adam Edly, Sec. and Treas. The Chairman : This is a letter from the Jackson Coal and Mining Company. Hartford, West Virginia. They say: 15 "We write to advise you as to the delay in shipping your coal. We have had no equipment of any kind for three days. The Railroad Administration advises us there is an acute shortage in coal car equipment" Senator Walcott : Why not put it into the record? The Chairman : I have another letter which has a bearing on it. I am sim- ply reading in order that Mr. Morrow may answer the question. This is a letter from the Tuttle Coal Company, Cincinnati, Ohio, in the district where the aver- age price in the last month recorded was $2.30. The letter says : "We are not in position to give you a price covering our Domino Coal in vSeptember, but if you care to place an order with us for shipment next month in available equipment, at the price in effect at time of shipment, we would be pleased to have you do so, as this is the only basis on which we are accepting orders at the present time. The present price on Domino Block coal is $4.50 per ton, but we are not in position to advise what the price for September will be. Very truly yours, TUTTLE COAL COMPANY." That would seem as if that company took advantage of the situation in rais- ing the price almost double. (The letter from the Jackson Coal & Mining Co., Hartford, W. Va., dated August 15th, 1919, and the letter from the Tuttle Coal Company, Cincinnati, Ohio, dated August 15, 1919, are as follows:) LETTERHEAD OF JACKSON COAL & MINING CO. Hartford, W. Va., August 15, 1919. Geneva Milling & Grain Co., Geneva, Ind. Gentlemen : We write to advise you as to the delay in shipping your coal. We have had no equipment of any kind for three days; The Railroad Administra- tion advises us there is an acute shortage in coal car equipment. We are not taking any more 6rders until we can see our way clear to fill those we have already taken. We will get your coal off just as soon as we can get the equip- ment. We realize this is a hardship on you, as well as on oursetves. If you can use your influence in any way to secure to the Coal Operators generally, a better supply of cars, it will be of benefit to yourself and everybody else as well. We believe the time has come when we must all work together for car supply. We write this so that you will not feel that we are intentionally delaying your shipments. Let us assure you again that we will do everything we can to forward your coal as soon as we can secure the necessary equipment. Yours very truly, JACKSON COAL & MINING CO. LETTERHEAD OF TUTTLE COAL COMPANY. Cincinnati, Ohio, August 15, 1919. Geneva Milling & Grain Co., . Geneva, Indiana. Gentlemen : Your inquiry of August 14 is received, but we are sorry to ad- vise that our entire output of Domino Block coal for this month has been sold ahead. Unless thp car supply improves greatly we will not be able to ship more tl'ian one-half or two-thirds of the orders we already have on our books calling for August shipment. The mines have also advised us that they will not accept orders specifying any class of equipment but that all orders must be subject to shipment in available open top equipment. We are not in position to give you a price covering our Domino coal in Sep- tember, but if you care to place an order with us for shipment next month in available equipment, at the price in effect at time of shipment, we would be pleased to have you do so, as this is the only basis on which we are accepting orders at the present time. The present price on Domino Block coal is $4.50 per ton, but we are not in position to advise what the price for September will be. Very truly yours, TUTTLE COAL COMPANY." 16 Senator Walcott: Is the Tuttle Coal Company a retail company? Mr. Morrow : No, sir. The Tuttle Coal Company are jobbers. With respect to the prices, however, I .will say this. Senator Walcott: Before you proceed: many of these letters are from operating miners? The Chairman: The Geneva Milling & Grain Company are retailers, are they not? Mr. Morrow : I presume they are retailers. This Tuttle Coal Company, I believe, are wholesalers or jobbers at Cincinnati, Ohio. The Jackson Coal & Mining Co., are, I think, producers. Do you know about that, Mr. Barker? Mr. Barker : I do not. Mr. Morrow: We will try to find out, Senator, and let you know whether these are operators or not. Ofifhand I do not know. Mr. Morrow: Yes, sir. If the operator is selling his output to some whole- saler, we do not know what happens after that. We have no record of those prices. Senator Walcott: It may be that the jobber increases the price. Mr. Morrow: Mr. Freer advises me that the Jackson Coal and Mining Com- pany are operators. They operate a mine in connection with their salt plant and sell the portion of the output that they themselves do not use. The Chairman : The Jackson people simply complain of the shortage of cars. The Tuttle Coal Company have increased the price nearly one dollar and fifty cents a ton. Mr. Morrow : Let me speak a moment on that. Senator. It is not fair to draw any general conclusions from that statement alone. You would need to know what that Domino Block is. If it is a four-inch block or a six-inch block, that price may be entirely justified. Let me explain how that may be the case. When coal is cleaned and specially prepared, to pick out those fine lumps where the consumer is asking fot^the cream of the coal— that is exactly what they are doing. I do not know what that particular block is, but it needs special preparation for that particular kind of coal, and it means this, also, which you will please bear in mind, that the remaining output of the mine from which those blocks are taken is an output that is diminished in value. If the producer screens five or six cars of coal in. order to get one car of fine lump, they have depreciated the value of the remaining four or five cars, which will have to be sold at much less ; and if the buyer insists on the cream of the coal the l)est out of four or five cars in one single car for him, is nicely sized lumps, carefully prepared, he will have in proportion just what you and I have to buy when we get cream. He would not expect to get it at the ordinary skimmed milk or ordinary milk prices. They ought to pay more than that, for the remainder of the output will be sold fof less. The Chairman : Mr. Morrow, will you please explain to the Committee why it is a firm who were able to produce early in the season this special kind of coal went off $2.75 to $3.00 a ton? Mr. Morrow : At that time the company perhaps was trying to get business to run the mines full time. They were possibly making quotations partly on that basis. That is mere assumption on my part ; I do not know the circumstances. But that might happen. It is just possible they were not making quotations on precisely the same kinds of coal. We need to go into the facts there, you sec, because a slight difference in the size of the lump and the kind of preparation will justify a wide difference in the price; and if they were able to run their mine full time they could make lower prices. So it would be necessary to find out the circumstances to answer definitely. The Chairman : Either they are compelled to increase their price by reason of the class of coal they are called upon to deliver, and the difficulty of produc- tion, or else they are taking advantage of the situation, one or the other. As TO HiNEs' Price Insinuation Mr. Morrow: That is right. If they are taking advantage of the situation, we have no sympathy with them at all. I want to make that quite clear. 17 May I go on, Senator? We were referring to the statement of the Direc- tor General that higher prices had been responsible for the lack of demand, and I have- shown you that in these districts where the price had gone off the most the demand has been the poorest, just exactly the reverse of the condition if the Director General's assumption were correct. Let me go further with that. In those three high grade districts I have shown you, viz., the Pittsburg, the smokeless and the Harlan fields, we find that in the Pittsburg district the average price for those four months was off one cent a ton, and their percentage of loss in production was only 16.5, as compared, for instance, with 47, 50, 33 and 40 in other districts. In the smokeless field in which the price rose 26 cents a ton, on the average, the running time lost during which there were no orders was only 15.2 per cent;. in the Harlan field, with the price going up one cent, on the average, the production they lost on account of no market was only 11 per cent. Mr. Morrow: We just wish to point out the fact that these figures alone show that the Director General was mistaken in the statements he made, that prices have not stayed up and therefore they could not have been a factor in keeping the producer out of the market. Senator Myers: Is there a lack of demand for coal? Mr. Morrow: A very great lack of demand, yes, sir. Senator Myers: Is not that very true always in the summer time? Mr. Morrow: Yes, sir; that is more or less true. Senator Myers : Do not operators go ahead and produce in the summer and lay it up so that by fall they will have a stock on hand? Mr. Morrow : Senator, if you have a mine open on the side of a mountain, where are you going to lay your coal up that you produce? Senator Myers: Are the mines not prepared to do that, as a rule? Mr. Morrow : Oh, no, indeed ; the coal is produced from the mines and dumped in the railroad cars which are waiting on the siding under the tipple, and if those railroad cars are not there the coal cannot be produced at most of the mines, for there is no place to ship the coal if nobody wants it. Senator Myers: The miners have to dispose of it? Mr. Morrow : Yes, sir. It is not practicable to store it at the mine. Senator Myers: Are there not wholesale coal dealers who store up coal? Mr. Morrow : Only in fhe extreme northern parts of the country ; in North- ern New York, in the Northwestern States at the head of the Lakes and in New England some wholesalers do that. Senator Myers: Has the demand fallen off this year? Mr. Morrow: Abnormally, yes, sir. It is the remarkable drop in the demand that is the difficulty of production. The production has been dropped back to the level of 1910. Senator Myers : Is not the lack of demand attributable to the falling off of the war industries and the steel products, and so forth? ^ Mr. Morrow: Yes, sir; that is true of by-product plants, industrial plants which had stocks at the beginning of the year have used up those stocks, and they have been slow to place their orders and buy coal and lay in new stocks. That has influenced the purchase of coal and is a factor in the remarkable showing of no markets for coal and no demand for coal. Senator Myers: Do you think there is any danger of a coal famine next winter? Mr. Morrow: Yes, sir; there is danger of it. That is the situation we feel that confronts us now and we have felt that way for two or three months, unless we could persuade a large part of the people to begin buying their coal during the summer, while these prices were down and while the railroads could haul the coal. If they wait for the fall and winter and all ask for it at once they will not get it. Senator Myers: Have the people been any more slow in ordering their winter stocks than usual? Mr. Morrow : That is the impression we have and we gained that impression from the official report of the United States Geological Survey, 18 Senator Myers: To what do you attribute that indifference? Mr. Morrow : We attribute it to two things. It is due in part to the natural reaction from the pressure of the war. We have all sort of felt, "Well, the war is over, and we can sit back," and coal buyers have thought they could take their time. 1 have not any doubt that some buyers of coal have been influenced by the idea that there should be normally some extreme drop in the prices of bituminous coal, but they did not analyze the situation. That was merely a general impression they have perhaps had in their minds. If they had possessed any accurate idea of the situation they would have known that could not take place, for the simple reason that with the price controlled by the Fuel Administration, and this price fixed on a cost-plus basis, there would not be any material drop in the price, because there would not be any exorbitant price allowed by a Government agency. There is this further reason, that with the reduced running time of the mines, operating only three or four days a week, the cost of producing coal has gone up. Senator Myers: Why are they only running three or four days a week? Mr. Morrow: Because they haven't any place to ship the coal. If you were to load it in railroad cars and ship it out to some place in the hope that you could sell it, and you did not make a sale, it would begin to accumulate demurrage of several dollars a car, and you are going to lose so much money that you wouldn't do that more than once or twice. In the future you would wait until you got the orders for the coal before you would load it in cars and start to ship it. Senator Myers: Is coal any higher than it was this time last year? Mr. Morrow : It is lower, and it has been lower for four months. Senator Myers : So the price should have nothing to do with the indifference of people in buying coal? Mr. Morrow : It should not have. Car Shortage Senator Myers: Do you claim there is a shortage of railroad cars? Mr. Morrow : There is no question about there being a shortage of railroad cars. Senator Myers : Is there a sufficient supply of cars to meet the demand ? Mr. Morrow : There is not a sufficient supply of cars. Senator Myers: If there was greater demand you would not have the cars? Mr. Morrow : There would be still more shortage of available equipment at this minute to supply the demand. The Chairman : Then you challenge the statement of Director General Hines that there is a sufficient number of cars? Mr. Morrow : We certainly do. Senator Myers: When demand is made for more cars what do the railroad officials reply? Mr. Morrow: I think it would be well to ask the railroad officials about that. Senator Myers : What do they say to you when the demand is made for more cars? Mr. Morrow: Director General Hines has written to the Senate of the United States, and I presume that expresses his opinion right well. One of these railroad officials has this to say — this is from the General Superintendent of Transportation of the Baltimore & Ohio : "At present we are unable to meet the demands for coal car equipment and the co-operation of shippers would be mutually advantageous. Mav we not ask that you again take this matter up to see that all coal car equipment is utilized to the fullest possible extent, or that cars are loaded to ten per cent in excess of their marked capacity when the cubical capacity will permit ?" We are glad to do all we can, but they frankly admit they are unable to meet the demand. The Chairman: I think, Senator Myers, the question of car shortage is one we will have to devote considerable time to. 19 Senator Myers : I suppose so. The Chairman: In order that the record at this time, in view of the fact you have asked the question, may be complete, I will insert in the record the reply of Director General Hines to the resolution asking for the record of coal cars. Senator Myers : I will be glad to have it now. The Chairman : It was introduced by Senator Pomerene and it should go in the record at this time. I think that is one of the questions we are going to investigate. (The letter referred to is here printed in full, as follows:) Mr. Morrow: In that connection, let me go on to say this: We wish to present to your committee the facts as we see them with respect to this present transportation factor in the production of coal. We have a number of exhibits prepared, and a very definite Outline of the situation as we get it, and we want to present that to the Committee and discuss it with you gentlemen, not to find fault, however, with the Railroad Administration at all, but that you may understand, and we may all understand what the situation is. Functions of the N. C. A. Senator Myers : I was not here when you began your testimony. What position do you occupy? Mr. Morrow: I am vice president of the National Coal Association. Senator Myers: What is the object of that Association? Mr. Morrow : It is an organization of bituminous coal producers. Senator Myers : Why do you say your organization are neither buyers nor sellers of coal? What does it do? Mr. Morrow : It 'devotes itself simply to general matters of concern to the industry as a whole; not local questions, but matters of this kind; this present car shortage which affects the industry generally is a matter we have taken up with the United States Railroad Administration frequently during the last two months. It devotes itself to questions of that kind. If we have any matter which are in Government Departments, with a governmental agency, we can get in touch with the entire bituminous industry. Senator Myers: It is an organization of producers? Mr. Morrow: Yes, sir; it is an organization of producers. Senator Myers: That looks after the conduct of the producers? Mr. Morrow : No, sir. We do not set up any standards for our operators to follow. Senator Myers: But you look after their general interests? Mr. Morrow : Yes, sir ; in matters that are strictly proper and entirely legal and where it is a matter of national interest and common concern. For example, the necessary co-operation between the coal producers and the United States Fuel Administration during the war in increasing the production of coal and matters of that kind. Senator Myers : I am glad to have that information. Mr. Morrow : This information, too. about prices. Senator. Perhaps you did not hear that explanation, either. We have this information because wc collect it from the producers of coal through members of our association and we compile these market statements from day to day and we give that infor- mation back to the producers and consumers of coal, and it is published in the coal trade papers so that they can find out what the market price of coal is ; not simply what somebody says it is, but what they really sold the coal for from day to day. The Chairman : I do not want to interrupt the continuity of your state- ment, but in view of the question that has been raised by Senator Myers in regard to the attitude of the public at this time, the fact that they are not buying coal and the fact that that attitude will contribute largely to the con- ditions in the winter, would it be in line with your statement to inform the committee what missionary efifort is being made by your association to induce a distribution of coal? 20 Mr, Morrow : Yes, sir ; I will be very glad to do that. The Chairman : And also, in that connection, do you think it would be in line to make a statement regarding whether there would be a sort of record of analysis made of the mines that have not the available car supply so that we might ask the Director General to look up the situation exactly as it exists from each one of the miners and each one of . the operators, so that he might know how he should direct his cars, in order to furnish the transportation facilities to these mines? Might that not be a practical suggestion? Mr. Morrow: In answer to that suggestion of yours. Senator, on the transportation feature of it, you might say, I will ask you to permit us to put our traffic secretary on the stand, as he has all of these details and he has been working with the Railroad Administration and has been giving just such information as you suggest, to them ; he is familiar with what they have and how they handle it, and so on, and he can answer many questions that 1 could not answer. The Chairman : Well, we will put him on later. Senator Walcott : I do not wish to interrupt here Mr. Morrow: You are entirely free to interrupt me at any time. Senator. I have not any set speech that I am getting off at all. Senator Walcott: I understood you to say a while ago that prices of conl varied just as much as do the grades of coal. I suppose there is quite a wide variation in price between the best coal and the poorest coal. Mr. Morrow: Yes, sir; there is. Senator Walcott: In those charts which you have gotten up, showing the United States Fuel Administration price, the average price, is that the price of the mine run? Mr. Morrow: That is reduced to a mine run basis, yes, sir. Senator Walcott : And the prices which are shown during the months of April, May, June and July, on this chart are also the prices of mine run? Mr, Morrow : It is all coal averaged ; that includes the prepared coal as well as mine run. I might say. Senator, for your information, that the Fuel Administration price on mine run was intended to be the average price. It had to be just about that figure, otherwise you would get more prepared coal than you would want, or you would get less prepared coal. Senator Walcott : Then, the basis of the average of the two prices is about the same? Mr, Morrow : It should be. Yes, sir ; it must be. Senator Walcott : Now, I come to this question that has been running through my mind. Are these figures reliable unless w^e also have a comparative study of the quantity of high grade coal sold, say, during four months, and like figures showing a high grade coal going to make up the average Fuel Adminis- tration price? The manifest reason being that if there is a small quantity of low grade coal ^being sold in the four months the average price would be relatively lower as against the average price of the Fuel Administration if there was a relatively larger quantity of high grade coal being sold by the Fuel Administration, which would lift up the average price of the Fuel Admin- istration coal. Do you catch my thought? Mr. Morrow : Yes, sir. Let me tell you what happened, I have not the exact figures, but from about the first of February, 1918, up until the close of the \yar I had charge of the distribution of coal for the United States Fuel Administration and know something about the demand in these different districts and what coal actually moved. During that period that these Fuel Administration prices were effective, both good and bad coal was being produced, and sold — all that could be produced. So, you had the maximum production of both kinds of coal. Now, since the absence of demand and the falling off in the price of coal, the demand for the high grade coals- has continued; there have been more demands for these coals than for the low grade coals, because the buyer of coal could choose his coal and naturally he preferred to take the better coal when he could get it. The consequence is. if we had the figures I am confident we would find the percentage of high grade coal which has been sold in these 21 four months now as against a similar period last year, is greater in these four months than last year, because the low grade coal has not been sold in great quantities. If that is true, the average lines which we show on the chart here will be raised by that increased percentage of high grade coal, will they not? Senator Walcott : That is to say, the coal would be cheaper than appears by those charts? The "No Market" Situation Mr. Morrow : Yes, sir. If there is any error therfe, the actual situation ought to show a little wider margin between the Fuel Administration price than this. We do not know, but that is the tendency that we might reasonably expect. You are speaking of the variation in that price in different districts, if you care to go into that. You were asking what the National Coal Association had done to stimulate demand. The main thing that we have done has been along these lines : Early in the year, as early as May, our Board of Directors felt that we were approach- ing a serious situation if the lack of interest on the part of the general public in obtaining its supplies of coal continued, and they asked all of our members that they could reach to do what they could personally with their own customers, to advise them of the situation and of the difficulties that they might look for later on in obtaining coal, and to see what they could do to encourage -them to buy now. I will illustrate what they did by just a few concrete cases. One company which I know of, which is an important producer of coal in the State of West Virginia, went to some of their customers, and said, "Please let us run our mines now and ship our coal to you ; you have the place to store it and we have not. When you want it you are going to want it there at your place and not down at the mines in West Virginia ; hence, let us ship it to you now, and you can pay us for it when 3'ou use it, either pay us the price we are asking you now, or pay us whatever the price may be then. In other words, let us ship you the coal and you can practically set your own price on it later on." They refused to do it. Now, that particular customer is in the market hunting for that coal, for in the meantime that producer found somebody else who would take the coal either on those terms or some other, and it made a contract with them. All kinds of expedients of that sort were used to persuade the buyer to take the coal and stock it during the spring and summer ; the producers did not hold out for prices. They said, "Let us run these mines and keep our men employed, so they can live and so we can maintain our organizations and do something to fill up this hole in the coal supply for the country." They did not get results. The producers sent out circulars, as these coal companies do, and they carried on their own individual efforts. Then, in the latter part of June, our Board of Directors authorized a general advertising cam- paign, not long extended or anything of that kind, but just to present the facts generally to the public in the way of a warning, so that we might say to them, "This is the situation as we get it from official reports. We are likely to need about so much coal and we are producing at such and such a rate. We are not going to have enough if that keeps on." "This summer the railroads have got a good opportunity to move coal ; let us co-operate with them and the producers and get some of this coal moving." That advertising campaign was put on in the last week of June. If you will refer to the charted figures of production of the United States Geological Survey — do you have the last copy there. Senator? Here it is for August 23rd, if you do not have it. The Chairman : Yes, this is August 23. Mr. Morrow : If you will take a look at the heavy line on that chart, which covers the production of coal during 1919, and follow along there until June, you will strike the week of June 28. In the middle, of that week we put the first advertisement in the newspapers of the United States, calling attention to the shortage in the production of coal and urging consumers to go out and 22 buy their coal, and let us begin shipping. You will notice that was carried on there for about two weeks. You can see what happened in the production of coal; it immediately jumped. It had been in the neighborhood of eight and a half million tons a week ,and it went up to nine and a half million tons and then up above ten million tons. The Chairman : It got on the toboggan in August ? Mr. Morrow: Yes, sir; and if you will turn to the second page over, down at the bottom of it, and analyze the reasons for it getting on the toboggan, you will see what happened. The Chairman: The second page? Mr. Morrow : The third page, Senator ; pardon me. One of the reasons, possibly, for its going down was that we stopped the advertising campaign, as we felt we had done our part; we had started the demand. Orders began to come in. But checking over those percentages of production and the tonnage that was lost on account of different reasons, as .shown by the survey, July 10, 26, August 2 and August 9, they tell their own story of the reasons for the slump. Possibly some buyers did not go on with their purchases of coal._ I do not know about that ; but for some reason or other, immediately following that advertising campaign, there was a very definite stimulation and an increase in the demand and production and shipment of coal. Beginning the second of August it has gone down. The Chairman: What are you doing now to keep up the demand? Mr. Morrow : We do not have to keep it up. We have more demand than we can satisfy. The situation now, just as I told you at the outset, is that the problem is to get the production. People know now that there is danger of not having coal enough produced and shipped this year. Senator Myers: The demand has increased? Mr. Morrow : It has increased. Those men who would not take coal on any terms last spring are now anxious to get it. Senator Myers: How are you fixed for labor? Air. Morrow : I wish to have the president of our Association talk to you on that, because he has made a special study of it, and I am not competent to speak of it. He can tell you a great deal more about the advertising campaign and other efforts of the Association to increase the demand, because that was under his immediate control and supervision. I am simply making a general statement now. Senator Walcott : When you speak of people not wanting coal last spring, but now realizing that there will be difficulty in getting it, who do you mean by "people"? Do you mean manufacturing concerns, business concerns, or those who desire coal for heating purposes? Mr. Morrow : I mean both ; but primarily the business concerns. Those men now, instead of looking to the coal operator to send his representatives to them to try to sell their coal are sending their buyers to the mines and offering this, that or the other price for coal, although the operator may have contracted with someone else, or who may not have the necessary cars in which to ship it. The Chairman: Then the question now is production? Mr. Morrow : Yes. The Chairman: And you cannot meet the demand? Mr. Morrow: That is the situation as we find it now. Senator; ye$, sir. Our difficulty at the present time is production. The Chairman : How can that situation be improved ? Mr. Morrow: How can that situation be improved? The Chairman : Yes. What can be done in a co-operative way to improve it? What can the Congress do? Mr. Morrow : That is a very difficult question to answer. Personally, I feel that if we were able to ship the coal that we could mine, we would pretty nearly satisfy this demand, and I think that could be done. I am speaking of my own general impression. , The Chairman : Have you enough labor ? Mr. Morrow: The question of labor, as Senator Elkins indicated, is a serious question. That is also a question that I would prefer to have Mr. Ta^dor 23 speak to you about, because he has studied it carefully. There are three or four factors that we need to consider. First, the demand from the consumer. No enterprise will start without a demand for its product. Mines wiil not open unless there is a demand. Now, we have the demand. We did not have it earlier in the year, but we have it now. Another factor that controls the production of coal is the number and the capacity of mines opened. Are there enough mines open? That is another question. We will give you all the infor- mation you want on that. The Chairman : That is the question I want to go into — the production and consumption of last year and the needs of the future. Mr. Morrow : There, again, Mr. Taylor has studied the situation more carefully than I and can give you more exact information about it. The Chairman : Then, do not go into that now. The question I aslc^d was: How can the situation be improved or relieved immediately? HiNES Must Furnish Enough Cars Mr. Morrow : The immediate limitation on production at this moment — the primary limitation on production — is the lack of cars at the mines — a lack of sufficient transportation facilities for the movement of the coal. That is the first thing to get straightened out. The Chairman: Then, it rests right here in Washington with the Director General's office? Mr. Morrow: That is right, sir. The Chairman : To furnish enough cars for the prpper transportation and distribution of the coal? Mr. Morrow : Yes, sir ; and to move those cars after they are loaded. Do not let them stand around on the mine tracks after they are loaded. The Chairman: Does that condition exist at the present time? Mr. Morrow: I do not know how largely it exists, but I do know that it exists to some extent. Our traffic secretary can advise you about that more definitely. The Chairman : I notice the Director General speaks of other merchandise than coal. Mr. Morrow: Yes. The Chairman : And that the movement of coal is delayed on that account. Mr. Morrow: Yes, precisely. The Chairman : Is not the key to the whole situation of all production at the present time, almost, the question of coal? Should not that have priority? Mr. Morrow: I am not prepared to say that it ought to have priority, but I will say that it certainly ought to receive as much attention as any other branch of transportation — as any other commodity that is transported. I do not know that coal, for instance, should have preference over perishable freight and things of that kind. The Chairman: No. Mr. Morrow : I am not competent to speak on that, Senator, frankly ; but the men who are competent to so speak can give you their own ideas about it. This I will say, however ; that more should be done than is now being done to get the coal loaded and the cars moved. The Chairman : You feel that something could be accomplished by Mr. Hines if he would move actively in the direction of furnishing more cars, and also moving the cars that are loaded at the present time from the mines? Mr. Morrow: Yes, sir; I do. Senator Walcott : You said that there were several factors entering into the production of coal. One is the demand. That has now been supplied? Mr. Morrow : Yes, we have all the demand we want. Senator Walcott : Another is the supply of cars for transportation, and that is a problem which is still acute? Mr. Morrow : Yes, sir. Senator Walcott : I understood you to say that there is a third factor. You did not give that third factor. 24 Mr. Morrow : There are two other factors : The number and the capacity of the mines that are open Senator Walcott (interposing) : Yes, you mentioned that. Mr. Morrow : I think the mines that are now open can produce all the coal that this country would need ; more than they would have any use for. Senator Elkins : That is, with the necessary labor and the cars? Mr, Morrow: Yes, with the physical equipment that is in those mines at the present time, if we can get the work from the men and the cars necessary to move the tonnage. Senator Elkins: You have covered the labor and the transportation problems — rather, mentioned them. Mr. Morrow: Yes, I mentioned those. Senator Elkins: And labor closes the list? " Mr. Morrow: Yes. Senator Elkins: And you are not prepared to speak about that? Mr. Morrow: No, sir. W'e have tried to provide the men who are best qualified to speak on the respective phases before your Committee, and who have prepared themselves on those subjects. Then if you want to go into the situation in any particular district, we will see that some man who knows the situation and who lias made the necessary prepara- tion to give you the information you desire, will come here to testify. Senator Walcott: Then, there are two problems that need immediate attention to correct the situation: cars or transportation facilities, and labor? Mr. Morrow: Yes, I wish to make it very clear to the Committee that you need not waste any time in trying to find any combination, and that there is no price situation that you need concern yourselves about now. If you get those other two factors straightened out, and get the production, you do not need to worry about the price. It will take care of itself. The Chairman: You refer enirely to the production at the mines? ^ Mr. Morrow: Yes, entirely. The Chairman: There may be certain evils beyond that? Mr. Morrow: Oh, yes, which we may not know about. Senator Elkins says a big production would settle a lot of those evils, and I be- lieve he is right about it. The Chairman: You believe it would? Mr. Morrow: Yes, I do. The Chairman: Some of the coal operators who have been writing to me say they have no difficulty with a shortage of either labor or cars. Mr. Morrow: That is true in some districts. The Chairman: Could you show the committee just exactly where there is a car shortage? Mr. Morrow: Yes, sir. The Chairman: And also where the Railroad Adm.inistration is failing to move cars promptly? Mr. Morrow: Our Traffic Secretary will have that information. The Chairman: We wish you to give us as specific information in regard to that as you can so that we may have it on the record. Mr. Morrow: Yes, sir. The Chairman: And show it to the Director General. Mr. Morrow: Yes, sir. The Chairman: Because I know he is anxious to cooperate in this matter. I have had a conference with him, and he is very anxious to co- operate in an effort to relieve the situation; and if you can show him ex- actly where they are falling down, I think something can be accomplished that will improve the service. Mr. Morrow: We have been doing that day by day — communicating with the Director General, at his request; we have been giving him that information for some time, and we have been calling his attention to this 25 situation. As I say, our Traffic Secretary, who has been doing that, knows just what has been done, and how, and he ran go into that with you fully. Senator Walcott: At the time that the Director General made the statement in a letter to the Vice President that there was no shortage of cars, you stated a- while ago, as I recall, that there was? Mr, Morrow: Yes, that is right. ^ Senator Walcott: Now, was your organization at that time supplying him with information showing where the car shortages were? Mr. Morrow: It was. Senator Walcott: And with that information in hand, he made the statement in a letter to the Vice President Mr. Morrow (interposing): The letter of the Director General, if you will observe, quotes the reports of the United States Geological Survey, and he quoted the latest reports of the Survey. I think he did not try to get all the information which he probably could have obtained from the operating officials of the railroads. He may not have had it in his hands at that time; I do not know; but the fact remains that at the date he was writing, there was a serious shortage of cars. Senator Wialcott: At the mines? Mr. Morrow: Yes, and it could have been very readily ascertained. Here are the later reports of the United States Geological Survey which show that. Senator Walcott: And you were reporting to him daily at that time the shortage? Mr. Morrow: We were, yes. Senator Walcott: Does the Geological Survey undertake to say that there was no shortage? Mr. Morrow: On the contrary, they point out quite a serious short- age of cars. Senator Walcott: Well, then, from all sources of information the Director General seems to have been advised that there was a shortage of cars at the mines? Mr. Morrow: Yes. sir. The Director General indicates his opinion as to the seriousness of the shortage, with which opinion we do not agree. He seems to feel, judging from his letter to the Senate, that it is not an abnormal or serious matter. We cannot admit that. We think it is a serious matter. Senator Walcott: I confess I have not his letter in mind now, but I thought he claimed that there was no shortage. Mr. Morrow: No, he did not contend there was no shortage, he ad- mitted that there was a shortage. He said, however, that it was not at)- normal, or gave that 'impression, rather. The Chairman: Is it not usual at the present time, in the summer, to furnish the mines with plenty of cars, and did they not do that last year, and is not the Director General basing his opinion upon the summer sit- uation, which is not supplying enough coal or which will not supply enough coal to meet the demand next year? Mr. Morrow: I do not know just what is in his mind. Senator Elkins: His letter covered that lull in business? Mr. Morrow: I think it did, yes. The Director General pointed out the fact that there had been a decline in the demand for coal, and he in- dicated some doubt as to the probable requirements during the remainder of the year, and mentioned some information he had with respect to that, I think; but, as I say, we do not altogether agree either with the state- ment of facts given in his letter as to the extent of the shortage or the probable consumption of coal or the seriousness of the car shortage — particularly as to the seriousness of it. The Chairman: Before we ask the Director General to meet this sit- 26 uation, you will furnish the Committee with definite information as to where the car shortage exists, and also where there is a failure in dis- ribution? , Mr. Morrow: Yes, sir; we will do that. Senator Walcott: Generally speaking, do the consuniers of coal buy di- rectly from the mines or through wholesalers? Mr. Morrow: There are about 90,000 consumers who buy in carload lots. Senator Walcott: Direct from the mines? Mr. Morrow: Not all of them directly from the mines. Quite a few of those consumers buy through wholesalers or jobbers. Many of the smaller operators of mines do not have production enough to justify them in maintaining their own sales organizations, and they turn their product over, in many cases, to wholesalers or jobbers. They deal with carload buyers, and in cases of that kind, the transaction goes through the whole- saler or jobber. In other cases — and in the greater proportion of the pro- duction of bituminous coal — it is sold directly by the producing company to the consumer, because far the greater tonnage of bituminous coal goes to the industrial concerns, and it is sold in carload lots to the consumer di- rectly from the mine. Senator Walcott: Are there any statistics relative to the proportion that is bought directly from the mines and that bought from the whole- salers or jobbers in coal? Mr. Morrow: I am not certain that there are, but I presume the United States Fuel Administration or the Federal Trade Commission rec- ords must have gone into that, and possibly they have it. In our distribu- tion work down there we did not worry about whethe' it went through a wholesaler or a jobber or directly. If we had to supply a power plant or a public utility, we ordered a shipment from the mine to that plant. Senator Walcott: And that went to the consumer at the mine price? Mr. Morrow: Yes. Senator Walcott: Whereas if it went through a wholesaler or a jobber- something was added on to the price? Mr. Morrow: Yes, and some of it did go through wholesalers. As far as possible, we allowed the general movement of coal to go on in the usual manner. Senator Myers: Do the coal retailers in cities of the size of Washing- ton buy coal directly from the producers? Mr. Morrow: I am Unable to afiswer that, because the retailers in Washington buy largely anthracite coal, and I am not familiar with that feature of the business. Senator Myers:' The papers generally show an average of about $2.50 at the mines? Mr. Morrow: About $2.40 at the mine^. Senator Myers: That is bituminous coal? Mr. Morrow: Yes, sir. Senator Myers: Not anthracite? Mr. Morrow: No, sir. Senator Myers: Now, what is the average price r»f anthracite coal at the mines? Mr. Morrow: I am unable to say. The anthracite people no doubt can give you that. , Senator Myers: Does not your Association represent the anthracite producers? Mr. Morrow: No, sir; only the bituminous producers. The Chairman: I stated, Senator, at the beginnmg of the hearing, that in view of the fact that shortage seemed to exist more in the bitumin- ous production, we would take up the question of bituminous coal first. 27 Senator Myers: Oh, yes. The Chairman: And we have been confining ourselves to that. Senator Myers: Yes, I did not know about that. American and Foreign Prices Compared The Chairman: Will you continue, Mr. Morrow? Mr. Morrow: That is all I have to say; but if you, Mr. Chairman, or any of the other members of the Committee, have any questions that you would like to ask, I would be glad to try to answer them. I might per- haps add this, which will be of interest. Senator. The Chairman: Yes, Mr. Morrow: Senator Myers inquired as to the average price at the mines in the United States. It may be of interest to know that our prices on bituminous coal at the mines, comparatively speaking, are very cheap. For instance, the price in England at the present time — and I am reading from a commerce report of August 14, 1919, page 870 — one of our con- sular reports, and he used the word "coses" — he means "prices" — the price at the pit head in Scotland is $7.04; in the rest of Great Britain $7.14 and in France $8.76 per ton, as compared with $2.40 a ton 'here. Senator Walcott: That is the cost at the mine? Mr. Morrow: Yes, sir. Senator Walcott: Does the report say that or does it say the cost in the hands of the consumer? Mr, Morrow: No, sir; that is at the pit head; that is at the mine. It is much more than that when it gets to the consumer. The Chairman: Can we get from some of your witnesses — I do not know whether this Geological Survey report gives the information or not — how much coal has been consumed in the present calendar year? Mr. Morrow: I doubt if anybody has that information, Senator. We know how much has been mined and shipped, but just how much of that has gone into storage, it is difficult to say. The only place that we would have any approximation of that would be at the head of the lakes, and I assume the dock operators up there could give you pretty accurate figures of that condition. I doubt if they could tell you about it in New England. We know, for instance, how much has ijone by water to New England, but how much has gone into stocks up there we do not know. We did col- lect that information when the Fuel Administration was in operation. The Chairman: Is not that rather important to know? Mr. Morrow: I think so. The Chairman: How much coal there is now in s-.crage? Mr. Morrow: Yes, but nobody knows. The Chairman: Could you not determine that? Mr. Morrow: No, sir; not now. The information along that line, I might say,* which has been collected by the Geological Survey — and they can correct me if I am wrong about this — I think has necessarily been dis- continued because their appropriation of $40,000 for that purpose was cut ofif. The Chairman: Of course, in that connection, I should like to know what is usually stored at this time, of year. Mr. Morrow: We would have difficulty in getting that information. The Chairman: Is there any way of estimating the probable consump- tion for the balance of the year, for domestic purposes? Mr. Morrow: It has been estimated. The Chairman: Is that on the record as yet? Mr. Morrow: No, Mr. Taylor has that information. The Chairman: Is Mr. Taylor your next witness? Mr. Morrow: Yes, sir. The Chairman: Well, I simply want to find out who can give the 28 Committee this information. Who can give us an estimate as to the pros- pects for export coal, what has been exported and what has been engaged for exportation? Mr. Morrow: We will have Mr. Farrell and Mr. Wilshirc give you that information. They are both connect(;d with the export ot coal, and are producers as well. The Chairman: Who can give us information as to the number of mines, or did you give us that in the beginning, in operatioiM* Mr. Morrow: I gave^the number of mined in operation. The Chairman: How does it compare with previou.^; years? Mr. Morrow: It is about the same number of mines that were in operation. It is a little more than the number that were in operation in 1916, and I would say it is a little under the number in operation in 1917, perhaps; not appreciably under. Mr. Taylor has worked out the figures on the capacity of these mines, which will be very interesting to you, and that is more important than the number of the mines. The Chairman: Is the capacity greater than in the years prior to the war? Mr. Morrow: It is about the same as in 1918, I would say, offhand. The Chairman: Is it greater or less than the pre-war period? Mr. Morrow: Oh, it is greater, much greater, and the capacity of the mines, in our opinion, has increased more than the production of coal. The Chairman: Has the number of the mines increased? Mr. Morrow: Yes, sir; not in this year over last year, but as over the pre-war period, yes; very materially. The Chairman: That, of course, has an important bearing on the num- ber of cars and the means provided for distribution. Mr. Morrow: That is right. The Chairman: How many more mines are in operation this year than last year? Mr. Morrow: Well, I doubt if there are any more in operation this year than last year; the same number, or about the same number, of mines are open which were open last year", but they are not all operating right now. Some of them are shut down waiting for conditions to change, but they are right there ready to open and operate. The number in 1917 was 10,634, and the total number might be about that now. The Chairman: What was it during the pre-war period? Mr. Morrow: About 7,000. The Chairman: And there are 3,600 more mines than there were dur- ing the pre-war period? Mr. Morrow: It is about somewhere near that. The Chairman: And the Director General of Railroads would have to furnish more cars on account of the increased number of mines? Mr. Morrow: The total capacity and requirements of those mines for cars, however, is not as great as the percentage of increase, remember, because a large number of those small mines ;ire what we call small wagon mines, and, whereas a mine of that kind would need about one car a day or three or four cars a week,, 'a real large shipping mine might want 50 cars, or possibly 100 cars a day. So the mere number of mines there is not the best index of that proposition. It is the capacity at the mine that is the important thing. The Chairman: Can you furnish the Committee with any definite in- formation, specific and definite information, as to what mines are now* failing to produce their capacity and those that ought to be fully developed, what mines are not operating^ or failing to produce their capacity owing to no market, lack of labor, or to the competition of other mines Mr. Morrow (interposing) : We could get that information for you. 29 The Chairman: Or insufficient transportation. That seems to be rather valuable information, because if you are going to correct a situation you have got to know the causes. Mr. Morrow: In the several local associations, where they take up just such questions as that locally, I think most of the associations have their information compiled. Well, if they do not have it^ they could get it very promptly and we could compile it and submit it to the Committee. The Chaitman: Well, will you bear that in mind and advise me later whether that information can be produced in detail? Mr. Morrow: Yes, I will. The Chairman: I presume no witnesses will appear tp give us the estimate of cost up to the ultimate consumer. You do not wish to deal with that; you want the wholesalers and retailers to take up that question? Mr. Morrow: I believe one of our members has some analyses of costs which carry from the mine to destination, but I do not think they carry clear through to the consumer. Is Dr. Honnold here? How about that exhibit? Dr. F. C. Honnold: I have those figures, but they are to destination. Mr. Morrow: Wiell, that will give y.ou an index in regard to it. The Chairman: Have you anything further to say? Mr. Morrow: No, sir. The Chairman: We will then hear the next witness, who is he? Mr. Morrow: He is Mr. Harry N. Taylor, of Kansas City, who is the President of the National Association. STATEMENT OF HARRY N. TAYOR, President of the National Coal Association, Kansas City, Missouri. The Chairman: You are President of the National Coal Association? Mr. Taylor: Yes, sir. The Chairman: Are you a mine operator or coal operator yourself? Mr. Taylor: I am the Vice President of the Central Coal & Coak Co., operating in Missouri, Kansas, Arkansas, Oklahoma and Wyoming, and I have individual operations of my own in Iowa. I am interested in Illinois. The Chairman: What the Committee is interested in is to try and re- - lieve conditions and bring about a situation to prevent coal shortage next year. We shall be very glad to have a statement from you and views which you may have on that question. Mr. Taylor: Senator, the National Coal Association has access to the same figures that the Railroad Administration and other people interested in the purchase and movement and consumption of coal have. Those fig- ures, compiled by the Geological Survey, pointed out a warning to the coal industry very early in the season, that th'e production of bituminous coal in this country was falling off to a very marked degree and by the 1st of June, or rather earlier than that, possibly the 1st of May, it became very evident to a student of the industry that unless something was done there would be a repetition in the year of 1919 of the serious condition that ex- isted in 1917 unless the public were aroused to the necessity of cooperating in the movement of coal. « Now, there are three distinct factors which pertain to the successful operation of coal mines and the successful serving of the public interests: that is, the producer, the consumer and the transported. If anyone of those three fail the other two are helpless. If the consumer wants the coal and the producer can produce it and there are no cars to move it, the other two are helpless. If there are plenty of cars and plenty of coal and the consumer will not place his orders, the transporter and the producer are helpless, etc. Any one of them failing in his share of the work renders the other two helpless. 30 Ill the early summer months of this year the one that failed was the consumer. 1 attribute that largely to the fact that for two years the Gov- ernment and the coal operators, in their effort to assist the Government, had intensified their demand upon the public to store coal. The press was full of the necessity for winning the war, and amplified the importance of the movement of coal in the twelve months, if we were allowed to pro- duce enough coal to win the war. They .laid stress on that. In pre-war times, when there was no particular incentive, it was often the practice of the consumer to wait until he really needed coal, and if the railroads had plenty of cars and if the operators had plenty of coal at their mines every- thing was all right; there would be a rush at the last minute and there would be a rush to buy coal in the fall that would keep the operators and the transporters working at top speed. So through the Fuel Administration that condition of affairs was made known to the public and that was emphasized and the public made famil- iar with it, and the production during the war-time wa? made almost con- tinuous throughout the war, and the ultimate consumer either stored his coal in the factory yard or in basements of the home users, and the rail- roads stored a large amount of coal, so that the production of those years was practically only limited by the transportation and the ability to get It through the congested centers. After two years of practically hounding the public to buy coal, when the armistice was signed there was a relaxa- tion on the part of the consuming public which was reflected in their lack of buying, and the Geological Survey figures distinctly showed that the production was falling off. By the 1st of June there had been a less production in this country, as compared with the year previous of about 70,000,000 tons, and it became evident to the coal industry that unless something was done, if we were to make up in part, or in large part, that large shortage of production, it would so congest the business in a few months that it would be impos- sible for the railroads to move the coal, especially inasmuch as they would probably be called upon to do so at the same period that I have previ- ously spoken about, they would be called upon at that same point to move the largest crop that was ever produced In this country, and with the added demand on transportation it would be impossible to take care of the pub- lic's want for coal and move other commodities such as grain and corn and things of the same kind. The Chairman: If we get busy right away can we save the situation in time? Mr. Taylor: Absolutely we can. I believe we can. I want to empha- size the two or three things that I believe are serious. I believe your com- mittee should take cognizance of, and I believe it calls for the best cooper- ation on the part of these three interests I spoke about a while ago, and I believe if those two or three things are emphasized and understood, and acted upon, that you will have acomplished your purpose and the public can be served. One of the reasons for the slowing down of production even when the demand is on is the right of selection. That is, the public will often place an order for a certain sized nut coal, two by three nut, or three by four nut, or a four by six nut, or some other sized coal, three by six egg, or some specially prepared size of coal. Senator Walcott: You are not speaking of bituminous coal now? Mr. Taylor: I am talking about bituminous coal, yes, sir. Now, when they do that, the orders do not come in in exactly the way that the screen- ing arrangements of these mines are fitted for. The way these mines operate, all of them start the coal on the screen, they run it over, contain- ing the slack and all, and they have to run over large amounts of coal that have no ready market and that are lying there, and in that way they tie up 31 equipment and delay transportation, due to the fact that the public are se- lecting a certain class of coal. The Chairman: Is there a classification in sizes of bituminous coal? Mr, Taylor: Oh, yes; they make as high as thirteen or fourteen sizes in some mines, different grades, and different sized screens. That condi- tion, if persisted in, in case of a serious shortage, would cut down produc- tion to a large degree and would help create a shortage of production which might be serious. However, so far as production is concerned, and the shipping of coal to keep people warm, I think it is entirely possible with our present mines running up to their capacty, to take care of the public want up to the first of January, if two elements which I am very fearful of can be handled: One is the Railroad Administration's ability to handle the coal, and the other is the labor situation. On the first day of August this year the production was 84,000,000 tons short of the production for the same date, the same period, of last year. I got those figures from Mr. Lesher of the Geological Survey, that our production is just 84,000,000 tons less on the first day of August this year than it was in 1918. That is a very serious falling off in coal production. Coal Production Figures Senator Walcott: What is the total annual consumption of bituminous coal? Mr. Taylor: Last year it was 585,000,000 tons. The year before it was practically 550,000,000 tons. The year before that it was 502,000,000 tons of bituminous coal in this country. The estimate of the requirements for this year has been about 530,000,000 tons. That is, there will not be as heavy requirement this year as there was during the war period, and it has been estimated that there will be about 530,000,000 tons required this year. Senator Walcott: And we are 84,000,000 tons short of what we ought to be at this time, this year? Mr. Taylor: Not 84,000,000 tons short of where we ought to be at this time this year, but where we were this time last year. There was carried over an estimated 30,000,000 tons from last year's production in stocks. So it will require an actual production and movement of coal this year of about 500,000,000 tons. At the rate we are now producing, we have pro- duced, speaking offhand, about 250,000,000 tons of coal so far this year, and at the rate of production necessary for the 19 weeks still available be- tween now and the first of^ January, we will have to produce at the rate of a little over 11,000,000 tons a week if we are to complete the program of 500,000,000 tons production this year. That is entirely possible. Senator Myers: What is the production per week right now? Mr. Taylor: It has been running between nine and ten million tons a week, and it will require a little over eleven million tons a week to meet the requirements of the country for the next nineteen weeks. If we can keep up a gait of eleven million tons a week we will have accomplished the estimate that the Geological Survey says the public requires. Now, that is entirely possible, because last year under intensified pro- duction and the miners patriotically making the effort to produce as much as they could, the mines that were open produced in excess of thirteen mil- lion tons a week at the high mark, and the demand for this year has been running at practially nine million tons a A^eek in the summer months, but after the advertising campaign that Mr. Morrow spoke of, the production ran up to over eleven million tons a week, so that it shows that with the mines that are still open and the labor production we have it will be pos* sible to produce that output in the next nineteen weeks, to meet the de- mand. So that we feel it is entirely possible to save the public from the 32 calamity that appeared up to the time that we started the advertising cam- paign, to offset that, provided, however, that we can overcome three things: First, that we do not have an extraordinarily severe winter, which nobody can foretell; it is entirely out of our power to know Anything about that. The second, and the two most important things, are the abil- ity of the Railroad Administration to move that coal in a regular manner and the effort on the part of the miners. , The Labor Situation I have been employing union labor ever since I was a boy — more than twenty-five or thirty years. Since 1886 I have dealt with union labor and I have no quarrel with union labor, and what I say now is not a reflection upon union labor, but we are all going through a stage of unrest. I would rather say we are all going through a siege of unrest in the labor world. Early in May I was advised that the United Mine Workers had a meeting of their policy committee, at which they mapped out the demands that they would make upon the operators, with the signing of peace. I would like to make that clear; I would like to explain it by saying that the central competitive field, what is known as the central competitive field in this country is composed of Western Pennsylvania, Ohio, Indiana and Il- linois. Since 1898 the operators and miners in the central competitive field have met in convention and have established their wage scale and made what is known as the interstate contract, based upon the contract of 1898, which was the basic contract of the country. Using that contract as a basis the other surrounding fields arranged their labor scale in conformity, in a competitive way, both as to earning power and as to market <:onditions, based on that central "competitive scale. Then all the outlying districts had their own conventions and work- ing with their men worked out their wage scale agreements and contract agreements. In the war period the necessity of continued production and loyalty on the part of both miners and operators was emphasized, and there was an agreement made known as the Washington agreement, which was a kind of blanket agreement that covered all of the contracts which are based on the central competitive field, and it was made for the period of the war. They were given a substantial advance in wages. The President and Dr. Garfield and all the Fuel Administration authorities recognized that agreement, and it was understood that the miners should continue work on acount of that substantial advance given them in their wages, and also on acount of their loyalty, and produce coal throughout the period of the war, and it was further understood that the period of tlie war would b'd'^up to the signing of peace; that is, when the peace treat}'- was signed and the declaration of peace made, it was understood that the agreement was then ended. The reason I make this explanation so in detail is on account of the fact that in all previous years the contracts made in the Central competi- tive field and other fields of the country did not bear the same dates of expiration. In other words, the competitive field contract expired on the first of April. The contract with the miners in the Southwestern part of the country did not expire until the 31st of July, and so on. So it was not hardly possible, if there were labor traubles, in certain districts that it would become national, because the miners in those dis- tricts would be covered by a similar contract, but under a different date, but the Washington agreement carried by all of those dates. So that we are facing a situation now that when the war situation automatic"S1ly ceased with the signing of peace there is no contract between the miners and operators of this country, so that all of the contracts between labor and the various operators expire on one day. 33 The Chairman: And a renewal has to be made? Mr. Taylor: And a renewal has to be made in all districts possibly at some certain date, or possibly on certain different dates, as was the custom in the past. But the fact remains that all existing contracts between the ' miners and the operators will expire the day the peace treaty is signed. Now, the miners' organization had their representatives in Europe. Mr. Frank Hayes, the President of the United Mine Workers, was the delegate that sat with the European leaders of the mining industry, and of course was in, conference with them as to the world wide situation, and the demand to be met in other countries, as well as giving them information in regard to our conditions, and after his return there was a meeting in Indianapolis, so I am advised, although this is simply a matter of rumor — we have no connection with the miners as far as getting information is concerned, but we know it to be a fact because we have seen it published since in the mining journals — that the demand they intend to make is largely in conformity with the demand made by the English/miners on the English coal operators, and that is that the present contract for an eight-hour day shall be cut down to a six-hour day and that instead of working six days a week, or forty-eight hours a week, they intend only to work five days a week, and their demand goes on further to say that in addition to this six-hour day and the five-day week, there shall be a substantial increase in the present wage. That demand so far has not stated what that substantial increase shall be in dollars and cents. Senator Myers : Sixty per cent increase some newspapers report. Miners Formulating Demands Mr. Taylor : Well, nobody knows. I will explain that in a moment. That is the demand. Further than that the national officials were authorized, or rather instructed by their board, what they call their policy committee, to have drawn up a bill to present to Congress for the nationalization of all of the mines of this country. That is the information we get as to what their demand will be. The miners have called a convention of all of their organization which they claim represents about 700,000 men — and I believe it is practically 500,000 men in reality, but that is immaterial — a convention of all the miners has been called at Cleveland^ Ohio, for the 9th day of Septembe-r. Their pro- cedure is to have the district presidents of their organization in each state or each district present the demands that they desire to have put into effect in their own districts. Then this national convention, after hearing all of their different demands is to formulate a demand which they will make upon the operators of the central competitive field. * As I understand, and as T explained before, after that demand is made the other fields will base their demands upon that basic contract. A call is already issued for the 25th day of September at Buffalo, New York, for a conference between the miners and the operators at which they desire to have a new wage contract made with the Central Competitive field. Whether they will change these demands that I have enumerated to you at their convention in Cleveland Senator Myers (interposing) : When was that? Mr. Taylor : On the 9th day of September, that is, the Miners' Convention, and the jpint convention will be on the 25th of September, at Buffalo. Senator Walcott : The 25th of September convention is what? Mr. Taylor : It is a convention of the Central Competitive Field. Mr. Walcott: Is all this based on the assumption that the treaty of peace will be signed prior to the 25th of September? Mr. Taylor: Well, they, are getting restless. That is what I am leading up to. Already the more radical element are determined to put into eft'ect the soviet government of mines. In an interview published widely in the papers Mr. William Greene, the Secretary of the miners, is quoted as saying that they do not want government control' of mines unless they have with it democratic management. They do not want any Burlesons, as they put it. 34 They want the Government to have the mines, but they want to run them for the Government. As in every industry, there are always what we call radicals, and always conservative men. In the State of IlUnois, one of our largest producing states just during the past two weeks there has been an uprising of the radical element witl? the express purpose of throwing out of office Mr. Frank Farrington, Presi- dent of their Union, largely because he is a man that believes when a contract is made it should be carried out, and because he will not tolerate the infringe- ment of the miners' contract and believes that the best interests of his organiza- tion are in living up to their contract. The radicals called a rump convention last week and tried to throw' Mr. Farrington out of office and shut the mines down all over Illinois, and greatly curtailed the production of coal in that state. In the State of .Kansas a gentleman by the nameof Alexander Howat, who has a reputation all over the United States as a radical leader, has called a strike to establish the principle that a man must be paid his wages whether he works or not, if the operator desires to have him employed. In fact, the largest producing company down there had a strike in April. There was a strike which was called by Mr. Howat. The company used some of their superintendents and managers to run their pumps and their fans, and their mine managers who were capable of rudnning an engine to lower the men into the mines, to see that the pumps were kept in operation so that the mines would not be flooded. Mr. Howat claims that the men on strike should be paid because another man stayed there to run the boiler or to run the fan in the fan house, and because the company refused to pay the man on strike and recognize the principle that a man who touched an engine that they ordered him to touch was not violating any order of the mine workers, he called another strike be- cause the company would not recognize his right to say that a man should not run an engine without paying the man who is idle. The .company said they would not recognize the right of Howat to say that a man should not run an engine, and as a result Mr. Howat has called a strike of all the miners of that company, and they struck. Senator Myers: Are the miners still out? Mr. Taylor : They are out and have been for five weeks. In addition to that Mr. David Frampton, President of the Missouri miners, has called all the miners out in sympathy with the demand made by Mr. Howat in Kansas, and if the company did not accede to those demands, they received permission from their national president to pull out all of the miners from the mines in Missouri as a protest against the non-payment of the men that were on strike, because the miners asked for compensation on the basis that a man who touched anything around a mine, if a man touched anything around a mine when they were on strike, the company should allow compensation to one of their number who was on strike, and allow that compensation while he was away. Senator Myers : Did the men all come out ? Mr. Taylor: The men did not all come out. They tried to call them all out on the 18th of August, but the men did not come out altogether. But they put an assessment on their, men to keep the mines of the company where the men were on strike, to keep them permanently closed down. Now, if this convention on the 25th of September fails in agreement I do not know whether we are going to be able to mine any coal in this country or not. In fact, I very seriously doubt whether we will. With that condition confronting us in the mining world, and I am simply telling this without passion and without any feeling, except it is a fact, easily ascertainable, because there is no hiding a thing of that kind — the United Mine Workers, if you would call them in here, would give you the same testi- mony that I have as regards the published policy — and with that condition confronting us it is very serious. Of course it might be changed in their meeting ; I do not know whether it will or not. But, if that goes into effect there is little or no hope of overcoming a very serious shortage of coal this winter, and great suffering in this country. 35 If we can keep the miners at work, and if the Railroad Administration can give us cars, I am sure the coal operators can produce the coal to take care of the public requirements, but those two elements are beyond our control and they enter so largely into this question that I do not believe any human being can predict what the outcome will be. Senator Walcott : You do not need any additional labor. Mr. Taylor: On that question, I will say this, that Mr. Morrow and myself have just returned from a trip at which we visited Alabama, Iowa, Missouri, Kansas, Texas, Oklahoma and Colorado, Wyoming and Utah. In some of the sections they are very seriously short of labor. In other sections they have ample labor. The labor situation is spotted. In Colorado, the operators tell me that they were from twenty to thirty per cent short at the mines, twenty to thirty per cent short of their normal supply of labor. In Utah they are somewhat short, about twenty per cent. In Wyoming the supply is pretty fair, almost normal. In other parts of the country they have ample labor. That, however, is true every year. The miners change around from one district to another largely, and if the work is good and steady, the labor supply stays, and if it is broken, as it has been this .year, there' is a restless feeling and they go from one field to the other, but on the whole there is a shortage of labor. Senator Myers: Will these demands of the miners for new contracts, will they not be in violation of your existing contracts which will run until peace is signed? ' Mr. Taylor : No, they are not in violation of the existing contracts ; these demands on which they are to strike are all in violation-; Senator Myers (interposing) : They are all in violation of contracts which were to continue until peace may be declared. Mr. Taylor : Yes, sir, and every contract in this country between the miners and operators, says this : That in case of a local dispute the mines shall continue at work while the difference is taken up by the courts provided in the contract. That is, all these contracts provide a way of settling disputes that arise in the mines with the men at work. Up until 1898, the date at which the first joint agreement was made, when we established the principle of collective bargaining in the coal industry in this country, up until that time, the operator either shut his mines down and forced the men to take less wages, or the miners struck the mine to force the operator to pay more wages. In 1898 the first interstate agreement was made and both the miners and operators felt that that was the greatest step forward in the industrial life of this country that had ever been made, because the men had a voice in the making of the scale and in reference to their conditions of employment and the mines must continue to work. The underlying, fundamental principle of the first agreement was that all mines must continue to work, and even if there was a dispute with regard to one or two men in the mines, all the men should not lay down their tools, and they provided a court in the contract by which these disputes could be settled. Nbw, in these strikes, in every instance they have failed to live up to that clause of the contract and have simply closed down the mines under the old time methods of force. Senator Myers : If this agreement of the miners in September contains new demands, they will be in violation of the existing contract which was to extend until peace was declared. Mr. Taylor: No, they will not. Senator Myers : I would like to understand that. Mr. Taylor : The Washington agreement was signed, and it was to extend until peace is formally declared, but this is a preliminary conference to take effect as a new contract when the Washington agreement expires. What they are doing in this conference is to provide the machinery for making a new contract. Senator Myers: Suppose the mine owners at the joint meeting on the 25th of September refuse to accede to these demands which are to take effect 36 in the future, and then the miners go out on strike, that action would be in violation of the existing contract. Mr. Taylor : It would be, if they went out on strike before the Washington agreement expired, but if they wait until the expiration of the agreement to strike, then there will be no violation of the agreement. The Chairman : At the present time they are keeping their contract with the exception of Missouri and Illinois. Mr. Taylor : Well, I mentioned those specifically, because they are the most radical spots, Missouri, Kansas arid Illinois. I would say in that connec- tion, as regards the labor supply, I say in many parts of the country the supply is ample. In the Pittsburgh district, one of the principal producing districts — the center of all our manufacturing activities — a memoranda was handed me showing they are twenty-five per cent short in their labor supply. As I said a while ago, and I want to emphasize that, the labor supply is spotted. There are many districts in which there is a great shortage of labor, and there are other districts in which there is no shortage in the labor supply. Miners' Present Wages The Chairman: What is the present contract, an eight-hour day? Mr. Taylor: The present contract calls for an eight-hour day. The rate paid per ton varies. That is a point that I want to bring out. Mining districts in this country, the conditions under which coal is mined varies ; and the variance is very great. There are mines in this country where they are working on a sixteen and eighteen inch seam. There are other mines in this country where the coal is twenty-eight feet thick, other mines where it is ten, thirteen, six and a half, four and a half. It runs from sixteen to eighteen inches up to as thick as twenty-eight feet. So that the rate paid per ton varies in these diflferent districts very markedly, consequently the cost of producing coal in these districts varies, too. The day wage scale paid to the man who drives a mule or does that kind of work is practically uniform all over the country, and the men who work per day, who are known around the coal mine as day men, get a fixed rate per day of eight hours. The miner gets a fixed number of cents per ton for producing the coal at his working place, and that naturally varies in accordance with his ability, and according to the thickness of the seam. That is, in the thickest seams where he can get down more coal with less endeavor he gets paid a less number of cents per ton, and' in the thinner seams the rate per ton is higher, because the endeavor to get down the coal is greater. Those men are supposed to work eight hours a day, the same as the day men work, but frequently it is almost impossible to keep a man working eight hours at the face; in fact, I would say that the records show that they do not work eight hours at the face, because they regulate their own earnings on what they produce. Senator Myers: What do the miners make on an average? Mr. Taylor : Well, as the seams range up, their wages range up. There are some miners that make as much as $15 a day, and there are other miners that are down as low as the day wage, because they could not make any more money in a mine digging coal than they could picking slate off of a car and they get five dollars a day for doing that. The Chairman: There are some energetic miners that earn $15? Mr. Taylor : Yes, and some that earn more than that, but it is quite common for the miners to earn $15 a day. The Chairman: What is the nationality of the men employed in the mines? Mr. Taylor : f hat varies in different sections of the country. We have almost all nationalities. They are largely a great many Italians, Austrians, Slovaks, Lithuanians, English, Scotch and a few Irish and no Jews. I never saw a Jew in a coal mine in my life. The Chairman: You have no classification that would show the percentage of nationalities? Mr. Taylor: That varies so markedly in the different coal districts. In some districts the predominance is Italian. In some others it is Austrian. 37 The Chairman: There is no census taken? Mr. Taylor: There is no census taken of that, except by the individual companies, and even in their individual mines the percentage varies. There is no fixed percentage. Oftentimes a little clique will get into a mine of a certain nationality will follow in there so that they get a predominance in that par- ticular mine. The Chairman : Are any of them what you call distinctively Americans, without a hyphen? Mr. Taylor: Oh, yes. I want to say this, that some of the brainiest and most upright men I have ever known were coal miners, men of the best American instincts. In fact, the great majority of the coal miners are American citizens. The Chairman : I mean, are many of them American citizens, that have lost connection with the country which they originally came from, that have been naturalized that long. Mr. Taylor : Yes, many of them have. FOREIGN-BORN MiNERS LEAVING tJ. S. The Chairman : Has your association any record of the number of natural- ized miners and the number of aliens employed? Mr. Taylor : Senator, I had better make this a matter of record : The National Association is simply the centraUzation of all these other associations ; that is, in each district they have their own association to deal with their own ^ particular matters. The National Association has nothing to do with prices or with labor matters. What I have testified to here, I am testifying to as an individual coal operator, but the National Association has nothing whatever to do with the making of prices or dealing with labor. The individual and the operators in each district look after that matter, and naturally those details matters pertaining to the employment of the men, or the contracts under which they work are handled locally in each district and the National Association hasn't got that information. The Chairman : If you cannot furnish that information I wish you would see where they can get it. Mr. Taylor: I think you could get it by asking each individual association in each district to give you that information. The Chairman : Has your association had any experience as to the leaving of these aliens, the exodus out of the country, leaving the mines, and returning to their home countries, to any great extent? Mr. Taylor: I will answer that by saying that we have not got thatf in- formation as the National Association, but in the mines around the country 'there has been a great exodus of the aliens going back to their own countries. The Chairman: Isn't the rate of exchange over there a very attractive featur€? Mr. Taylor : Yes, and they are very much alive to that. The Chairman : They have a thousand dollars here, and they will have $1,200 or $1,500 after they get home? Mr. Taylor: Yes, and I want to say that they are very intelligent about those things. There is nothing that a foreign coal miner does not understand about the difference in value of money in his own country and this country. If an Italian can get the American gold he is very much alive to its advantages. The Chairman : Those men that are returning back to their own country are not American citizens, they have not been naturalized. Mr. Taylor: As a rule they are not, although there are some that have gone over that will come back, they have gone over because they have lost their home and friends, and they want to find out what has become of them, and when they do, they will come back again. The Chairman : Has your association made any effort to induce those men to stay here in the land in which they have sought their opportunity ? Mr. Taylor : The individual members of our association are making every effort they can to keep those men in their mines, and try to induce them to stay at their work, but that is an individual matter entirely. I wish to make just one other statement. 38 The Railroad Fuel Situation The Chairman : Well, continue. We are going to adjourn in a half an hour so you will have plenty of time. Mr. Taylor : I want to bring out a point which seems to me to be of the greatest importance. As I said a while ago, the National Coal Operators' As- sociation does not deal with prices or with labor matters in any way. Still we are in a position, meeting all the operators in all parts of the country, to know the condition of the coal trade' probably better than any other source of infor- mation that anybody could have. , We are confronted in the coal business with this condition. The miners' organization is entirely exempt from the Sherman law, and can get together and make any demand on the operators they want after consulting with each other in different parts of the country, they can formulate a demand based on their own ideas, absolutely backed up by their organization, which is nation- wide and international in scope, and they can have those conferences and make their demands without any infringement of the law. Therefore the coal operator of this country is confronted with a combination of labor which is not any way controlled, and without infringement of the law can get together and formu- late a collective demand upon the operator which forces up his cost both in price and in the conditions under which the men are employed. On the other hand, we are confronted by a combination in the form of the Railroad Administration, ax buying combination, which is to be the buyer of all of our railroads, which is to do all the buying, which was formerly in the hands of local purchasing agents scattered all over the country, and this pur- chasing power is now in a centralized body in the hands of one man, and as the railroads use practically thirty per cent of all the bituminous coal mined in the country, the coal operator scattered as he is, is confronted with the most har- rassing condition and combination of conditions that it would be possible to confront him with. Labor can force up his cost price almost indefinitely, and the combination on the other hand of the railroad administration can force his selling price down almost indefinitely. Now, the coal operators have no right to get together and agree on a method of holding the price up in any way, and I believe that the figures that Mr. Morrow has given you show clearly that the combined efforts of the cen- ti;alized buying power has had a very marked effect on the price at which coal has been moving from the mines. The natural consequence of that condition is such that it is not right. I am going to be very frank in saying that it is not right if such a large percentage of our coal is forced down to cost or below cost by a centralized buying power that the entire profit of the industry should be put upon that part of the country, the customer, the consumer who can least afford to pay an extra price, and yet if we do not get an extra price the industry carries no profit whatever, and would soon shut down. Senator Myers : Do you understand it to be an infringement of the anti- trust law for the mine owners to get together and form an agreement to resist collectively the demands of organized labor? Mr. Taylor: No, I do not say that, but I do say that it is against the law for the mine owners to get together and resist collectively the effort of the Railroad Administration to force the price of coal down, but we' are caught between the two millstones. A collective buying power on the one side and a collective organization to force the cost up on the other. If the coal man could direct his own business he would much prefer to have his coal run in an evenly distributed manner during the twelve months of the year at a very low, reason- able profit than he would to have it run six or seven months in the year at no profit, and then have a peak load at profit which leads to howls and con- demnation of the coal industry, which we have in the fall and winter. Senator Myers : You can get together to resist the demand for wages, but not in regard to price. Mr. Taylor : Yes, but if we do not agree, the next step our employees go on 39 strike and force us to agree. We have a perfect right; there is no law against meeting with your employees to make a wage scale, and we always make every effort possible to make that wage scale without any conflict, because strikes always bring suffering upon the public. Senator Myers: The anti-trust law interferes with j^our organized re- sistance of offers of price made by the Railroad Administration? Mr. Taylor : Yes ; if we would get together and agree to fix a price and not deviate from that prcie and stand for it whether anybody got coal or not, we would be in jail, and yet there is a buyer that buys one-third of our coal *that can easily say, "If you do not quote us a certain price we will not buy coal from you." There is always some weak sister, you know, that doesn't know what his coal costs that will give in. On the other hand, many times a man has his men around him, and if you do not take business and run your mines in the surnmer, the.i when the fall comes the men scatter and the miner cannot get his mine operated, and he cannot get coal when 'he needs it. The Chairman : You have made the. statement that the Railroad Adminis- tration has urged you to sell coal at a very low price. Do I understand you to say that the Railroad Administration has forced you to sell coal below cost? Mr. Taylor: It has not forced me to do it because I haven't done it. The Chairman: Has it forced anyone to do it? Mr. Taylor: I don't know that I could say "below cost," but the tac- tics pursued before the war have come back into effect. During the war Dr. Garfield fixed the price for coal on a cost plus basis, that is, on the cost basis plus a fair profit. The figures obtainable by the Fuel Adminis- tration were the figures submitted to the Federal Trade Commission on a cost form blank which they themselves sent to the operators. Naturally they were fixed at a period in the coal industry when all the mines were running practially full time, or as nearly on full time as they could run. That cost is below the cost that it is physically possible to produce the coal for from those mines now, because they were having the best operat- ing conditions at that time. With the passing of the Fuel Administration, and the slump in busi- ness, the cost of coal has constantly increased, simply because the over- head went on and the tonnage decreased. The principal business of this country that is regular throughout all the months of the year is railroad coal. They consume coal summer and winter, all the time, and are pub- lic utiHties and that trade is about the only trade that is stable. The coal man must have a stable tonnage, something that he can depend upon, and by holding off in the purchase of coal, by creating a doubt as to whether you are going to have the railroad contraci-, by bringing coal from one state to another, and by a hundred other different devices that were known to the railroad purchasing :jgents prior to the war, they have succeeded in keeping the railroad coal down so low that there would be no profit in it, to mine it, but the operators have to take the price. Now, Mr. Garfield made his price on the basis that I have spoken about before, and he made it for the railroads on the basis that the rail- roads should pay the same price for coal as anyone else under the Fuel Administration ruling. They did pay it after a great deal of contention, and finally the matter was referred to the President and the price on all of the coal in the country was cut down ten cents a ton and the railroads were expected to buy their coal the same as anybody else, because the cost price fixed on cost plus was the same on coal produced for the railroads as it was for coal produced for any citizen. After the passing of the Fuel Administration the railroads again re- verted to their old tactics, but with a great deal more effect, because the entire purchasing power of the railroads was centralized in one committee. Now, I do not think we can point to any definite way, but that purchasing power was used so that the records show that the purchases made by the railroads all over the country were very, very materially under the prices 40 fixed by the Fuel Administration as fair. That has cill been published. We know that. Senator Elkins: Some of the mines were selling at a loss? Mr. Taylor: Some of the mines were selling at a los^s. The Chairman: Do the operators have to sell coal to the Government? The Witness: Well, on the basis that you would think of it as a merchant, they would not have to sell it, l)ut in some localities there is little or no manufacturing, and unless those mines have that regular rail- road tonnage to supply they cannot keep their men-a't the mine during the idle months, and so they take the contract at a loss; so that when there is a demand for coal at a profit they have the organization there ready to mine the coal out. It is not right that the public or the small consumer should make up the deficiency caused by the large consumer paying such a small price. The Chairman: Your position is that while it is t!ie duty of the pub- lic utilities, and that trade is about the only trade that is stable. The entitled to a reasonable and fair profit. Mr. Taylor: That is my contention, yes. The Chairman: And that if the public official fail-i to recognize that and forces that out of the price the small consumer must make it up? Mr. Taylor: Must make it up, and it is detrimental to the public, in my opinion, that that condition be allowed to exist. The cost of coal is well known to the governmental bodies here. The sworn cost sheets are in the hands of the Federal Trade Commission. They were in the .hands of the Fuel Administration all the way through. The price at which coal could be produced is a matter of public governmental record, and there should be in the interests of labor — in the interests of the public, the governmental bodies should pay a fair margin of profit on their coal, which would make it possible to charge the general public or the small consumer a lesser price. Every ton of coal produced should carry a reasonably fair margin of profit, and it is not right, and it is not good economic practice to have a large part of the public coal sold at a lower price, that is, the coal used by the Railroad Administration, and the other coal sold at the correspond- ing increase, which would make up the difference, especially when the in- crease is put on the man who can least afford to pay it. The Chairman: Do you know any producer who has been forced to sell below cost: Mr. Taylor : Well, no man is forced to do so. The Chairman : Well, that has sold below cost to the Railroad Adminis- tration. Mr. Taylor: Well, that is a matter, as I said a while ago, as far as I am concerned, I did not, because I did not intend to do it and I do not intend to do it, but from hearsay I have got this information. The Chairman: You cannot make any definite statement about it? Mr. Tayk>r: No. Senator Myers : Do you know any that have been compelled to sell through the circumstances surrounding them to the Railroad Administration at less than a fairly reasonable profit? Mr. Taylor: Yes, I could make that statement generally. I do not think the Railroad Administration is paying a fairly reasonable profit on any of the coal they buy, judging from what I know of the cost and the published figures at which they bought. They have published all of the prices they have been compelled to pay for coal, and I do not think there is any of them that shows a fair margin on the coal. Senator Myers : It does not afford the coal producer a legitimate profit on his investment? Mr. Taylor: It is a very small and meagre profit and not what he should have if he were in any other line of business. 41 Senator Elkins: It is a question but what he loses money. Mr, Taylor: It is such a question. If all his business were of that kind he would lose money. That is true in many circumstances. Of course, there may be some, exceptions. The Chairman: Continue, Mr. Taylor. < Mr. Taylor: Well, I will be glad to answer any questions, Senator, that you ask me. The Chairman : Well, I think unless the rest of the committee have some questions to ask, we wilt adjourn for luncheon and convene at half past two this i afternoon and hear the remainder of the witness' testimony. Mr. Taylor : There might be some matters to talk about. The Chairman: You will be available? Mr. Taylor : I will be here at half past two. (Thereupon, at 1:10 o'clock p. m., a recess was taken until 2:30 o'clock p. m.) AFTER RECESS. The Sub-committee reconvened at two-thirty o'clock p. m. The Chairman: We will resume the session, gentlemen. Mr. Taylor? STATEMENT OF HARRY N. TAYLOR (Resumed). Mr. Taylor: Senator, I do not know that I have very much to say more, except that I imagine that your committee would welcome, if they could get such a statement, something that would be constructive in this line of inquiry? The Chairman : Most certainly. Mr. Taylor : There is nothing that the coal men are so anxious to accom- plish, if it is possible, to take out from their business the seasonable feature ; that is, to emphasize what I said this morning, if it were a possible thing, to have the industry active throughout the year, instead of inactive for six or seven months of the year and active for five or six months of the 3'ear, it would be a great thing, not only for the coal industry from an operating standpoint, but from the standpoint of the men engaged in the production of the coal, the miners, and for the general public. As the matter now is, there is always a time every summer when the rail- roads' sidetracks are full of empty coal cars, when mines are lying idle and the men who make their living in those mines are out of employment because the mines have no orders for their product. The railroads use, as I said this morning, practically thirty per cent of the bituminous output. When there is na business in the mines, they naturally have no business for their coal cars or that class of equipment that is peculiar to that business. If the railroads could arrange to takei;heir coal supply at the time of the year when their equipment is idle, and when the mines are idle, they would accomplish three very important- things : In the first place, they would get their supply into storage, they would have the assurance of the already mined coal. They would use that idle equipment at a time when it is idle, and they could make it active, and would keep the men at the mines employed, and would relieve the labor unrest. As it is now, when the men are thrown into a period of idleness for three or four or five months every year, and only working, as they did, in pre-war times, 150 to 155 days out of a year — if that employment could be more regular, it would not be so neces- sary to make demands for higher rates per ton in an effort to get a whole year's living out of a few months' activity. In other words, the more regular employment would largely offset the labor unrest. It would use the idle equipment that is doing nothing but lying on a i sidetrack. It would bring the coal in a time of the year when it was possible to dig it and it would relieve the equipment for the use of the public in the fall and winter time, when the public so badly needs coal. An equal distribution of the coal over 12 months instead of over six months would have a tendency to lower prices and make less labor unrest, better use of railroad equipment and would stabilize the industry all along. 42 The Chairman : Mr. Taylor, in that connection, prior to the war, when the railroads were under private operation, was any difficulty in procuring cars en- countered? Were the railroads following the same practice as the Railroad Ad- ministration follows now in purchasing their coal only at the end of the year, or at a time when you are busy, or was the situation dififerent? Mr. Taylor: Almost all railroads' contracts that I have ever seen, cover- ing a great period of years, contain what they call a minimum and maximum clause; and in the times of the year when they do not want to invest money in storage coal and they are not running particularly heavy, they take the minimum ; and in the time of the year when their business is good and they want coal, they take the maximum. That spread is one of the causes of the troubles in the fall, because this coal business is good and that is when they take the maximum. That always produces a car shortage, and a great deal of equipment that should go to public use, is used in the taking of railroad coal. That prevailed before the war, and it has been prevailing ever since, except during a period when the mine was running to its output, anyhow. There is one other feature that I want to take up Senator Walcott : Before you get to that feature Mr. Taylor : This is in connection with what I am now stating. Senator. Senator Walcott: Go ahead. Mr. Taylor: Mr. Morrow told you this morning that there are ten thousand and some odd mines in this country, of which about seven thousand are actively operating, or supposed to be in operation, as much as they could get business for; and that the other three thousand sprung into life at a time when there was an extraordinary demand for coal. It is a common practice in the coal industry, with the large opera- tors, those who have large outputs, to make a contract sometimes as high as seventy-five percent of their entire output, or seventy percent, figuring that with the coal car supply they would have a market for the other thirty percent as free coal — what is known as free coal Car supply and the price are very intimately connected and if the car supply shortens down so that there is no more tonnage than will supply their absolute con- tracts, they have not any free coal and therefore cannot take care of the current business. The smaller class of mines which are idle, just lie off waiting for that condition, and it creates those mines that spring into being, taking the men out of the mines that are always in operation and taking their output, throwing the commercial business into those smaller mines and those men only coming in as "snow birds" as we call them in the business — that is, coming in with the snow. That class has no business reputation to kee^ up and they have a habit of taking whatever they can get, taking advantage of a situation created largely by car supply from time to time. That makes ii possible for those men to jump into the market and create a price which is outrageously high and for a small percentage, four percent or five percent of the entire out- put, and the entire industry is damned for that condition of affairs, which is what we call the "snow bird" condition, taking advantage of that situa- tion. The price and the car supply are largely connected. When the stand- ard companies are in the business year in and year out and live up to their contracts, and they have a large percentage of their output contracted for, they have got to take care of that first, and it makes it impossible to have free coal, and it is taken by that class of mines described by Mr. Morrow. There is just one other thing that I would like to say, and then I am ready to answer any questions that you desire to ask me. This morning I made the statement that I did not believe any rail- road coal had carried a reasonable profit. It has, been called to my atten- tion that there are a few instances where the operators have received a 43 profit that was considered reasonable. I want to make .my statement as nearly correct as I can make it, and that is why I make that correction. The Chairman: I gained the impression from what you stated that some of the mines were compelled to furnish coal to the government at a loss. Have you made any investigation as to that? Mr. Taylor: I want to stand by the statement that I made this morn- ing, but I said that I did not think any carried a respectable profit. Some carried a profit, but not a reasonable profit, their investment considered; but I have had my attention called to the fact that there are a few in- stances where the prices paid for the coal carried a reasonable profit on the coal to the people that sold it. I want to make that correction because it has been called to my attention. The Chairman: Do you know of any mines that have furnished coal to the Government at a loss? Mr. Taylor: Yes. I know some mines like that, but 1 do not care to specify those particular mines, because I would have to tell you how I know it. I know it from railroad purchasing agents, and if I tell you that and it should get into the record, those men would lose their positions. '1 do not want to make that record, very frankly. The Chairman: If the facts were correct, why should they lose their positions? Mr. Taylor: Because a letter ^that I received from at least one of them said definitely that he knew it was the fact, that the pressure was put on and brought it below cost. The Chairman: Then your statement is that the Railroad Administra- tion would punish anyone who told Mr. Taylor: No; I do not want to make that statement; I do not want to assume the responsibility The Chairman: Let me finish my question. (Continuing) — if they told of a condition whereby the Railroad Administration purchased their coal at less than cost? Mr. Taylor: I will make myself very plain in this matter, because I do not want to even appear to be evading anything. There is a certain district in this country where the cost of production was well known to the local purchasing cpmmittee. They asked the oper- ators to bring in cost sheets and the operitors did it; gave them to them. One operator in that district who did not keep an accurate record of his costs or, for some other reason — I am not told what his reason was — made prices less than the cost of production in that field, and the Purchas- ing Committee sent out instructions to the local purchasing committee that that was as much as wou^ji be allowed in that district for coal. It was less than the cost of production and the men who purchased that coal locally knew that and have admitted that fact. The local men know that to be a fact, and have so admitted. The Chairman: Maybe the Railroad Administration could tell us about that. , Mr. Taylor: They may be able to tell you, but I am not going to tell you, because I do not want to take on myself the jeopardizing of any man's position. I do not know whether that is permissible or not, but I do not want to have it involved in the argument. The Chairman: You spoke of the labor situation. What is the policy of your association toward the miners in regard to living conditions and other conditions surrounding the mines? Do you treat with that situation or is that individual with the mine owners themselves? Mr. Taylor: That is entirely individual with the mine owners them- selves or with the local associations in the different districts who make contracts with the miners. The miners' contract not only covers the price per ton, but it covers the conditions of employment. The price covers 44 deficiencies in the coal seam which are not normal. A man gets extra pay for all of those conditions under the collective bargaininfr that exists and has existed for the last twenty-one years between operators and mmers, known as the dead work, and things of that kind, and a deficiency clause which carries with it extra pay for conditions which would lessen the earning power of the man. The Chairman: I am referring to living conditions, the question of housing and school facilities. Mr. Taylor: That is a matter peculiar to each location, where the mines are in each mining district. In some districts the men live in towns and go out on trains, and in other districts they live around the mines in different ways. That is a matter that is local to each district. But they are matters which are taken up and discussed at all times and they are handled dififerently by different companies in dififerent parts of the country, according to their geographic location, the railroad situation and the loca- tion of the mines, and things of that kind. At some mines they have to really build the camps; in other cases the men live in established cities and go to the camps. The Chairman: Are there any women employed in any of the mine operations? Mr. Taylor: There is no woman employed in the coal mines in this country in any capacity. There might be some stenographers around the offices, but I am talking about the physical labor around the mines. The Chairman: What is the age limit of employment in the mines? Mr. Taylor: Whatever the State laws prescribe. In most States 16 years is the limit. That is prescribed by State laws in different States, ♦whatever the State law is; but I do not believe there is any State where it is less than sixteen years. I do not know of any. Senator Walcott: A while ago you were saying, Mr. Taylor, that it would be an admirable thing if the matter of production could be spread out over the year and made somewhat equal in each month Mr. Taylor: Reasonably equal. Senator Walcott: Yes — instead of making it dependent upon the spon- taneous demands with the seasons? It is very clear to my mind that it would be of very material benefit, but how can the arrangement be made? What is your constructive suggestion as to how to bring about that situa- tion? Mr. Taylor: The larger consumers of coal, such as the railroads, the large manufacturing interests, the public utilities, the big steel plants and others, store as much coal as it is possible to store in those ordinarily dull months, which would relieve the equipment for ample car supply for the general public in the months of the year when the public wants the coal for the purposes of keeping warm. Senator Walcott: There is nothing in the way of legislation, -however, that can be drawn to bring that about. It still must remain with the volun- tary action of the parties interesed? Mr. Taylor: Any more than this: We learned daring the war that even a suggestion from a highly recognized governmental body was, fol- lowed out, and I believe that your committee, making a thorough study of the coal industry and with the high standing of such a committee, and the public interest that you would hold, splendid results would be obtained by you in the public interest, bringing about the relief of the labor unrest which would come from more regular employment, and it would have a great public response: but those who are able, like the railroads and the large manufacturing interests and the public utilities would store, as far as they could, in the months that are ordinarily dull, and it would put into use this railroad equipment and relieve labor unrest and free the cars in the time of the year when people depend upon coal for heat. They would 45 be able to get an ample supply, and that regular run of coal would cheapen the cost of production and the public would get the benefit of it as well as the manufacturers and the people who would buy it in the dull time of the year. Senator Walcott: The large consumer of coal is the railroad? Mr. Taylor: They are the largest. Senator Walcott: Somebody said about thirty percent. Mr. Taylor: Practically so; yes. Senator Walcott: As a general rule, I suppose they contract for coal? Mr. Taylor: The railroads, so far as I know, invariably contract for coal. Senator Walcott: And the price covers the life of the contract? Mr. Taylor: As a rule they make a contract for a year or two years with a minimum and maximum clause, which gives them the elasticity necessary for their business. Senator Walcott: The minimum and maximum as to the quantity which they will take? Mr. Taylor: As to the quantity they will take; yes. Senator Walcott: But the price is fixed? Mr. Taylor: The price is fixed, but the quantity used by the railroad is not below a certain amount or above a certain amount. Senator Walcott: I understand. What motive would a railroad com- pany having such a contract have for storing coal — because it can get the quantity of coal it wants under the contract at any time in the year and the price is always the same. Mr. Taylor: You want to know what motive they would have? Senator Walcott: What selfish motive. Mr. Taylor: I believe I can point out a selfish motive. Senator Walcott: Unless it be the indirect motive that in another year the price of coal might be lower. Mr. Taylor: That is one of the points. The next point is that: that they would use equipment which is idle and which is not earning them any- thing. It is standing on side tracks for the storage of their own coal. That same equipment would be released at a time when it could make revenue freight, whereas, under the present practice, they are using it for company coal at a time when it could be used for revenue, and the people are not getting their coal. Senator Walcott: Those cars cannot be used for any kind of traffic? Mr. Taylor: I know; but when they are using them for railroad coal it is at a time when everybody else wants coal. If the equipment could be used for revenue bearing coal it would be a good thing for the railroads to have those cars free to help their earnings. The Chairman: Do the railroads store coal in their cars on the sidings? Mr." Taylor: As a rule they unload ihem at certain places. They do not carry that practice in this country to anything like the extent — or in all parts of the country as they do elsewhere. During the war period they did store coal in the summertime to a larger degree than they had in other years, and that is one of the reasons that this slack time came this summer. Last winter was an exceedingly mild winter. There was no great snow blockade or things of that kind that use up a lot of coal in the operation of the railroads. Their ordinary storage extended over in the summer to a longer time than it would if they had used it under rough operating condi- tions. It was part of that stock that I spoke of that was carried over into this year. Last year was the most open winter we have had in this coun- try for years. Senator Walcott: Coming back to the question of labor: There are two factors that are now acute — car shortage, I understand, and labor. Most of your remarks concerning the labor situation had to do with pos- 46 sible future developments in that situation. If the present labor that is now working in the mines could be worked the ordinary full time, would there be sufficient coal mined to meet the present demand if the car short- age was supplied? Mr. Taylor: I made that statement this morning, Senator, that with the present labor supply — although I said nothing about a shortage in cer- tain places — but as a whole, with the present labor supply and our present producing ability, if we are allowed to continue workir.g without the car shortage, we will be able to produce the coal by the first of January Senator Walcott: I recall that you did make such a statement as that, but I thought you spoke with respect to the time when the advertising campaign was on. when you demonstrated by actual tonnage that you could produce the required tonnage. Mr. Taylor; Yes. Senator Walcott: Then the thought occurred to m.e that perhaps the strike that has since arisen has rendered tnat inapplicable to the present time? Mr. Taylor: I simply made it for this purpose — chat last year, with the same mines open, but under patriotic zeal on the part of the miners, who patriotically responded to the Government's request to produce as much as they could possibly produce, they took out of these mines in ex- cess of 13,000,000 tons a week. We have had a lapse since that time and we are not certain how much labor has left the mines, but during the ad- vertising campaign in July these same mines produced in excess of 11,000,- 000 tons with their present force; and I say it seems to me that with the present labor supply and with the present mines open, we can produce enough coal, if we are not interrupted by a lack of cars or labor strikes. Senator Walcott: In July there were just as many strikes on as now? Mr. Taylor: There were spasmodic strikes in Ohio. Illinois, Missouri and Kansas of quite good size, and then there is always some little disturb- ance, but nothing of any great magnitude. Senator Walcott: Let me understnd: In your judgment, if the mines could operate full capacity with the labor on hand today do you think you could meet the demands of the country if you could get the cars? Mr. Taylor: That is absolutely the situation, as I understand it. Senator Walcott: Then, in your judgment, there is only one factor outstanding today that prevents the meeting of all the demands of the country, and that is the car shortage? Mr. Taylor: I do not want to say "yes" to that, because I really be- lieve — I am convinced — that with the demands that labor is going to make upon us - Senator Walcott: But you are speaking of the future? Mr. Taylor: Yes. Senator Walcott: I ajn speaking of now — the present time — with no change in the labor situation. Mr. Taylor: Well, yes, until the labor situation changes, we can, but 1 am very fearful it will change. Senator Elkins: With the factories and steel mills starting again, they will demand more coal, and that would tend to niake a shortage of labor? Mr. Taylor: A production in excess of 11,000,000 tons a week would bring the total production up to 500,000,000 tons by the end of the year, which would cover the situation which vou describe. At least, that is what the Geological Survey figures, and we can accomplish that if we can continue to produce in excess of 11,000,000 tons a week for the next 19 weeks, including this week. The Chairman: I assume, Mr. Taylor, that this information that I asked for previous to the recess for luncheon, will be furnished by other 47 witnesses, in regard to the probable consumption for the balance of the year, and other figures that I asked for? Mr. Taylor: Yes. I want to just touch on that again. We have sources of information which would be more in line wiln what you want; I mean which would furnish a better record, and as Mr. Morrow said this morning, on the export business we will 'isk you to call on Mr. Wilshire, who is thoroughly familiar with that situation. You understand, Senator, that only a small portion of the coal in this country is suitable for ex- port as regards quality and its nearness to the seaboard, to make it avail- able for export — that is, with the rate situation. We, in the West, in Illi- nois and in the other Western States, have no possible chance of getting into the export business, on account pf our geographical location and our freight rates; so we will have to consign that testimony to the men wha are actually engaged in the export business, and Mr. Wilshire can undoubt- edly testify along that line. On the other matters — figures of production — Mr. Lesher, the statistician of the Geological Survey, would undoubt- edly be the man who could give you the most accurate figures. On the other matter you asked Mr. Morrow about this morning, he will take that up with the local secretaries, and furnish 'A to your Committee as soon as possible. Any other questions that you may ask he will find some way to get you the information at first hand. Western Coal Costs The Chairman: When you have concluded, I will dictate to the stenographer a memorandum of that so that you may have it. Mr. Taylor: Yes, and we will undertake to get that for you from first hand. The Chairman: I noticed this morning that in referring to the prices in the various districts or zones, Mr. Morrow failed to mention other sec- tions of the country — other States — Iowa, Texas and the Southwestern States, and the Rocky Mountain and the Pacific Coast States. Mr. Taylor: You see, we were called down here on very short no- tice, and the charts that were available right at hand were the ones that were given to you. I received a telegram in Kansas City from Mr. Mor- row asking that we bring such information here, and where I have not furnished it for all the mines, we have it for groups of the principal mines in those different districts, which I have had photographed, and I have brought copies here for you. It is in little different form. Now, these particular charts (indicating), the yellow line, beginning with 1915 is the cost of production and the white line i? the realization by months. Each, of these little squares is ten cents (indicating) and each of those small squares is one cent. If you will follow that right straight through, you will see the actual cost of producing coal each month, up until this time. And the white line is the amount received. Now, those two peak loads, you will notice, are in April, 1918, and in April, 1919. Senator Walcott: Is that the yellow line? Mr. Taylor: Yes, this is the yellow line. That came from the fact that the mines in the State of Iowa, in Appanoose County, the principal field there, were shut down, trying to arrive or arrange for a cheaper con- tract; and the same thing occurred that aext year. That is in the State of Iowa. , The Chairman: What has been the average price of coal in Iowa? Mr. Taylor: There is the cost and there is the price (indicating). That shows it from month to month. It shows the actual cost and the realization each month. It began in 1915 with $1.82 cost, and $1.98 price. The Chairman: And it is now today? Mr. Taylor: It is now at a cost of $3.25 and a selling price of $3.15 on that sheet. 48 The Chairman: It is much higher there than— Mr. Taylor: The vein out there is 31 inches thick, ni that field. The Chairman: And that adds to the cost, does it? Mr. Taylor: Yes, that is what I explained to you this morning, that the veins average in this country from 16-inch coal up to 28 feet, so nat- urally the cost would vary very markedly. This is what is known as the thick field zone of Missouri (indicating). That is, it is thick in that State. It would be thin in this part of the country. In 1915 the selling price was $1.53 and the producing price was $1.47, and that follows right straight through. You see spots here where they came together. At this particular moment, the selling price is about $2.77, and the producing cost $2.59. The Chairman: Eighteen cents margin? Mr. Taylor: At this time. Right before that, it was the other way, but it straightened itself out again. Now, this is the Kansas field, the principal producing field in Kansas, running along the white line, being the realization, and these costs follow. At present, $3.08 is the realization and $2.97 is the cost. Now, this is Arkansas (indicating). This is the Huntington field of Arkansas. Now that is purely domestic coal, ^nd the fluctuations are ter- rific in this. I. brought this chart just to show you that. It drops down on this side, in order to get it on the same chart. It would have gone away up in here, otherwise (indicating). The Fuel Administration put that price on, and then it was reduced 75 cents. Here- is the labor cost and there is the realization (indicating). That is 21 cents. The Chairman: The difference? Mr. Taylor: That is the margin at this time. Senator Walcott: That selling price is over the cost? ^ Mr. Taylor: Yes. Senator Walcott: It is not operating at a loss? * , Mr. Taylor: No. The Chairman: $3:20, is it? Mr. Taylor: It would be about $3.22. The Chairman: And the cost? Mr. Taylor: And the cost would be S3. 02. The Chairman: That is in the Arkansas field? Mr. Taylor: Yes, in the Huntington field of Arkansas. Here is the Hartford field, of Arkansas (indicating). That cost, at this time, is $2.98, ♦and the selling price is $3.28. That is another chart of Missouri — a dupli- cte set (indicating). Senator Walcott: Mr. Taylor, are these cost calculations based on any uniform system of accounting? , Mr. Taylor: Yes, they are based on the Federal Trade Commission's form of accounts. The blanks are sent out by our association. When Mr. Hurley was on the Federal Trade Commission he made a tour of the country and asked the coal industry to get onto some uniform accounting system, as nearly as they could, so that they could make a comparison of their costs in the Federal Trade Commission; and they furnished the coal industry with a form, which has generally been used by the principal companies; maybe not identically, but almost so. The general form is the same. Senator Walcott: Are the cost sheets, as I call them, for the want of a better term — I do not know whether that is the proper accounting term or not — kept in accordance with the principles laid down by the Federal Trade Commission, who compiled the forms? Mr. Taylor: Yes; they are kept on that same or practically that same form that they furnished, with the request that the accounts be 49 kept that way, so that they could make comparisons between the differ- ent fields; in order that the same items of cost would go into them. Senator Walcott: Is there not a great deal of contention from time to time as to what is a proper sum to be put into any particular item of cost? For instance, depreciation? Mr. Taylor: That varies, of course, in accordance with the amount of capital invested, and the extraction. Senator Walcott: Yes; there are any number of things that enter into that. Mr. Taylor: Yes. Senator Walcott: Is there any general principle followed out in these cost sheets upon which these figures are based? Mr. Taylor: The National Coal Association appointed a committee, known as the Cost Accounting Committee, which has been two years in conference with the Federal Trade Commission and the different depart- ments — the Treasury Department and so forth — to establish a cost account- ing system, and we will put it into evidence here, if you wish it a manual, or rather, a form which they have gotten out and sent to every coal oper- ator in the country, along the lines of cost accounting, which are in line with the governmental bureaus. I will ask Mr. Morrow if he will, to fur- nish you one of those and put it in evidence here. We have them printed and circulated all over the country. Senator Walcott: The material thing that I was getting at was whether or not these various costs in various districts were bottomed on a uniform method of calculation? Mr. Taylor: They are worked out on a uniform basis, but every mine has different costs. The conditions of mining change the cost, even within^ the same district. The thickness of the seam and the age of the mine or the distance they are back, and many things of that kind enter into it, so there is no absolutely uniform cost at any particular mine, but the general system is along the lines that I have just described. Senator Walcott: Have these various cost accounts been sent to the Federal Trade Commission? Mr. Taylor: Yes; they have been turned in to the Federal Trade Commission every month. Senator Walcott: For what purpose? Mr. Taylor: Because we were told to turn them in. Senator Walcott: What is that? Mr. Taylor: Because we had orders to turn them. in. The Govern- ment required that we turn them in. They were made use of by the Fuel Administration, which had a board of engineers, who used the Federal Trade Commission's cost sheets in determining the price that they al- lowed operators to charge for coal. They had a board composed of Mr. Gannsey, Mr, Allport, and Mr.^ Norris, and those gentlemen were the engineers of the Fuel Administration, and they took each of those dis- tricts, and charted them up from these cost sheets, and from those fig- ures Mr. Garfield named his allowable selling price as a maximum selling price. * Senator Walcott: Would it be fair to say that the question of whether or not these costs have, for instance, been padded, had been passed upon by the Fuel Administration in the examination of those sheets? Mr. Taylor: As I understand it, the Fuel Administration's engineers scrutinized every cost sheet, and, being expert in that business, undoubt- edly they would have corrected any inaccuracies they found, one way or another. Of course, many coal companies have no well organized ac- counting department, I mean small companies; but all the large com- 50 panics keep very accurate accounts of their costs — generally to the fourth decimal, in every item of cost — the fourth decimal. , The Chairman: Mr. Taylor, I believe you testified, or Mr. Morrow did, that at the present time there is a great demand for coal, and that if the cars could be supplied the demand would be immediately met. Now, do I understand you that your Operators' Association makes no agreement as to prices and has no control over prices at all? Mr. Taylor: We have absolutely no control over prices and make no price arrangement between our members, because our members are com- petitors all over the country, and we make no attempt whatever to deal with prices or to suggest prices to anyone. The Chairman: Then, each individual operator is in a position to take advantage of the situation in the present excessive demand and to raise the price of coal, is he not? Mr. Taylor: He is in that position if he felt it was to his interest to do so or advisable to do so. He could do it, but the question is whether he would or not, if he had good business sense. The Chairman: In other words, he could practically, if there was a competitive demand from a number of industries, name his own price, could he not? Mr. Taylor: I hardly think he could, Senator, for this reason, that collective bargaining between miners and operators, and the basis on which it was made was the competitive relations, markets being consid- ered. That is; if a man had a rate of pay that made coal so high that he could not sell it, it would be of no use to him, because he could not work; just like letting off the irrigation in Egypt, where they let it out year by year, they finally got the water to a level; and these mining schedules, after 21 years of practice, are so closely competitive, that if any one district attempted to run its prices way up, it would lose its busi- ness to the next adjoining district or operation, who would jump in and take its business; so there is a safeguard between the different districts. The Chairman: Then there is no chance, in your opinion in the pres- ent situation of a runaway market? Mr. Taylor: The only thing that could create a runaway market would be desperation and the consumer himself offering more for coal than the operator would ask. That condition existed for a short time in 1917, when the New England people thought they were not going to get coal, and they sent their agents into Central Pennsylvania and bid the coal up to outrageous figures; and at that time the Council of National Defense had the Coal Production Committee, known as the "Peabody Committee," and Mr. Peabody sent for coal men all over the country, and with Mr. Lane, Secretary of the Interior, they met those coal men and told them they wanted them to stop that — to refuse taking those prices for coal; that it was not patriotic to allow consumers to bid it up in that way; and the coal men voluntarily reduced the price of coal for which they were getting six and seven dollars a ton at the mines, down to three dollars to meet the views of Mr. Peabody and Secretary Lane, and an- nounced a three-dollar price all over the country, when they were being offered almost double that in many instances. Shortly after that a letter was written which upset that whole propo- sition, and the public held off buying for the rest of the summer, and ran into, the winter of 1917 short of coal; and all the suffering which occurred that winter was largely due to the fact that buying and production ceased in the summer months of that year. That is one of the reasons why when we saw that same condition threatening this year, through a lack of buy- ing, the Coal Association thought it was its duty to the public and to themselves to put these facts compiled by the Geological Survey fairly before the public through advertisements; and they contributed a large 51 OF ILL amount of money — to be accurate, $92,000 and a few odd dollars — to an advertising campaign, and put them plainly before the public in every big journal in this country; and shortly after that people began to place their orders, and production increased; and shortly after that the car shortage became evident. Now, up to that time there had been no car shortage and there was no demand foi" coal either; but as soon as the demand and the production was resumed, then the car shortage began to appear; and the Geological Survey report showed 42 per cent of that shortage was due to no orders — no market, as they term it. When that was reduced to 21 per cent, then the car shortage which we feared, began to show up. Now, if the production gets up to the full amount, I do not know how much the car shortage will amount to; but th'C reducing of the condition from no market to 21 per cent created a car shortage in many parts of the country; and to be fair to Mr. Hines, in his letter he mentions July 12th, I think. Up to that time there was no car shortage of consequence. It was from .06 to about 4 ""r cent in some districts, but as soon as this movement began in earnest then the serious car shortage developed. The Chairman: Can your Association assist the Cornniittee in an ef- fort to keep stable these prices by exerting influence with the members of your Association to prevent their taking advantage of the present situa- tion and raising the prices abnormally? Mr. Taylor: Undoubtedly so, and it would be to the interest of the coal trade not to bring about the condemnation of the public. All this Association wants is a fair business margin on their coal, and we would much prefer, as I said this morning, to have a reasonable margin all through the year than to have no margin for a part of the year, and a great big peak load in the way of a margin for the rest of the year; and our efforts are being directed in that way. That was our reason for trying to relieve the situation which we saw would make a runaway market in the fall, and we spent the money of the Association in advising the public of that fear, so that there would be no misunderstanding about it; and the public, in a way, responded; and as far as they did respond, the increased tonnage immediately began to de- velop a car shortage, and from that time on it has been accentuated by this carman's strike within the last week or two weeks The railroads were crippled and could not send their cars to the mines, and immediately there was a marked drop in production, which was largely due to the labor disturbance among the shopmen on the railroads. The Chairman: Of course, we have reviewed today only the mine costs — the costs at the mine — but there is universal complaint that the coal prices are mounting for bituminous coal. I have not gone into that to- day but I shall before we finish. Have you any observations on that score? Are the wholesalers or retailers, or any distributing agencies that you may have, taking advantage of this situation, in your opinion? Mr. Taylor: I really am not competent to talk about wholesalers or retailers. My efforts are entirely, in my individual capacity as a coal oper- ator; and in my official capacity as president of this Association, we deal only with coal operators or producers. We do not have any connection with the retailers or jobbers either. The Chairman: I know, but surely your vision extends beyond the mouth of the mine? Mr. Taylor: It certainly does, yes; out up to this time there has been no exorbitant prices put on coal. As I said a while ago — and I want to make it very plain to you, so that there may be no misunderstanding about it, if we have a car shortage to any great degre^:, so that this pro- duction falls below the amount we have named, and if we have labor dis- turbances which curtail the production, so that we cannot average over 52 11,000,000 tons a week for 19' weeks, you are going to have a runaway market, and there will be some of the coril operators irf this country who will take advantage of that situation, and those three thousand mines, as I described them, will come back into being, and they will get all that the traffic will bear. They are not members of our Association, because they do not continue in business in a regular manner. That has been the his- tory of every coal famine for the last 25 years. The "Snow BffeDs" The Chairman: Have they an association? Mr. Taylor: No; they simply come in, as we call them, as "snow birds. ' They come in when the occasion warrants. If we do not have a coal shortage and a cold winter, they shut down sometimes two or three years, until there is an opportunity for them ta get in. The Chairman: Is that due to their cost of production, like a low- grade copper mine, which cannot produce unless they get a high price? Mr. Taylor: It is a good deal on that order, but it is chiefly because they are there only to take advantage of a situation if it exists. They are not regularly engaged in the coal business, as we see it. The Chairman: Where are most of these mines located? Mr. Taylor: They are located all over the country. In every big producing field there are those little pigeon holes — in some places they call them "dumps" and "gins," but they exist all the way from West Vir- ginia to the State of Washington. Every district has some of them. They are scattered all over the country in every coal field. Wherever coal crops out, you will find numbers of them along on the hillisdes, all over the country, where it is easy to get into the coal, and where there is not much involved in the way of investment; and when the weather gets se- vere and the demand becomes great, then they take a few men — their brother-in-law and their father-in-law, and everybody goes to work, and collectively they get out some coal. And, of course, they take advantage of every situation because that is their only chance for operating, and we cannot control them, because with the first spring weather they shut down again. They are just what we call them, "snow birds." They come and go with the winter. The Chairman: And you believe that unless we can get the cars and keep our production up to 11,000,000 tons a week, we will practically face a condition where the prices will advance? Mr. Taylor: We will face a condition where people will be short of coal, and naturally that causes an advancing market. The Chairman: Now, you spoke of the fact that the railroads pur- chase their coal in the busy season — at the time when the mines are busy. Would it be feasible to have storage facilities in certain sections of the country for re-distribution, and if a system of that kind were created, would that relieve the situation? That is just a suggestion. Mr. Taylor: I want to correct you. Senator. I did not say they pur- chased their coal when the mines were Dusiest, but that they take the bulk of their coal at that time. The Chairman: They ask for deliveries at that time? Mr. Taylor: Yes. I think a system of storage on the railroad sys- tems of this country would be a great benefit to the railroads, to the coal industry and to . the public, because it would more evenly distribute the available car supply and would take fewer cars to serve the business, be- cause they could be utilized a greater number of days in the year; and they could store their coal at times when other people did not want coal, and thus make the cars available for the public when the public did want coal. The Chairman: Could the mine owners create a system whereby they 53 could store for public distribution in various sections of the State, to avoid this congesfion in transportation? Mr. Taylor: I do not think the production of any one company would warrant that. There are stoage facilities; take it at Duluth and Manitowoc and Waukegan and Chicago and Milwaukee, and at all the Lake ports, there are large storage docks, and in certain sections of our country they largely depend upon that Lake business, which was referred to this morning by Mr. Morrow. The mines that serve the Lakes run well in the summer time. There are two classes of mines in this country: mines that get or- ders and ship directly to the consumer, and mines that get their orders and ship it into storage at the Lake ports. Undoubtedly those mines have their busiest time when navigation is open on the Lakes in the summer. The other mines that ship directly to the consumer become busy in the fall and winter, so it depends on the section of the country and the na- ture of the coal. There are only certain grades of coal that are hard enough to with- stand the transportation strain by rail and lake and the unloading and re- loading, and therefore only certain sections of the country enjoy that Lake business. That is largely due to the nature of the co^l which per- mits them to do that in that territory. Then, when the coal gets on those docks it is reloaded and shipped into the Northwest, and to that territory tributary to the docks. The other coal that is shipped directly from the mines goes to the consumer or to whatever market it has. In the West, take on the Union Pacific and those other roads that go through the mountains, where they have a lot of trouble with snow; they always store more or less coal because there are times when their transportation is so much interrupted that all they can do is to get their passenger trains through in the winter; but in the parts of the country where they are free from those terrific storms, it is not the railroads' practice to store coal to any great extent. They only store enough to insure them against a sudden shortage, but not enough for any real re- sults. The Chairman: To relieve this situation, in order that you may have a better balance of working time, and following out the policy that has been already established, from necessity — the storage facilities on the Lakes — would it not be well to develop that further on the Eastern coast and elsewhere, .through some unified system which would enable you to bring your coal to the seaboard at a time when the mines were slack, and you had the transportation facilities, and store it and distribute it when it was needed and the transportation facilities were limited? Mr. Taylor: That would be feasible in some sections where the coal is suitable for that kind of handling. In other sections of the country where the coal would not stand re-shipment the depreciation would be more than the profit. Coal in some districts will fire when stored. The Chairman: I know, but under modern methods of handling, the fire hazard is very much minimized, is it not? Mr. Taylor: It is minimized on certain grades, but there are coals, Senator, that will not stand storage. The Chairman: To what extent would that prevent the establish- ment and successful operation of a system of that kind? Mr. Taylor: I could not give it to you in percentage because I really have not attempted to ascertain or work it out. Your thought is largely new. The Chairman: Well, is it half of the coal produced that could not be rehandled, or just approximately what proportion? One-third or how much? 54 The Chairman: You will not be drawn into an argument by me. I am simply after information. Mr. Taylor: I do not mean by you; I mean by the trade. The Chairman: It seems to me that one of your greatest problems is the question of distribution. Mr. Taylor; All the higher grade coals, such as Kentucky* Ohio, and the Pennsylvania coals — most of them — and the Tennessee coals, and all those higher grade coals will stand storage. The Iowa coals, part of Illi- nois — some of Illinois will store and some of it will not — and the Kansas coals will not store; the Utah coal is splendid storing coal; the Hock Springs, Wyoming, coal is, and some of tlie anthracite of Arkansas and Oklahoma will store; but the coal in the far Northwest of Washington, I do not believe that would store. The lignite coals of Wyoming, Colo- rado and Texas will not store. The bituminous coal in Texas will store to a certain degree. I was the district representative for that coal, and had occasion to store coal in the different cantonments, and the coals that I have mentioned as good storing coals stood the test, while the others did not. I am not prepared to go into that, but~ my observation in the handling of those storage piles during the Fuel Administration led me to make the answer that I have just made. The Chairman: Is there anything further that you have to say to the Committee, or any suggestions that you would care to make? Mr. Taylor: Nothing more, unless you wish to ask me some other questions. The Chairman: The Committee is very grateful to you, Mr. Taylor, for the information you have given. Mr. Taylor: I want to thank the Committee for the very courteous treatment I have received. The Chairman: Now, Mr. Morrow. STATEMENT OF J. D. A. MORROW (Continued). Mr. Morrow: Mr. Chairman, I wanted to present to the Committee the chart that I did not have this morning, of Southerii Ohio. I will add it to what I have already given to the reporter. I read the figures this morning showing the decline in that district. Senator Walcott: How does Southern Ohio coal compare with East- ern Ohio coal? Mr. Morrow: There is not a great deal of difference, Senator, be- tween the Hocking coal and the District No. 8 coal, which is what we mean by "Eastern Ohio Coal." There are some of those coals in South- ern Ohio that are not quite so good as that. I may say, in general, as a rough comparison, that they are about the same. There is but little com- parative difference between them. Where Coal Should be Stored I want to add this. Senator, in connection with what Mr. Taylor said with regard to storage, or perhaps omitted to tell you: The commercial hazards of storage of coal are a thing that you need to take into consid- eration. The man who stores the coal stands a chance of having a de- graded product to attempt to sell in competition with freshly mined coal. Moreover, it would take about as many railroad cars to handle it from the storage as it would take to handle it from the mines. The proper place of storage is at the point of consumption in the factory yards. Senator Walcott: But railroad cars moving from central points of distribution would not have to make such a long journey. Mr. Morrow: That would depend upon the relative congestion of traffic. It might be easier at some times to move a railroad car 100 miles than to move it 20 miles at other times. 55 Senator Walcott: A car moving from the mines, going to a definite destination, would have to go over a certain route and would have to make a longer mileage than a car moving from a storage point somewhere near the destination, would it not? Mr. Mprrow: It might, but the chief practical difficulty about such storage is the commercial feature. You take this coal, for instance, in Central Pennsylvania, and move it down to Northern New Jersey, and then undertake to redistribute it from there. Now, that coal picked up and moved again will carry additional charges. There will be additional costs of unloading and reloading, and there will be a certain loss in the degradation of the product and you will pay another freight rate on it, and as that coal has to compete with freshly mined coal, you would prob- ably lose money on it. Senator Walcott: I can see that. Mr, Morrow: Furthermore, who is going to tackle it? Senator Walcott: My remark was made only in connection with the further point that the congestion of traffic on the line might have some effect upon the facility of distribution from the storage point. ^Mr. Morrow: It might, in some districts. Possibly not, as a general thing. The Chairman: Mr. Morrow, I quite appreciate what you say in re- gard to that, but supposing you were supplying the m.etropolitan district of New York, and that section, and Newark, we will say, and Philadel- phia and Baltimore and Washington, and then down the coast and you stored quantities of coal, shipping it at a time when the traffic could be handled with the greatest ease, and at a time when you could mine it tin- der the best conditions; what would be the difference between that coal stored in a coal yard and then distributed to the consumer — probably handled in wagons, as it would be handled from the cars to the factory — and storing it in a mill yard, and carrying it all the winter until it was consumed? Now, of course, there would be deterioration but would it not be practicable, and would it not relieve this situation in the future, if some system of that kind could be carried out? I realize that you could not do it now, but could not some plan of that character be worked out, in view of the fact that you are going to have this problem likely for a num- ber of years? Mr. Morrow: I think it has been worked out wherever it was prac- ticable commercially to work it out; and in those places where it has not been worked out in that manner it will have to be done by the consumer of the coal. If he wants to protect his supply of coal, he should have the forethought and the foresight to go out .ind buy his coal in the season of the year when he can get it and put it in his yard. He is the man who can do that. It is not practicable as a commercial proposition in those other dis- tricts, aside from the Lakes and New England, and the extreme northern parts of the country. If it had been a practical commercial proposition, it would have been developed long before ihis. It is not practical for the reason that in most years in the past the consumer has been able to buy his coal currently, and he was content to leave his coal stored in the mines two or three hundred miles from his plant. If we are approaching a condition where he will not be able to de- pend on that, he is the man to exercise the forethought and foresight to protect himself by getting his coal and putting it at the place where he wants to use it, and he can do that. Now, we need some education on that line with our consumers. They need to have a little bit more thrift and foresight in that respect; but if they do not do that and choose to leave their coal in the mine and let the coal operator carry the storage charge on it — for that is exactly what he does when he lets his mine lie 56 idle with their coal in the ground — then they ought to expect to pay more for it in^the winter time. Senator Walcott: It takes money to get it out of the ground and to get it to a point of accumulation? Mr. Morrow: Exactjy. Senator Walcott: And that cost has got to be borne by someone. Mr. Morrow: Exactly. The business man who runs a factory feels that he has his money tied up in his plant when he has coal there on storage, and that he is out the interest on it; but the man who keeps his mine ^ready to supply his customers in the winter time has had to meet his overheads for the idle days or weeks on that same coal for that man- ufacturer who is going to use it when he needs it. He has got to pay for it in the long run. In either case, the cost will be there also whether it is on his own books, in the way of storage in his own yards or in the form of an in- creased price, under the influence of extreme demand. In one case he has the coal; in the other, it is problematical whether he will get it. That is the way it analyzes. The Chairman. Is there anything further, Mr. Morrow? Mr. Morrow: Nothing further, Senator. , The Chairman: Who is the next witness? Mr. Morrow: Mr. Callahan. STATEMENT OF MR. JOHN CALLAHAN (Traffic Manager, National Coal Association.) Mr. Callahan: At the outset, I would like to say that in my capacity as Traffic Manager of the National Coal Association, my instructions are and my constant aim is to co-operate with the United States Railroad Administration officials. I make that statement at this time in order that there may be no misundersanding as to what I may say later on. My statements will contain no animus; there is only the most friendly feeling on my part toward all of the officials of the Railroad Administration, but I am compelled to disagree with some of the statements they have made with regard to transportation. In the beginning, it is our opinion that the United States Railroad Admin- istration is not furnishing enough transportation for bituminous coal to ensure the production and shipment of sufficient coal to meet the requirements of the nation this year. A great deal has been said already about the requirements of the coal industry, from the car supply standpoint ; that is, the necessity of coal having cars awaiting it at the mouth of the mine. For purposes of con- tinuity I would like to say again that it is absolutely necessary when coal is brought to the surface of the earth that railroad cars be there to transport it to its place of destination. I would like to say at this time also that it is to be clearly understood that the difficulty today is on account of a transportation deficiency and not a car shortage alone. There is transportation deficiency, in addition to a car shortage. It is true that there are some districts in this country receiving sufficient coal cars today, but those districts are the exceptions. The principal coal-producing territories, especially those which serve the large in- dustrial districts, are short of cars at this time. There are many, many mines idle on account of no cars today. One day in July. 97 mines were idle in the West Virginia district; and for the whole week 285 mines were idle in this district, while neighboring districts had a car supply which did not permit half-tmie operations. I would like to have you look at a table in that connection which shows the Fairmont district, and to direct your attention to the fact that durmg the five days ending July 19th, there were 112 mines idle on account of car sh(3ttage in that one district alone. Senator Walcott: What do you call that district? Mr. Callahan: The B. & O. Monongah division; it is the Fairmont district. Further, that during the following week there were 285 mines which were idle. On July 26th 97 mines were shut down on account of no cars ; and so on through the table. One hundred and seventy-two mines were idle during 57 the week ended August 2nd ; 275 during the week ended August 9 ; 104 during the week ended August 16, and during the week ended August 22, or five days ended August 22, no mines were idle because cars which had otherwise been used on the Chesapeake & Ohio Railway and from neighboring lines, were diverted to the Baltimore & Ohio Railroad for use there, and thus they had a full car supply. That was on account of the shopmen's strike. Another fact in this connection is that this does not indicate the total idle- ness in that district on any one of those dates. This does not show the number of mines which only worked part time on those days. There were other mines which did not work full time. , When I went to the office at noon, I found a telegram there, which I would like to read into the record at this time. It is from Chicago, August 25, from the Pike County Coal Company, and states : "Our mine closed down on following dates entirely; caused by car shortage: August 9, 11, 12, 13, 14, 15, 19, 20, 21, 22 and 23. Worked only two days out of last possible 13. Mine located at Petersburg, Indiana, served by Chicago & Eastern Illinois Railroad, and produces 1,400 to 1,500 tons per day." Senator Myers : What do the miners do when those mines are closed down for lack of cars? Mr, Callahan : They do not work. In many instances, the mine operator, as I understand it, has to carry them over, if he wants to continue them in his employ. Senator Myers: Does he have to pay them for their-idle time? Mr. Callahan : If he wants to continue employing them, unless they have other employment. Senator Myers: Do they draw their wages, I mean? Mr. Callahan : I do not know, but I know that in times of car shortage in the spring it was commonly reported that coal operators were paying their men — at any rate giving them free house rent and extending them credit at the company's store. Senator Myers : Do you not know whether they continued to receive their wages in full? Mr. Callahan: I do not know, but there are operators here who will be glad to advise you as to that. Mr. Gutheim : You said "the car shortage in the spring." Did you mean the no-market condition? Mr. Callahan: They were idle at that time. They are idle now on account of car shortage. Losses Due to Car Shortage Mr. Gutheim: Was it on account of car shortage then? Mr. Callahan: There was some car shortage in the spring; it was not at all as acute as it is today. If I attributed the whole matter to car shortage in the spring, I was in error. Statements have been made in regard to the Geological Survey reports, and I would Hke to quote from those reports the production lost on account of car shortage for the last five weeks. July 12, 2.8 per cent. July 19, 7.4 per cent. July 26, 11.2 per cent. August 2, 14.5 per cent. August 9, 22.5 per cent. This has increased, gentlemen, from July 19th, when it was 7.4 per cent, to 22.5 per cent at present. This is reflected in tonnage in a chart which I would like to have you observe, for a little longer period, however (The chart above referred to is reproduced below:) Mr. Callahan : This chart shows in tons the loss on account of car shortage from June 7 to August 9, by weeks. It indicates that during the month of June there were 2,624,900 odd tons of coal lost on account of car shortage. During the month of July there were 3,724,183 tons lost on account of car 58 shortage. During the week of August 2nd 2,311,402 tons lost on account of car shortage. During the week of August 9, 3,591,180 tons lost on account of car shortage. There was a total for the two weeks in August of 5,902,582 tons, or approximately what the State of New Jersey required in the year 1917 for the 12 months. The total for this period was 12,251,762 tons, or about two-thirds of what the whole New England section of the country required during eight months — the first eight months of 1917. I would like to say at this time that there is an abnormal car shortage today. The Director General has stated that this situation is not abnormal. It is abnormal. Over a long period of railroad experience I cannot recall when, at this time of year, we have had a car shortage as large as this. You can observe from the chart how this has run up, and the disturbing feature is that it is still progressing, it is still going on. The Chairman: Getting worse? Mr. Callahan: Yes, it is getting worse. Senator Walcott: To what do you attribute it? Mr. Callahan : I will come to that in a moment, Senator. Senator Walcott: All right. Mr. Callahan: It is partly in connection with car repairs and partly in connection with the movement. Car Repairs and Movement The Chairman: How does this compare with last year? Was there a loss last year? Mr. Callahan : It is much worse than last year. Those figures are all taken from the Geological Survey reports. They are simply percentages worked into tons. As a matter of fact, they are much worse than they were last year. For example: For the week ending July 19, 1919, it was 7.3 per cent, as compared with the week of July 20, 1918, which was 5.1 ; an increase of 2 per cent. July 26, 1919, the percentage was 11.6, as compared with 7.2 for the week of July 27, 1918. For the week of August 2, 1919, the percentage was 14.5, as compared with the week ending August 3, 1918, when it was 7.7. You will see from that that the percentage was just about half in the August week, 1918, what it is in the same w'eek in 1919. The Chairman: This is the time of year when you meet your worst car shortage ? Mr. Callahan : I beg your pardon, Senator, but this is the time of year when we expect the best car supply — as good, at any rate, as any other time of year ; this is just the beginning of the large demand for coal and we should have the maximum number of cars. Senator Walcott: These figures mean that of the total shortage of coal, these various percentages represent what is due to the lack of cars? Mr. Callahan : Yes, sir. The computation on this chart, headed "Pro- duction Lost Through Lack of Railroad Cars at the Mines" is an extension into tons of these percentages of the total production as set forth in this Geological Survey report. On page 3 of Document No. 73 of the Senate, being a communication from the Director General of Railroads to the President of the Senate, in connection with the Pomerene resolution, there appears a statement that there are now 37,000 new cars which have been built, of which 17,000 have been put into service. In connection with this table, I would direct your attention to the fact that while these 37,000 cars are going into service, when in service they will not solve the problem by any means. This tonnage for the week of August 9, 3,591,000, translated, means about 71,824 cars of coal, or practically twice the number of new cars. Senator Walcott : Mr. Callahan, "these 17,000 cars have been put in service," is the language of the communication, so you cannot count on 37,000 cars in addition to those already in service, can you? Mr. Callahan : No ; but the point I was making was that even though the total of 37,000 cars were in service today, or had been in service during the 59 week of August 9, they would not have taken care of this shortage by one-half. Senator Walcott : I see. Senator Elkins : Are they being put into service promptly? Mr. Callahan : They are, some of them, I would refer again to this Hines statement on the same page in the same paragraph. The statement is made that "the remaining 20,000 already built are now being numbered and lettered, and are being placed in service as fast as this work is being completed." It is true that these cars are being stenciled and lettered, but the work is unquestionably slow. In one instance, which was recently called to my attention, it involved 2,000 cars which were being lettered at the rate of ten per day. Senator Walcott: At that rate, it would take only about 200 days to get them lettered? Mr. Callahan : About seven months, yes. Senator Walcott: Is this lettering operation very prolonged or difficult? Mr. Callahan : It does not take long, I think. Senator Walcott: It simply involves the use of a stencil and painting it over? Mr. Callahan: That is all. Senator Myers: What is the cause of its being so slow, then? Mr. Callahan : I am unable to answer that. Senator. Mr. Hines can prob- ably tell you how many of these cars have been lettered, and how fast they have been lettered, and how long it has taken to letter them and place them in service — those which are already in service. Senator Elkins: Do you know how many shop cars there are on order? Mr. Callahan : Yes, I have that here. Senator Elkins: That takes up a lot of the facilities? Mr. Callahan: Yes. The Chairman : Now, this stenciling, of course, delays the delivery of the cars to the railroads and to the mines. But does it not require the weighing of the cars or the measuring of them for their tonnage capacity ; it is not simply the labor of stenciling them, is it? Do they not have to be weighed, and a lot of calculations made as to their capacity and their weight and so forth? Mr._ Callahan : That may be true. Senator, but my point is in connection with this matter; that, at any rate, preparations have not been made by the Railroad Administration for doing that expeditiously. Many of these cars have been constructed for months. Why has not all of that been prepared for? Why has it not all been taken care of? Why are not these cars ready when the car shortage comes? That is a question I would like to have answered. The Chairman : I will ask the Director General to answer that. I cannot answer it. Now, you spoke. Mr. Callahan, not only of the shortage of cars, but the transportation conditions. Mr. Callahan: That is true. The Chairman : Is the coal production affected by the management at the present time of the railroads, and, if so, in what way? Mr. Callahan : I will attempt to show, in a moment, Senator, a statement which will indicate the movement today as compared with some time ago. If you will permit me, I would like at this time to make mention of another statement which has been made by the Director General in his letter. It comes up in connection with the demand, and the indication that the Director General does not think the demand for coal is as great as we think it is. On page 5 of this same Senate Document No. 73, I find the Director General saying: "It may be noted that during the first six months of 1919 the coal consumption by railroads was about 26,000,000 tons less than in the corresponding period of 1918, during which latter year the fuel coal consumed by railroads aggregated 154,000.000 tons for the twelve months." I think those figures are excessive. I think they are excessive by about 50 per cent — somewhere in that neighborhood. Senator Walcott: Fifty per cent which way^ Mr. Callahan: I think that figure is less than, or around 15,000,000 tons. Senator Walcott: Which figure^ The 26,000,000? Mr. Callahan: Yes. Senatoe Walcott: It ought to be about 15,000,000? 60 Mr. Callahan: 15,000,000 or less; I just wanted to put that in at this time. It is not directly connected with this car matter. Senator Walcott : You notice his language is: "The coal consumption by railroads was about 26.000,000 tons." .Is it your idea that they consumed only about 15,000,000 tons? Mr. Callahan: 15,000,000 tons less; that they consumed less about half rf that 26,000,000 tons. Mr. Walcott: You say they have consumed that? Mr. Callahan: Yes. Mr. Walcott: Do you mean they have purchased oniy about half of that this year? Mr. Callahan: No; their consumption. He says "consumed" and I say "consumed." Mr. iValcott : All right. I thought maybe they had consumed coal that they had in f^orage somewhere, which you would not know about. Mr. Callahan : No, I think the consumption is incorrect. They think the coal consumption by railroads was about 26,000,000 tons less. Now, my state- ment is that it was not that much less in the corresponding period of 1919 by around 13,000,000 tons. Senator Walcott: I misunderstood your statement. Pardon me for inter- rupting you. Mr. Callahai^: After coal cars are loaded they are not moved as rapidly as they should be. The Chairman: What is the reason for that? Mr. Callahan : I would like to show you a chart here, if I may, in regard to the average miles per car per day of all cars, from which it will be observed that during the year 1915 the average miles per car per day for all cars was 24.4 ; in 1916 it ran up to 26.9 ; in 1917 it was 26.4 ; until in 1918 it was 24.9, and the first six months of 1919 it was 21.5 miles. The Chairman: Are these coal cars? Mr. Callahan: These are all cars, and it is my belief that if all, traffic is moving slower, including commodities handled on special fast freight schedule it is natural to suppose that coal is also moving more slowly. This, of course, is reflected in car shortage. The slower your cars move, the fewer number of trips they make. I appreciate that the Railroad Administration may say that this is due now to the fact that there are a large number of open-top cars and other cars undergoing repairs. At any rate, it is our judgment that this factor is of such importance in this inquiry that it would doubtless be to the interest of the committee to ascertain from the Director General the information, have him pre- sent a statement as to just what the average miles per car per day of coal cars have been for the first six months of this year as compared with similar periods in other years. Senator Walcott: Where do you get the data from upon which to make up this chart? Mr. Callahaan: From the Bureau Railway Economics, which is the official statistical division of the American Railway Association. Senator Walcott: Is that a division of the Railroad Administration? Mr. Callahan: No; it is a private bureau maintained by the railroads, a sta- tistical bureau. The Chairman: The claim that you make is that the Railroad Administra- tion, the railroads, are losing their efficiency in the hands of the Railway Admin- istration; is that not so? ^ Mr. Callahan : I claim that they are not moving coal as fast as they should. This indicates that they are not hitting the ball. Senator Elkins : Are they repairing cars like they used to? Mr. Callahan : No, sir ; the repair matter comes next. The Chairrnan : I would like to ask you this. We are interrogating you on the coal situation and trying to ascertain the reasons for the car shortage. Now, the present table shows that all classes of traffic, the mileage of all cars, 61 has been reduced practically from the peak of 26.9 miles to 21.5 miles for the first six months of this year, those amounts are shown on that table. Mr. Callahan : My contention is that the traffic is moving more slowly today than it did formerly. Coal Movement Slow The Chairman: Did this Bureau of Economics have any data on coal cars? Mr. Callahan : It did not. The Chairman: It was not classified at all? Mr. Callahan : They were not classified. And, Senator, I wanted it to be understood that since this includes all cars, this is an indication that the coal car movement that is set forth here is slower. I would hesitate to say just how slow it is. That was why I suggested that the Director General should indicate to the committee, and he should prove whether or not that is one of the contributing factors. I think it is, because I know from experience that when the general movement is around twenty to twenty-five miles a day for all cars, that coal is moving more slowly than other commodities. Coal does not move on fast sched- ules like refrigerator traffic or like livestock, or even like general merchandise. When on the road it is necessary to take an engine off a freight train for a pas- senger train, they do not take the engine off of the livestock train, if there is a coal train available, or they do not take the engine off of a grain train if there is a coal train available. They take the engine off of a coal train. If the crew is running near its time limit they think nothing of setting the coal on a side- track. Coal is the commodity that usually adorns the sidetrack. The movement is always slow. The movement is slow today, slower today than it has been here- tofore. That is my belief. The absolute figures which the Director General did not put in his record may indicate differently, but it is our belief that that is a fact, and that is one of the contributing factors to this car shortage under this condition. Senator Walcott : Does the Railroad Administration maintain anything similar to- this Bureau of Economics that you spoke about, or whatever it was? Mr. Callahan: I do not know that the Railroad Administration does, but every railroad maintains that figure constantly. That figure can be obtained, in other words, from every railroad in the country. They will have no difficulty whatever in obtaining it from the Class I railroads over which they have con- trol, 136 of the principal railroads of the country, and they will have little diffi- culty in obtaining it from the others. The Chairman: Is this inefficiency, this slowing down of the movement of cars and general traffic due to the overhead supervision, or due to the supervision of the lines or due to the labor inefficiency? Mr. Callahan : Senator, I am unable to say. I am not an authority on that subject. Frankly, if I could say what it was I would be very glad to help out there. I only know the effect. I do not know the real cause. I know that they are slowing down. This is the time of the year right now when we should have the utmost efficiency in our railroad operation all over this country. There is noi any cold weather ; there is not anything to deter the movement of cars from the standpoint of mechanical ability to move. By that I mean there is not anything to interfere with the operation of the engines, the deficiency of motive power which grows when low temperatures are experienced. Nothing of that sort exists today. They should be moving faster today than they have at any time this year, and right at this time we have in our yards at some of our coal mines, it has been reported to me within the last week where coal loads have stood at coal mines four and five days without being moved. That is a situation which should not be permitted at this time of the year. The cars should be moving now. Mine tracks should be pulled. These men can- not load coal into cars when the mine tracks are blocked with loads. The Chairman : Would the necessary cars have produced your average pro- duction per week that Mr. Taylor claims to be necessary in June, July and August ? 62 Mr. Callahan : Yes ; if those necessary cars had been available they would have increased that production right up to the maximum. On August 9, I think they would have brought it up to around 13,000,000 tons. Senator Walcott: With the cars moving so much more slowly, of course, if cars move so much more slowly than they did heretofore, you have to have more cars at work? Mr. Callahan : You have to have more cars to do the work. Senator Walcott: So if you had had these extra cars on would that have supplied the deficiency? Mr. Callahan: If the cars had been moving properly. As I stated in the beginning, it is not entirely a question of cars, in my judgment. It is also a question of transportation, of movement ; the traffic will have to be moved. Pri- marily it is cars. The Director General says that it is not. He hints that the difficulty will be a question of movement on account of congestion when the peak load of traffic is expanded this coming fall. In my judgment, when we have blocked loads at the mines in.cars, they are carrying about as big a load as they can carry. It is a question of cars and movement. They will^have to move the cars to get the service out of them. They will have to move the 'cars promptly in order to get the mileage out of them, and if they are ever going to do it, this is the time to do it ; the ideal conditions exist today. The Chairman: Mr. Callahan, you represent the National Coal Association here in Washington? Mr. Callahaan : That is correct. The Chairman : And you are in cpnstant touch with the Railroad Adminis- tration ? Mr. Callahan: Yes, Senator. The Chairman: Calling their attention to the failure to move cars at the various mines; what is the Railway Administration doing to meet this problem, to solve the diffiulty? Are they making an effort, or are they simply allowing the situation to become worse? Do they respond to your request? Are they doing everything in their power? Mr. Callahan: Oh, I cannot say as to whether they do everything in their power. I do not know exactly what they do. I approach them from the stand- point of the difficulties being experienced in certain territories, called it to their attention and asked them that the difficulties be corrected. Frequently when it is corrected it is a case of robbing Peter to pay Paul. Cars are taken from one track and moved to another. It is just simply prolonging the agony. This whole thing also hinges upon the matter of repairing cars. There is a large number of cars in bad order. I have a statement here which shows such cars from April 5th to July 19th. This, by the way, is a percentage-of-coal-cars-in-bad-order. That shows that whereas on April 5th the cars in bad order, the total in bad order amounted to G6,192 or 6.5 per cent of the total cars of that character, the number of bad order cars increased constantly until on Jul^ 5th, the week ending July 5th, there were 105,295 of such cars in bad order; 10.4 per cent of the total cars owned. Senator Myers : How can they be kept in any better repair if the Govern- ment is losing a million dollars a day on the railroads now? Mr. Callahan : Senator, they can, of course, assist in the relief of that loss, or a portion of it, by earning more revenue ; by putting these cars in repair they will increase their earnings. Senator Walcott: They will also take more money out of the Federal Treasury to pay their repair bills. Mr. Callahan : Well, that is not for me to decide. The Chairman : Isn't the Senator from Montana a little inaccurate as to his figures? Senator Myers : Well, it was stated on the floor of the Senate a little while ago. I may be mistaken. The Chairman : I think those figures have been revised up since. Senator Myers: I wanted to be on the safe side. 63 Senator Walcott: I notice on your chart you have a column of "Total Cars." Mr. Callahan : Yes, I would like to explain, Senator, that those are not only the total cars of the class one roads, the roads under Federal control. They are total cars of other roads, that is, of class 2 and class 3 roads; cars which are not under the Railroad Administration's jurisdiction, the Director General. Senator Walcott: Of course, as to those cars, the Railroad Administration has nothing to do in the matter of repairs. Mr. Callahan : But the percentage of ownership of those cars, as the Di- rector General has pointed out, is only about one per cent. There is only about one per cent of the total coal cars which belong to those roads other than the class 1 roads, only about 1 per cent are out from under his control, in other words. Over 95 per cent, it is safe to say, are under his control. He has the say as to what shall be done with them. Senator Walcott: In his letter, in response to the Senate resolution, he makes a statement that there are about 775,000 open top cars suitable for coal loading. ^ Mr. Callahan : Yes, but he also says that there are about 900,000 or 990,000 ; I have the figure here somewhere, which are coal-carrying cars. The total coal carrying cars of class 1 ownership on July 12th was 974,547 cars. Senator Walcott: Where does he make that statement? Mr. Callahan : He does not say that. I say that. I say that there were 974,537 open-top cars, Class I ownership, on July 12th. Senator Walcott: Suitable for coal carrying? Mr. Callahan : Coal carriers ; coal-carrying cars. Senator Walcott : His language is as follows : "The total result is that there are now approximately 900,000 open-top cars in the United States ready for use without any repairs, and about 775,000 of these open-top cars are suitable for coal loading." Apparently all open-top cars cannot be used for coal loading. Mr. Callahan: Well, I did not care to go into that, but in the classification of coal-carrying cars there is a distinction. There is a class of cars which are constructed primarily for mill purposes. They can carry 100,000 tons of steel billets, and they have that capacity marked on them, but they would not carry over 75,000 pounds of coal, we will say, or 50,000 pounds^ — 70,000 pcunds, T should say. Now, those cars are not desirable from our viewpoint in the coal trade, but it is necessary at times, and they are frequently put in for coal loading and therefore we assum.e the Director General means that that number of cars is suitable for coal loading. We know that there are more cars than that at times in coal service. On page 8 of the Senate Document the Director General also says that there are "Suitable and used for coal, ore, stone, sand, gravel, crushed stone, blast furnace waste, brick, lumber, sugar cane and sugar beets, and generally commodities not affected by the weather," 860,000 cars in service. The Chairman: There was a long period in which the Railroad Adminis- tration failed to repair cars, was there not? Are you familiar with that condition? Mr. Callahan: That the railroads failed? The Chairman: Failed to repair cars; they stopped repairing to any great extent. Mr. Callahan: Back before the Railroad Administration took them over? The Chairman: No, in this year, I understood that there were no funds available and there was a period during which that happened? Mr. Callahan: I do not know just how long, Senator, they failed to make repairs to cars. It was commonly understood that only what are called running repairs were being made, that they would put loads in, repair and move the cars, but that they were not carrying on any extensive program in connection with repairs to cars. The Chairman : I understood that they either stopped or slowed down on coal car^ repairs, but about the first of July — I may be wrong about this, I am simply informed about this — they resumed the repair of cars. Now, your 64 peak of cars out of commission for July 5th reached lOO.OOO, and since that lime down to July 19th it has reduced over 7,000 cars. Mr. Callahan : That is right. The Chairman: In other words, Mr. Hiiies has improved the situation since the 1st of July? Mr. Callahan : He has to some extent. The Chairman : But you need all the cars at the present time. Mr. Callahan : We need all the cars and more than there are now. He has improved it to some extent, hut there are later figures which indicate thai the condition is not at all improving at the rate at which it should. And 1 think there is not any question but what he should exert the utmost effort, should do everything that he could immediately to put these cars into condition. Normally that ten per cent as shown there on July 5th, normally, it is my judgment — and I say this advisedly — and as a personal opinion, there should not be over five per cent on any well regulated railroad of the open-top car", undergoing repairs or awaiting repairs. 1 think that is a safe figure for open-top cars, and beyond that I think it is dangerous. The Chairman : Suppose the Government had not taken over the railroads, normal conditions had existed, and there had been no war during this time, would the number of cars available for coal have increased, would the railroad have increased the supply of cars? Mr. Callahan: Senator, that is problematical. It is a matter of opinion only. Frankly I cannot say. I am a confirmed private ownership man and I think that they would naturally have been more interested in their revenue than they are under the present arrangement. The Chairman: Are there enough coal cars to carry the traffic, that is what I mean, even if all cars were repaired? Mr. Callahan: The present traffic, yes. If they had all of the open-top cars repaired and conditioned today they could take care of all the coal production which the country requires — and I do not want to be evasive in that, I do not know what kind of winter we are going to have. So I cannot answer it just now. Senator Elkins : According to this movement, the way they are moving now ? Mr. Callahan : N(5, I thank you. Senator, for that. That would have to he taken into consideration also. They would have to have to move coal on a reasonable movement basis. Senator Elkins : Are they short motive power? Mr. Callahan : They have about 02,000 locomotives on the railroads owned or operated by or under Federal control, and about 8 to 10 per cent of these locomotives are now in the shops for classified repairs. The indications are that these 5,500 locomotives will be needed quite early this winter, and unless active steps are taken at once, we may find ourselves when winter comes in the same condition with regard to engines that we are in regard to cars today. While on the subject of cars, I would like to go a little further into that thing and say that on July 12, there were on July 12 208,531 bad order cars of all classes. The Director General stated in this connection that a large number of these cars awaiting repairs are held for only light repairs, which can be speedily applied, and to proceed with my own statement, while the number of light cars is not stated, it is a fact that there are 135,895 cars requiring heavy repairs, and 72,636 cars requiring light repairs at the middle of July ; this is the figure for all classes; and it is assumed that there are just as many open-top cars proportionately requiring heavy repairs as other cars. Senator Walcott: Where do you get those statistics? Mr. Callahan: Those figures are Railroad Administration figures not in the Railroad Administration's letter. At the time to which reference is made 47 per cent of these 208,531 cars, or 98,139, were coal-carrying cars. I would like to show' you a statement in that connection, the cars of Class I ownership as of July 12, 1919. which shows the number of closed cars, that includes box stock and refrigerators, of 1,183.490 cars, of which 95,928 were in bad order. This was 8.1 per cent of the total bad order cars. The coal cars amounted to 974,547. Included in that number 98,139 65 bad order cars, or 10.1 per cent. There were more coal cars in proportion than there were of the other cars. This indicates that the Railroad Adminis- tration has not given the attention to coal equipment which they should give. They have not anticipated this thing. The Director General says, "Oh, this situation is not abnormal." I say that the railroad men who are running the railroads today know that it is. They know there is a car shortage. The Director General could have advised himself at the time he sent the letter to the Senate, if he had cared to do so, because we know that we were short of cars at that very time. HiNEs' Statements Inaccurate The Chairman : Well, then, your statement is that the Director General, in informing the Senate and through the Senate the country, has misstated the facts and is inaccurate as to his figures. Is that your position? Mr. Callahan : Practically that. Senator, that he did not state the exact facts in regard to this car shortage. The car shortage was there. Mines were shut down, many of them weeks at a time, as indicated by one of these state- ments; and we were constantly receiving at our headquarters here in Washington telegrams and letters beseeching us to get cars to those mines. The Chairman: If you can, will you furnish this committee, before we ask the Director Gneeral to come here and explain his statement to the Senate, and also when we ask him to see if he cannot improve the situation immediately — can you furnish to this committee a statement showing at which mines there is a car shortage at the present time and where distribution is delayed by the Railroad Administration just during a certain month, so we can show the Director General that notwithstanding these statements that condition exists? Mr. Callahan : Senator, this very Geological Survey report from which my figures are taken shows that, and the Director General knows it. I will be glad to comply with your request, very glad indeed to submit figures. The Chairman: I want to say, "Why do you not get the cars there? If there are one hundred cars needed at this mine, why do you not move them?" Mr. Callahan: This statement shows that for the State of Illinois, for example, there wa.s 9.2 car shortage on July 26th. The Director General knows what railroads run through Illinois; he knew that there was a car shortage there at that time, if he had just looked through the figures which were submitted. He submitted figures in regard to the Geological Survey's report, Senator, and went right to the same figures and took them out and showed that it amounted to so many tons of coal lost, as in- dicated in two weeks — enough to supply the State of New Jersey, as much as they burned in the year 1917. The Chairman: New Jersey is not the only State that needs coal. Mr. Callahan: There are other States, true enough; but I also sup- plied the tonnage pertaining to the whole New England territory. The Director General knew that. He must have known it if he examined these figures. Furthermore we will gather these figures together. They are contained in this chart. It is like carrying coals to Newcastle to take these figures over to the Director General. The Director General has experienced operating men running these railroads every day. His regional directors know every morning, Senator, what the car shortage is lhat day; every one of them does in his territory. The Federal Manager of each railroad must know every morning just where he stands in regard to his cars, in regard to his engines, in regard to the congestion in his yards: the total number of cars and engines the day before, the total remaining to be moved — he knows all these things. I will be glad to put these things up this way, but I want to draw your attention to the fact that he already has that infor- mation and he knows all about it. The Chairman: But we do not. I feel this way: T feel that if this is one of the causes of the present situation and the danger of a coal famine 66 next year, we should liavq. definite inforniarion as to the mines that suffer from a lack of coal cars, definite information or testimony from these mines as to the time when cars have l)een left on their sidings and the Railroad Administration has failed to remove them. We want to know a few individual experiences. Mr. Callahan: Wle can give you individual experiences. We can tell you all those things. The Chairman (continuing): Simply to show the situation, and then see if it cannot he immediately relieved and the conditions changed. I understand, Mr. Callahan, that you represent the Coal Association here. It is your duty to keep in close touch with the Administration? Mr. Callahan: Yes, sir. The Chairman; And try to see that these things are rectified? Mr. Callahan: It is. The Chairman: You are failing in that regard; is not that so? Mr. Callahan: I am failing to get rejults. I have not prevented this car shortage, despite all that has been said. I go over to the Railroad Administration day after day, and ask them this and that and the other thing. I communicate by telephone; but I have not averted this car shortage. The Chairman: Do you get results? Do they move the cars when you point them out to them? Mr. Callahan: Oh, they remove them; I do not saj that they are in- active. They take into consideration the requests that I make. It is fre- quently a matter of robbing Peter to Day Paul. When you have three hundred thousand cars idle on account of repairs, these men who, are ad- ministering cars cannot make cars. They can only use the cars they have. They move them around to avoid a shortage just as much as they can. The men with whom I am particularly in -touch are doing all they can, I believe; but it is a crime that these cars are not repaired and in condition, and that the requirements of the coal industry were not anticipated. We not only meet them, but we also write to them. I would like to show you some letters we have written to the Railroad Administration on this sub- ject. (Mr. Butler and the^ witness held a consultation which the reporter was directed not to report; after which the following proceedings took place.) The Chairman: Do you want to withhold these letters? Mr. Butler: I think, Mr. Chairman, it is inadvisable to put in the let- ters to the Administration unless the replies are put in. I am not just in a position to say at the present time whether that would be acceptable to the Administration. The Chairman: Then you do not submit these letters in your testi- mony? Mr. Butler: I prefer not to do it until we have talked with the Ad- ministration about it and have gotten their consent. Mr. Callahan: At any rate. Senator, we cooperated with the Railroad Administration in every way, manner, shape and form. We have advised them, we have kept them in touch with what was going on and have talked with them and the net result has been a loss of 12,000,000 tons of coal pro- duction in ten weeks. Senator Myers: Do you know where these cars ar-i that are being re- paired? What is being done with them? Do you know whether they are simply laid aside or whether they are in course of repair now? Mr. Callahan: They are in course of repair. Senator, but it must be remembered that a minimum amount of attention has been paid to repairs for several years — 1917 and 1918. Senator Walcott: Was that not so prior to that? Mr. Callahan: I cannot say that that is the case. I know the repairs 67 were made regularly on the majority of roads. The equipment was kept in reasonably good condition. Continuing the answer, Senator, these cars arc being repaired, unques- tionably, but there is an oncoming flood of cars, new cars to be repaired or additional cars to be repaired, because of this condition which requires and necessitates exceptional effort and increased numbers of shopmen to put these cars, all of the cars in repair against the day when we will have to have the maximum number. Senator Myers: When a car gets so it is not in condition where it is advisable to use it any longer, how long does it take to repair it and put it in good condition, if you know? Mr. Callahan: No; I cannot say as to that. It depends entirely on the con- ditions. Many of these cars have steel under-frames. That work is very diffi- cult. Many of the box cars have wooden end sills instead of steel sills. The wooden under-frame cars are more easily repaired than are the steel cars. My impression is that they have somewhat followed the lines of least resistance and have done the easiest job first. I know that steel cars are hard to repair, but they take longer. Senator Myers : Your idea is that as soon as a car gets so that it does not produce the best results in operation, it ought to be repaired. Mr. Callahan : Positively. Senator Myers: You think that is not always done? Mr. Callahan : No. Transportation is the only thing that the railroad has to sell, and the only way they can produce transportation is with cars, and it seems to me they should be in readiness at all times. 1 know positively from the experience of years that the repair situation is abnormal, exceedingly abnormal. Senator Elkins : Is that on account of not putting the labor on the cars that they put on them before the war? Mr. Callahan: It may be a matter of finance; it may be a matter of inabil- ity to get men ; but whatever it is, we are facing that condition today. Senator Elkins : When the government took the cars over they took them over in fair condition and said they would keep them in fair condition. Have they fallen off in repairs? Mr. Callahan: I do not. think the cars have been kept in repair the last seven or eight months as they were before. Senator Elkins : I do not think so, either. The Chairman: Let us be perfectly fair. Is not that partly due to the war conditions and the fact that Mr. Callahan: That is true, Senator. The Chairman (continuing) : And the fact that they were under tremen- dous pressure? • Mr. Callahan : The war ended. Senator, in November, 1918, and during the early part of the year 1919, by word of mouth, this condition which we were coming into was preached to the railroad people, the Railroad Administration people. I myself have talked about it frequently. I have said, "Now is the time when there is a surplus of labor. People are talking about unemployment. Now is the time to put the cars in repair against the day when they will be required." We began earnestly along in May and June to bring it to their attention. The Chairman : Have you made any investigation as to what the Railroad Administration is actually doing in certain sections in regard to repairing? Mr. Callahan : I have been unable to learn just what they are doing in the way of repairs. The Chairman: There is evidently an improvement shown here?- Mr. Callahan ; There is some improvement, but the figures that I have indi- cated here are only up to July 12th. That was the date on which the Director General chose to close his report. Senator Myers : There were a few months last spring when Congress did not appropriate any money for the Railroad Administration. The Chairman: Yes; I understood that the Director General financed it in 68 other directions. Whether there was sufficient for car repairs or not 1 do not know. Is there anything further, Mr. Callahan? Mr. Callahan : I believe not, Senator. The Chairman : The committee is very grateful to you for your testimony. If c^nything further occurs we will probably recall you. Mr. Callahan : Thank you, very kindly. The Chairman (after a conference which the reporter was directed not to report): Mr. Callahan desires to introduce certain letters that were written to the Railroad Administration and their answers. Is there any obj'-ction? The Chair hearing none, it will be allowed. (The correspondence referred to is as follows:) The Chairman: Have you any other witnesses today? Mr. Morrow : That is all today. Senator. In connection with the letters that wc introduced here, we put in the replies from the Railroad Administration officials, not that we have anything to criti- cize or find any fault with in their replies, but we wanted to put in our letters to them in order that you might have a better view of how we had approached the present situation and the efforts that had been made to deal with it, to show you that we had not let it drift along. We felt that it was not right to put those letters in without showing the replies of the Railroad Administration. I would like that explanation to be made in connection with this corre- spondence. The letters were offered. They read as follows: The Chairman: The committee will adjourn until 10:30 o'clock tomorrow, and will now go into executive session. (Thereupon, at 5 o'clock p. m., the committee adjourned until Wednesday, August 27, 1919, at 10:30 o'clock a. m.) ' WEDNESDAY, AUGUST 27, 1919 The subcommittee met at 10:45 o'clock a. m.. Senator Davis Elkins (acting chairman), presiding. Present: Senator Walcott. STATEMENT OF MR. J. D. A. MORROW (RESUMED) Mr. Morrow : Mr. Chairman, there are a few odds and ends of statements with regard to the testimony yesterday that we wish to clear up. In the first place, let me say that we have a little additional information whicfl we desire to give your committee before we close our appearance here; and we would like to put that in at the same time that we make our reply to the questions which Senator Frelinghuysen asked yesterday we should get information upon. He realized that it would take a little time to do that, and after going over the questions last evening, we feel that we will be able to get together all the information we can obtain for him by next Tuesday; and when we present the answers to those questions, we would also like to explain to the committee in some detail just how we arrived at those mine-run averages that appear on the charts, so that there will be no misunderstanding as to what those figures mean, and so you will appreciate the fact that there are prices above and below those figures and get the real significance of those charts. Then, of course, you appreciate the fact that it is not possible to bring the record for August up until the month is completed, but we hope by next Tuesday to give you at least something as to what the prices at the mines have been during part of the month of August. No doubt there will be some increase, but probably not a great deal. We will get that together for you by next Tuesday. Also it was pointed out last evening, after the hearing closed, that the statement with respect to the shortage of labor perhaps was not as complete as it should have been; that Mr. Taylor, in speaking of that subject, was per- sonally acquainted with the Western situation, where the shortage is not so 69 acute ; and that in several of these .Eastern producing districts — particularly those adjacent to the more important industrial centers — there is quite a shortage of labor at the mines, and in order that your committee may be accurately and fully informed about that, we want to take a few days' time to canvass that situation and get the information from those local districts to present to the committee; and we will undertake to do that by next Tuesday and have that information in hand to give you at that time, when we comply with the request of Senator Frelinghuysen. That is all we have to present at the present time as far as we know ; and if you will let our appearance continue until that time, it will be agreeable to us. Senator Elkins : Then we will adjourn until Tuesday next at 10 o'clock. (Whereupon, at 10:50 o'clock a. m., the subcommittee adjourned until Tuesday, September 2, at 10 o'clock a. m.) TUESDAY, SEPTEMBER 2, 1919. The subcommittee met at 10:40 o'clock a.m., Senator Frelinghuysen pre- siding. Present : Senators Elkins and Walcott. The Chairman: Mr. Morrow, who is your first witness? Mr. Morrow : I am. STATEMENT OF J. D. A. MORROW (RESUMED). Mr. Morrow : Senator, on Wednesday morning I explained to the Com- mittee that, for your information, we wanted to make it a little clearer just how we arrived at that mine run basis price that we had charted ; and, with that in view, I have analyzed one of the districts in detail so that you may see just how we got the figures. This is the Pittsburgh District, and it shows the total number of cars, averaged at fifty tons per car, multiplied by the price at which that coal was sold; and, in that manner we obtained the total average — the total number of tons sold divided into the total num- ber of dollars received for the prepared coal, the run of mine, and the screenings or slack, all added together. That gives the mine run basis for all coal. How Price Averages Were Obtained I should explain, further, that the $2.62 which appears up there in the first line as the price for the prepared coal was also an average obtained by simply multiplying the price by the tons for every single transaction that was reported in that field — lumping them together in a similar manner, and adding the results, so that you would get an accurate average. Senator Walcott: Now, Mr. Morrow, referring to the chart of the Pittsburgh District which you put in evidence the other day, the Fuel Ad- ministration price for that district up to February 1st, when the Fuel Ad- ministration was discontinued, was $2.35? Mr. Morrow: That was for mine run, yes, sir. Senator Walcott: Did the Fuel Administration allow prices above that $2.35 for the prepared coal, for instance? Mr. Morrow: They did. Senator Walcott: Which, on your table submitted today, shows $2.62 for April? Mr. Morrow: The Fuel Administration figure is if;2.60 at the foot of the sheet for prepared coal; for run of mine, $2.35, and for the slack or screenings, $2.35. When we undertook to make an averag'e for the Fuel Ad- ministration we could not m.ake a true average because we did not know the total tonnage sold under the Fuel Administration for those past months; so we just put on the chart a dotted line representing the run of mine price — which is, normally, the average price. They should correspond. In the Pittsburgh District, however, they did not correspond, so that the ac- tual Fuel Administration realization was a little higher ihan the dotted line average shown there; but that is uncommon. It would only be a few cents, however. 70 Senator Walcott: What is meant by "slack" coal? Mr. Morrow: Slack is what remains after the coal has been screened. Senator Walcott: That is the commonest part of the output, I sup- pose? Mr. Morrow: That is the smallest part or finest part, and usually of the least value. In some districts that may not be the case, but usually it is, and it sells for less. Senator Walcott: Now, referring again to the char^ of the Pittsburgh District, it appears by that chart that the price of coal in that district to the operator at the mine would probably average about the price that had been charged under the Fuel Administration regime? Mr. Morrow: That is right. Senator Walcott: Yet, by this analysis of the run of mine price which you are submitting today, it would appear to me that the really desirable coals^ — the prepared coal and the run of mine — were charged by the operators at a larger or higher price than wafs allowed under the Fuel Ad- ministration; whereas, the least desirable coal — namely, the slack — under the operation of the mines by the operators, free from the restrictions of the United States Fuel Administration — was sold very much, namely, 31 cents, below that allowed under the Fuel Administration. Thut seems to be cor- rect, does it not? Mr. Morrow: Yes; that is what happened. Senator Walcott: So would it not be fair to say that this average shown on the chart which you submitted the other day about equaling the average of price under the Fuel Administration, is hardly a fair presenta- tion of the case from the practical viewpoint of the consumers of coal? Mr. Morrow: It depends on what you mean by "consumers of coal." Senator Walcott: I assume people want the more desirable grades of coal, and those more desirable grades cost more to the consumer since the Fuel Administration let go in this Pittsburgh District? Mr. Morrow: If you will follow it through the other months, you will find that not so apparent. Senator Walcott: I am only comparing the month of April. Mr. Morrow: Well, look at May, and you will see that the prepared coal sold for less than the Fuel Administration price. Senator Walcott: It did in May; that is correct. Mr. Morrow: Yes, and the mine run did also. In June it was under. In July it was above one, cent. In August it was above again; but the screenings are still below. I do not know whether it would turn out so in all districts; but I would not be surprised if an analysis would show that what you have stated there may be generally the case— that the higher grades of coal and the more specially prepared coals are possibly higher in price now than the Fuel Administration limits; but you will find, at the same time, that the low grades of coal are below the Fuel Administration prices. The explanation of that is rather simple and easy to understand, when you are acquainted with the facts. The Fuel Administration maximum prices were in effect at a time when there was a remarkable demand for coal, when all these grades of coal sold at Fuel Administration levels, regardless of quality. Now, since we have had an open market for coal and a falling off of the demand, that demand has been concentrated on the high-grade coals and on the better prepared coals; so that the poorer quality of coal or the portion screened out and the leasts desirable has sold at a decided discount under the Fuel Administra- tion prices. The net result of that is that the price of the low-grade and low-priced coal will determine the prices you will ask for your high-grade coal. You may not get them, but the process that you will go through will be that; and I put this in here in some detail, as an illustration, in this tabulation. 71 The Chairman (interposing): Before you pass on, may I ask you a question ? Mr. Morrow: Surely. The Chairman: I notice that at the end of May the average price was $2.32. Senator Walcott: That is in the Pittsburgh District, is it not? The Chairman: Yes, in the Pittsburgh District. At the end of June it was $2.35; at the end of July, $2.37; at the end of 21 days of August it was $2.47, or 15 cents advance over the average price in May. Now, that shows a progressive advance. To what condition is that due? Mr. Morrow: Two conditions, sir. One is the increase of industrial activity in the Pittsburgh District. If you will take a look at the production of pig iron and steel in those months, you will find that the bottom for the production of pig iron was reached in May, at 2,032,000 tons of pig iron in that month. The production increased in June; it increased still further in July, and it increased still further in August, and that has made a better market for coal in and around the Pittsburgh District, in that coal-consum- ing iron and steel-producing territory. That is one reason. The other is The Chairman (interposing): Is not all that coal contracted for? Mr. Morrow: That coal is contracted for by the steel plants, yes, sir; but when those steel companies are not taking the full deliveries on their contracts, they arc allowing the mines to ship ."ome of that tonnage in other directions, and in such a month or week there is more free coal on the mar- ket. That additional free coal on the market is a depressing factor on prices. Now, with an increase of the iron and steel business in that vicinity — Northeastern Ohio and Western Pennsylvania — you would naturally have less free coal; but that has also coincided with the car shortage in the Pittsburgh District, which has reduced their production; so you have an increase in demand at the same time you have a decrease in production, and the direct natural consequence is that there has been an increase in price. The Chairman: Is that price liable to increase as the year expires? Mr. Morrow: How do you mean? The Chairman: I mean next month will it be still higher, and finally will we run into a period where there will he a shortage and high prices will have to be paid? Mr. Morrow: Let me explain this. It is a condition that everyone ought to have definitely fixed in his mind, who studies the bituminous coal- mining industry. The bituminious coal-mining industry is one in which a man wlio studies price changes will tell you this: that the price of bitumi- nous coal in the open market tetids to be fixed on the basis of the produc- tion of the cheapest producing district or mine. Now, the reason for that is simple: the potential production is practically unlimited. We could pro- duce all the coal that this country could possibly consume, and more be- sides. That production is actual when you have the cars at the mines. Anyboclv can get all tlie coal he wants; he is free to choose the mines and the districts from which he will take his coal. Under those circumstances every single buyer of coal gets the best coal that he can buy for the least money. Under those circumstances your prices naturally, normally, inevi- tably gravitate to the lowest level of production cost. Then, just as soon as any factor begins to limit production— a car shortage has limited the pro- duction in the last six weeks — then you find that the price level begins to rise, and it is not fixed on the lowest level of porduction any longer. That beine the case with bituminous coal there is only one thing that needs to be done to take care adequately of any question with respect to prices of l)ituminous coal, and that is simply to insure enough production. You do not need any price regnlaton whatever, under those conditions, because the market itself will refe^ulate the price, and make it low — and there is not any power under Heaven that could put it up. The United States Government 72 could not put it up, even if it fixed the price. With an unlin)it(,'d ]>roduc- tion, the bottom would drop cut of it in spite of that. The Chairman: But the Government can put it down by a price-fixing; arrang^ement, if it gets too high? Mr. Morrow: It can; yes, sir. Senator Walcott; I notice in the car-shortage table Pennsylvania is divided into four districts: Western, Central, Westmoreland, and Somerset. Mr. Morrow: Western Pennsylvania corresponds there to Pittsburgh. The next one east of it is that Greensburg and Westmoreland field, and beyond that it is Central Pennsylvana. Di(l I answer your question fully, Senator Frelinghuysen ? The Chairman: I think 1 understand. Mr. Morrow: Now, to answer it directly, I would say this: that the question of where the price of bituminous coal will go next month is purely and solely and singly a question of production. Just tell me what the pro- duction will be next month, and any coal man can pretty well tell you what the price will be. Get out 55,000,000 tons of coal and if will go down; get out 35,000,000 tons and it will go up. Now, to return to the question Senator Walcott asked— that is, with re- spect to the higher prices for the better grades of coal, I explained that your problem in marketing coal was the lower grade stuff. What can you get for that? After you have found that out, then you can see what you will have to do in order to make a profit on your higher grarle or better class coal. The Chairman: At this point, without dejection, I will direct that tiie statement presented by Mr. Morrow be placed in the record. (The statement above referred to is here printed, in full, as follows:) "ILLUSTRATION OF METHOD OF FIGURING AVERAGE PRICES AFTER THE TABULATION OF SALES FROM DAILY MARKET REPORTS. PITTSBURGH DISTRICT Average Price — $2.32 CARS TONS TONS APRIL 9,355 X 50 467,750 X $2.62 $1,225,505.00 Prepared 3,456 X 50 172,800 X 2.50 397,440.00 Run of Mine 9,795 X 50 489,750 X 2.04 999,090.00 Slack Total 1,130,300 Total $2,622,035.00 MAY 28,238 X 50 1,411,850 X 2.56 3,614,336.00 Prepared 43,533 X 50 2,176,650 X 2,28 4,962,76:3.00 Run of Mine 12,059 X 50 602,950 X 1.92 1,157,664 00 Slack 4,191,450 9,734,762.00 AVERAGE PRICE- -$2.32 JUNE 27,600 X 50 1,380,000 X 2.50 3,450,000.00 Prepared 12,935 X 50 646,750 X 2.35 l,519,86'i.50 Run of Mine 9,131 X 50 456,550 X 1.89 862,879.50 Slack 2,483,300 5,832,742.00 73 AVERAGE PRICE— $2.35 JULY 15,162 X 50 758,100 x 2 61 1,978,64:. 00 Prepared 13,437 X 50 671,850 x 2.37 1,592,284.50 Run of Mine 8,947 X 50 447,350 x 1.95 4,443,25S.OO Slack AVERAGE PRICE— $2.37 AUGUST 1st to the 21st, INCLUSIVE 3,195 X 50 159,750 x 2.77 442,507.50 Prepared 1,730 X 50 86,500 x 2.41 208,846.74 Run of Mine 2,102 X 50 105,100 x 2.04 214,404.00 Slack AVERAGE PRICE $2.47 UNITED STATES FUEL ADMINISTRATION PRICES — Prepared $2.60 Run of Mine $2.35 Slack $2.35" Mr. Morrow: And this Ittle analysis. Senator, you will also place in the record? The Chairman: Yes; without objection that will be placed in the record. (The statement last above-referred to is here printed in full as follows) : "Memorandum showing prices necessary to be charged for specially prepared lump coal to return the cost of production, when cost is $2.60 per ton at mine. FORMULA: 5 tons Run of Mine coal when screened produce 1 ton Special Lump 4 tons resultant (depleted coal) Cost of 5 tons at $2.60 $13.00 Realization 4 tons resultant at $2.25 9.00 One ton special lump coal must be sold to equal costs of production without profit to operator at, per ton $4.00" Mr. Morrow: This statement. Senator, is simply intended to illustrate to you what kind of prices, if you were a coal producer, you would have to get for some high-grade coal, under certain conditions. Those conditions are the production of coal in the mine where it costs you $2.60 a ton to produce the coal, and from which you screen out on^ ton of special lump coal from five tons of mine run, for domestic trade; for instance, your household trade. Let us get it right down to that. Senator Walcott: I suppose $2.60 is an average price? Mr. Morrow: Yes, that is, for the output. Senator Walcott: That is, you want to get an average of $2.60? Mr. Morrow: Yes; if you are going to break even, you must sell your coal so as to average $2.60; but you are going to screen one ton of specially prepared coal out of every five tons, or one car out of every five cars that come out of the mine. When you have taken those cars of special lump coal out of your mine run- Senator Walcott (Interposing) : Just a moment. You spoke of "spe- cial lump coal."' On the little memorandum you have submitted here it is called "prepared coal." Is "special lump coal" synonym^ous wth "prepared coal"? Mr. Morrow: Yes. We can carry that on to here. I have simply designated it that way to indicate that it is not coal as it comes from the mine. It is a domestic lump coal, in this case. 74 Senator Walcott: In order to have this menK^raiuluni throw any light on the discussion, the hypothesis ought to hft an assumption or descrip- tion that corresponds with the actual practice at the mines. Mr. Morrow: Yes. This happens in several districts, except instead of screening five. tons to get one ton, tliey would have to screen about six tons to get one ton. Senator Walcott: It is fair to say, is it, that in trying to get one ton of lump coal out of five tons, they do the same thing they do with what is called "prepared coal" here? Mr. Morrow: You will have to define that. It is a specally prepared coal. Conditions differ in different districts. In this district around Pittsburgh they have a large market for slack coal. There is a great deal of industrial use for that kind of coal. On the other hand, the large part of their prepared coal, in the summer especially, is shipped up the lakes, and it is not restricted to large lumps alone. This territory that I am speaking of here is in a district, say, including Eastern Kentucky and Eastern Tennessee, that produces domestic coal primarily. They want a specially fine domestic coal — four-inch or six-inch lump, as distinguished from three-quarters of an inch or an inch and a quarter. That changes your proportion somewhat in the different districts. Senator Walcott: The material thing, however, in this formula em- ployed by you, to be explained, is that this getting out of a ton of special lump coal does actually take place in the mines? Mr. Morrow: Oh, yes, it does. It takes place with respect to thou- sands upon thousands of tons — millions of tons of coal, in fact. If you will study that a moment there you will see — and this also happens — after y6u have taken your lumps out, and after you have screened your coal, the screenings have to be sold for a lower price than either the run of mine or the prepared .coal. It is not worth as much in the open market. You have screened out four cars of that coal, and when you come to sell it, you find that you can only get $2.25 a ton for it. That is all the mar- ket will pay for that resultant coal. The Chairman: That is the average, l)ased on the mine run and the slack both? Mr. Morrow: No; that is not the Pittsburgh District that I am talking about on this sheet. This is typical of some of the domestic coal produc- ing sections of Eastern Kentucky and Tennessee. The Chairman: It does not include the slack? Mr. Morrow: That $2.25 would include the slack, yes. It is w^hat is left after you have taken the specially prepared coal out. The Chairman: It is based upon both mine run and slack? Mr. Morrow: Yes, if you want to call it "mine run." When you screen it, your fine stuff goes into a separate car by itself, and your lump remains separately by itself. Take this proposition here, and 'you have your specially prepared lump coal, and the remainder will sell below your average cost of production. It does sell below the average cost of pro- duction. The consequence is that if you are just goin.^ to break even, under those conditions, and make no money, your car of lump coal will have to sell for $4.00 a ton. Those are the conditions in some districts. Senator Walcott: Before you have this memorandum fro into the rec- ord, why do you not substitute the words "lump coal" for ''prepared coal"? Mr. Morrow: Yes, that will be better. Senator Walcott: So as to make your formula harmonious throughout. Mr. Morrow: Yes. I will do that. The Chairman: Have you ever prepared in the Pittsburgh District, for which you have submitted figures regarding average prices in certain months, an estimate of the cost of production? 75 Mr. Morrow: I have not, Senator/ In our office here we do not ob- tain that information. The Chairman: As to the cost of production? Mr. Morrow: No, I have not those figures. The Chairman: Where can they be procured? Mr. Morrow: The Fuel Administration or the Federal Trade Com- mission had those figures up to the first of this year. I think there have been no official figures obtained since that date. You would have to obtain it from the producers in the several fields, if you want to get that infor- mation. That would be the only source now. The Chairman: Suppose, in view of the fact thai you Compiled the average prices in that district, that you file with the Committee the aver- age cost of production. Mr. Morrow: We will try to get that for you, if you wish. The Chairman: Yes. Senator Walcott: Now, Mr. Morrow, the resolution under which we are acting directs the subcommittee to make inquiry into the cause or causes which have brought about the enormous increase in the market price of coal. From the series of charts which you filed at our last hear- ing, it would appear that the only district in which the average cost of coal, since the Fuel Administration let go, has exceeded the average price under the Fuel Administration is the smokeless field of West Virginia? Mr. Morrow: That is the only one up to August 1st had averaged general increases in price, with the exception of Southern Illinois. I think yon will find that true in that district also; that is, the high quality district in that field. Senator Walcott: Oh, yes; Southern Illinois has advanced also. Mr. Morrow: Yes. You will notice the other fields in that vicinity are lower. Senator Walcott: This chart speaks only of averages. It is to be read in the light, however, of your testimony today that when we come to deal with the more desirable grades of coal, namely the prepared coals and the run of mine co?.ls, generally speaking, the price, since the termination of the Fuel Administration regime, has been higher? Mr. Morrow: No. I do not think that follows. It may, in a few dis- tricts. That may be the case in those districts where they have difficulty in disposing of their lower grade coal — of the screenings that result when they make a specially prepared coal; but In the lower grade districts, where the lower grades of coal have been produced, it has not been the lower grades alone that have gone down in price, but there has been a general decline of prices in those districts. You ta^ke some of the fields, however, in which during the Fuel Administration they did have good prices for their low grade .coal, and w^ere held to the Fuel Administra- tion's levels on. their specially prepared coals, they have now found in the open market that they cannot get the prices for the low grade tonnage that they got before. It has declined materially, and the consequence has been that if they are goinnr to make any profit at all on their tonnage, they will have to get more for the better grades. That is simply the operation of competition in the oDen market. Senator Walcott: Generally speaking, would you say that there has been an enormous increase in the price of coal since February 1st? Mr. Morrow: I would say that up to the first of August that was ab- solutelv wrong. There has not been anything of the kind. On the con- trary, there had been a decrease in the price of coal — generally, a de- crease, when you a\'era,ge it all together. Senator Walcott: You are speaking only of bituminous coal? Mr. Morrow: Yes. But, since the first of August, as T told your com- mittee, there has been an increase in the price of coal, and w have"^ot- 76 ten for you all the inforinatioii that we could get on that, and have tabu- lated it. It f?oes up to August 21, in some cases, and to August 28 in a few cases. It shows the present averages, and the Fuel Administration prices. I want to put that in the record also. We want to give you all the information we have on this, even though it is partially incomplete in some instances. The Chairman: In connection with Senator VValcott's question, I wish to state that the wording of the resolution perhaps makes a charge that came through information received principally through indviduals; and I think Senator Walcott will agree with me in this, thai the Committee, in this investigation, wants to be perfectly fair. Senator Walcott: Oh, there is no doubt about that. The Chairman: And in no way to impugn the motives of the mine operators. We want to find out whether there is any foundation for the numerous complaints that come in that advantage is being taken of the situation, and that prices are being arbitrarily advanced. Iwill have sev- er,':il of those complaints to present to the Committee, and I think possibly that you or others may be able to clear them up somewhat. I have a let- ter here, for instance, which I will read into the record, because it is somewhat abusive, and it is not necessary to put it into the record, but there is an inclosure with that letter which purports to be an advertise- ment which was published in the Chicago Tribune of August 27, 1919. I will eliminate certain of the observations on the advertisement. It reads as follows: "COAL MINERS PRESENT THEIR DEMANDS SEPTEMBER 9TH. "Strike or no strike, you face an advance on coal up to $1.00 per ton, after that date. England raised the price of coal $1.50 per ton in a sim- ilar crisis. "Smokeless Coal (Pocahontas or Pennsylvania) is still available, in limited quantites, but the time for delivery short, as cars and labor are scarce. Better buy all you can today." May I ask, Mr. Morrow, if you know who inserted that advertisement, or at whose instance it was inserted, and for what purpose? Mr. Morrow: I do not. Senator. That is the first I have heard of that 0 advertisement. I do not know anything about it at all. Is it not signed? The Chairman: No signature at all. It is simply what I have read. Senator Walcott: It seems to me that if this Committee gathers all the testimony it can as to the prices received by the operators for coal, and if it should turn out that the operators have not received a larger price than heretofore, under the Fuel Administration, or have not received an undue price, the inquiry then is not complete at all, because it may very well be that the jobber or wholesaler, in between, is piling profit on top, so that when the coal goes into the hands of ^he consumer, an enormoush' high price is charged, as alleged in the resolution, due to the intervention of those neople in between, the producer and the consumer. The Chairman: I think. Senator, that 1l:)efore we complete the hearing on 1)ituminorr, coal, the Wholesalers' and Retailers' Association can be called. I understand, outside of contracts, they are the ones that sell the coal — the agencies from which the coal is brought by the consumer. Is not that true? Mr. Morrow: Yes, thev sell a considerable portion of it. Senator. The Chairman: And possibly we cm ascertain w]''ether there is any loading through those agencies? Mr. Morrow: You will ha\*e to inquire from them ns to the conditions of r'"'ee. be<-ausc we hnve no records on it at all. Senator Walcott: W^e have got to have a starting point to follow. 77 Mr. Morrow: Do you care to see this statement oi" prices as near the present as possible? August Prices The Chairman: Present all the mtormation you can, so that the com- mittee may siuciy it; and we wouid like to have you elucidate it as you go along. Mr. Morrow: Here is a copy for the record. (The statement reierred to will appear at a subsequent part of this record.) I'his is information up to August 21, from some districts, and up to August 28 for others. In one -or two cases we had no reports after July 1st, as shown on this sheet. It shows in the Pittsburgh District an in- crease there of 10 cents a ton; in Central Pennsylvania, a decrease of 9 cents a ton; Northwestern Pennsylvania, an increase of 14 cents; in East- ern Ohio, an increase of 26 cents; in bouthern Illinois an increase of 3 cents. No hgures for Central Illinois. An increase in two districts out of three in Indiana, as compared with all Indiana, of 8 cents. 1 do not know whether that is a correct statement, of increases for the state since the third district report is not in. There was an increase in the Harlan field of Kentucky of 48 cents; in the smokeless, of 11 cents; Northern West Virginia, 25 cents. We have no report in from Southern Ohio. Senator Walcott: That is an increase for August over July? Mr. Morrow: Over July; yes, sir. Senator Walcott: All the increases you have mentioned are over the July figures? Mr. Morrow: Yes, sir. In some cases the July figures had been higher than the June figures; in some cases, lower thin the June figures. It is fair to say that the. prices reported there show an advance, an in- crease in those three weeks. Please understand that these same figures are the averages of sales, not of the realization, not the average that the mine obtains on all the coal that is being shipped, but only the coal sold from day to day or from week to week. Other coal that was sold in days gone by and is being shipped at that price is not included here. The Chairman: You mean the contract coal is not included? Mr. Morrow: No, sir. The Chairman: It is not included? Mr. Morrow: No. sir; it is not included in this average, Senator. This is only the average of the actual sales or transactions made from day to day. The Chairman: What you term free coal? Mr. Morrow: Some of it may have been. There may have been some contracts included in the averages, contracts made in that period. Most of it has been spot sales, current sales. There may have been some con- tracts made in that period. As we told, you the other day. it does show some advance. I have not totaled it up to see how much it is — probalily 5 to 8 per cent of the whole. Senator Walcott: The contract coal that yon speak of which is not embraced in this table, would have the prices disclosed in the various tables prc'^eding. at the time when the contract was made. Is that correct? Mr Morrow: Yes, sir. Some of those co-itra:cts are in April, some in May, June and July. Others, ho^^^ever, had been mr^de prior to these dates and are not shov/n here at all. Thev were made during the time the Fuel Administration prices were in effect. T want to call your attention to the fact that^the figures on this table for ti e .smoktless field are slightly different from those shown on the chart, the reason l)eing that when the chart was made we had not ob- 78 obtained for the smokeless field anything but the contract sales during those months. Since that time they have completed their record, and the averages shown liere include all of their sales, contract and spot, alike. In connection with that field 1 think it would be well to insert into the record here a statement of their sales of export cMid bunker coal of which there is a considerable tonnage. In connection with these prices, for the information of the Commit- tee, I will give you the report of the National Coal Association for the week ending August 27, which is the latest information we have available. It shows the general range of prices for the different fields. That is all the information we have. We have given you all the cards that we hold in our hands cn this matter of price. Senator Walcott: Mr. Morrow, the chart of the smokeless fields of West Virginia, submitted at the last hearing, should be corrected by the table which we have here today? Mr. Morrow: That is true; and it would 1)e well to attach that to your chart. Senator. This includes also the grand total which covers the bunker and export coal. The Fuel Administration allowed a price of $1.35 per net ton above the domestic price on coal sold for export. Mr. McVann calls my attention to the fact that this average does not include the export and bunker coals, but this one (indicating), does. That is the complete analysis of it. The "$2.76" does not include the export. The Chairman: Without objection that will be put in the record. (The statement referred to, showing the average prices received per net ton on the run of mine basis for bituminous coal, during the months C'f-April. May. June and July, and up to the 28th of August, will be found at a subsequent part of this record.) The Chairman: Is there a representative of the Railroad Adminis- tration here? Mr. Gutheim: Yes, Senator. The Chairman: T may ask vou to put certain information in the rec- ord sotne time later. Mr. Gutheim: Yes, sir. The Chairman: Have vou anything further to present, Mr. Morrow? Labor Shortages Mr. Morrow: Yes, Senator. You gave me some questions last weelc that you wished answered. One of the otlier matters that we wanted to complete our statement on referred to the labor shortage at the mines. In the Congressional Record of July 25, page 3348, is printed some observations and a letter from Mr. Densmore, the Director General of the United States Employ- ment Service, in which he makes the statement that there are approxi- mately 1,000,000 men employed in and around the bituminous and anthra- cite coal mines. '1 hat figure is not correct. The total number of men em- ployed in tb.e bituminous coal mines is somewhere in the neighborhood o-f 600.000 n^.en in 1918. Nobody has any figures for 1919, or up to the present time. It is somewhere, presumably, in the neighborhood of 575.000 or, possibly, as high as 600,000, although I do not believe it is that high. I have not had an opportunity to inquire of the anthracite operators V. hat their total number of employes is. but it is my recollecton that last year they reported to the Fuel Administration that tlie}^ had onlv about 140,000 men employed; and they certainly do not have over 150,000 men, ?it the outs' 'e, employed now. I am satisfied that that figure is the max- imum and that their numbers are within that. If you add that to the pos- •sible total of 600.000 in the bituminous industry at the outside, there are not more than from 750,000 to 775,000 men now employed in the anthracite and bituminous coal mines and coke ovens. 79 « Tiie statement of the Director of the Employment Service, therefore, is only an exaggeration oi about 35 per cent in the number ot men em- pioyeu. :3enator Walcott: He states how many? Mr. Morrow : Jrle states a million. It is not a million, at all. Mr. iaylor, the other clay, stated that the shortage of labor at the mines was spotted — that they are short in some districts while in others tney are not. i want to make it clear that from the information we have, the short- age ot men at the coal mines is more acute in those fields that are nearer uie great iiiclustrial districts. 1 have a letter from the Kanahwa Coal biiippers' Association of West Virginia covering eleven companies in that neld. They are fairly good-sized concerns. They are now short 280 men. 1 hat letter can go into the record, if you wish. The Chairman: May I see it first? Mr. Morrow: Certainly, Senator (handing letter to the Chairman). The Chairman: Of course, Mr. Morrow, the Committee does not want to encumber the record with specific cases unless it is simply to illus- trate Mr. Morrow: I understand, Senator. The Chairman: If you have any census taken of shortage in any of the mines and the Committee would like to have it as ^ valuable contribu- tion to the record. Is there any way in which that could be procured? Mr. Morrow: It could be done by having a census taken. It would take some little time to do that. We have some information from certain districts; for instance, here is a statement of the Somerset field in Penn- sylvania showing there, by companies, a shortage of 2,325 men. We have information from the Pittsburgh District and from Northern West Vir- ginia, and from Central Pennsylvania, from individual companies in some cases — chiefly from individual co'iiipanies — reporting a shortage of men which they now are experiencing. The Chairman: I thing it is very important th?.t the information should go into the record, but whether it should go in m this table or not I do not know. What does the Committee think? Mr. Morrow: In that connection, I can go through these letters and just state the facts which the letters disclose, I think. Senator Walcott: That would be better, I should think. The Chairman: Yes. Mr. Morrow: Here is a letter from West Virginia showing a short- age of 380 men Senator Walcott: What section is that? Mr. Morrow: The Kanawha District of West Virginia. Here is a statement from the Fairmont district of West Virginia. I want to read that. This is the Hutchinson Coal Company. The letter is written by the President: He states: "Our company is short about 100 miners at the present time. The numl^ers of miners in the region" — and this sentence I v ant you gentlemen to get clearly "The num1)er of miners in the region varies with the car supply. If the car supply is short, as it lias been in this region ^^ince the middle of July, a large nnnil)er of miners leave the field for other lines of employ- nient. Then, again, when th*;" car supply is better, and the miners have regular work, ;i good many return to the field." Tl'at sr^iue statement has l^een made by a number of other operators. One of the nu-ii in ilie Somerset field, the figures for which I will give you next, has u i ilten the same tiling, that while they are &hort up' there it is not possible For them to get men and keep them when they do not have running time for them, when the men cannot work. 80 This statement for the Somerset field shows that in these mines up there are 5,447 men now employed, and that they have workinp^ places for 2,325 additional men, who could find employment immediately, if they could be obtained. The next is a letter from T. H. Watkins, President of the Pennsylvania Coal and Cake Corporation of Pennsylvania, in which he says that they employ about 3,500 men and have development, equipment and facilities for employing^ about 1,000 more. He mentions the fact that recently they have encountered a shortage of cars and that the supply of cars has been so erratic that they have not been justified in endeavoring to place more men even if they could secure them, which is doubtful. "Most of the operators tell me they are short of labor, and in some instances bonuses are being paid alcove the present scale in order to get labor." Here is a statement from the Keystone Coal and Coke Company Senator W'alcott: In those instances where bonuses are being paid to get labor, that cannot be explained by car shortage? Mr. Morrow: It may be that those mines might not have been run- ning. Senator Walcott: How can it be, Mr. Morrow? T understand the argument to be that if there is a car shortage they cannot work the men because they cannot ship the coal? Mr. Morrow: That is right. Senator Walcott: And they are ofifering^ a bonus to men Mr. Morrow — Oh, I see what you mean. Senator Walcott: Of course that cannot be due to lack of cars? Mr. Morrow: The present shortage may be due to lack of cars. If the mine has been short on cars in the past two or three weeks they may have lost a number of men because of that fact. They may feel that they p.re going to get cars, and they do not want to lose their operating forces and they go out and offer a bonus to get men in the hope that when the vsitiiation straightens out thej^ will have the organization there to get the coal. You need to go into the facts about that in a giv?n case before you can be sure of it. It is probably the condition, however, that those men pre on some branch of railroad that has had a good car supply and that thev are able to run. Senator Wcilcott: It certainly looks to me. if they are offering bonuses to induce laborers to come in. thev are not suffering from car shortage. Mr. Morrow: No. in general thev \yould not be. But you understatid that these are statements of individual operators who do not treat the ni.atter as a whole. Th's letter is from the Keystone Coal & Coke Company, at Greens- *l-)tir8-. Pennsvlvnnia. Thev state that their mines are short about 800 men; a'^d that thf^ Tannison mines are s^iort about 500. and that those fields as a whole in there are short about 5.000 men. Here are some letters from the Pittsburgh district, showing that at the Carnegie Coal Company's mines they are short about 500 men below the capacitv of the mines to employ men. The Hillman Coal & Coke Company think that with that concern and its subsidiaries the shortage of miners runs from 20 per cent to as high as 50 per cent, varying- in conditions in the individual mines. The Verner Coal "& Coke Company reports a shortage of 500 men, or about 28 per cent. The Henderson Coal Companv reports a shortage of 35 per cent. The Pittsburgh Terminal Railroad and Coal Company do not state the number, but they say they are short: that they have been running reg- ularly in an endeavor to obtain miners. The Harmon Creek Coal Company reports a shortage and the 81 Meadowlands Coal & Coke Company has a similar report, and that they nave been insertnig advertisements m order to obtain nimers. Senator Walcott: Is it not tair to say v^ith respect to that particular locality that car shortage is not the trouble? Mr. Morrow: Oh, no. Senator Walcott: Vv'hy should it be, if they are after these miners to get the coal out? Mr. Morrow: You have to realize this, Senator. You do not have a car shortage 300 days a year, and you do business at the coal mines during all the year; you have your customers and you want to take care of them and you want your, working force tliere. When a car shortage strikes a mine a lot of your men get restless and go into town and get work there. Some go into other fields. The expectation is that after a while the short- age will cease, and you make every effort to get the men as long as there is any prospct of employment for them. I am reminded of another feature that is all-important in that connec- tion. Coal mines are rated as to the number of cars they are capable of loading. In times of shortage the distribution of cars is a percentage of the rating of the mine. If you have a 40 per cent car supply and your mine is rated at 20 cars, you will get eight cars put in there. It is the effort of the operator under conditions of that kind to convince the rail- road officials that he ought to have more cars, that he is entitled to a higher rating, that he has working places for more men and that he ought to have a greater number of cars put in. So there is that incentive on the part of the operator to attempt to get men and keep them there, even though he does not have regular running time for them. Senator Walcott: The hope being that if he can do that he will help himself in the supply of cars? Mr. Morrow:.- Yes, sir. Method of Mlne Rating (Senator Frelinghuysen yielded the chair to Senator Elkins.) - Senator Elkins: Explain the matter of mine rating. Mr. Morrow: I do not want to gO' into the details of it. Senator, but the purpose is to insure fair distribution of the cars at a time of shortage. At the present time all the mines are rated on a u iiform basis. That rat- ing represents capacity in cars to load coal. It is a rating fixed by the railroads that serve them. As I say, that is on a uniform basis and be- comes the fixed basis for a percentage distribution of cars in times of shortage, so that presumably they all v/ill be treated alike. We, have at the prcse-.t time, under the present rules — if I am mistaketi about this either Mr. Giitheim or Mr. Callahan can correct me — that rating can be changed hy the railroads 0!ice a month on the basis of what you actually get out during the hours the mine is operated. It is calculated on *a daily basis, so that in tlint manner they estimate the rating of each one of these mines, in the period your mine is able to run during a car shortage, even though it rwAs only a half a dav. if you have more men in your mines you are going to f:et Qut an additional production. You are goine to be in a posi- tion to convince the railroad officials that you are entitled to more cars next month, or as soon as you can get your rating changed. So there is F:ti1l an incentive to (ret more men there. If they can fill all of the cars aMotted I's index to t^'e cap?'C'tv of the mine Moreover, in car short- n-^e reriods the ope-ri-cr b?s trouble to keen his men. They are 'eiving him ?11 the thne. - Other operators are tryin.-r to p'et them and other m- dustries are trying to get them, and the men themselves get disgusted be- cause thev cannot work enough days in the week, and they give up and leave. That is going on all the time. The operator does his best to hold 82 his men so that his rating will not be decrcaoecJ and so thai lie may take care ot his trade. ilie main reason, 1 might say, for the shortage ol men in some of these nelus is tne inuustnai acuvuy adjacent to them during tne war. It took men away from them and they have not all come back. Some of them will not come back, Senator Walcott: i ou say that is the main reason? Mr. Morrow: 1 would say that in some districts that is the main rea- son. Ihere is no question about it. Senator Walcott: ine car shortage is not? Mr. Morrow: Not in those districts, no; I think not. There is a labor shortage in some districts, and that decreases the capacity to produce. Ihen we have a car shortage cutting dov\*n the production still further. Senator Walcott: if 1 understand you, labor shortage and car short- age act on each other? Mr. Morrow: Yes, they do. Mr, Morrow: It v\e have a long continued car shortage you will have no men at all. Senator Walcott: Then the operators, in order to correct the car shortage as much as they can will offer bonuses to the men in order to get them back to supply the labor shortage, giving an argument for in- creasing the number of cars and thus correct the car shortage to some ex- tent. Mr. Morrow: Yes, sir, under conditions of car shortage. In this statement with respect to the Pittsburgh district, the Pitts- burgh Coal Company says that in July, 1919, they were short 6,714 men. They had 13,706 employed, the average number during that month in their mines. Under those conditions it is fair to observe that those districts which are now short of men have fewer men than formerly employed and have already been faced with a decreased production, and if struck with a car shortage they are in a peculiarly unhappy condition in taking care of their customers; and it is all the more necessary in those districts for the oper- ators to obtain the best status that they can. They need to run the larg- est number of days that they can run if they are going to take care of nor- mal demand in their districts. That is the condition in some of the districts. In the Eastern dis- tricts, where they have fewer men than they are accustomed to employ and have the working places for, that is the situation. In that connection, Senator Elkins suggested the other day that I give the Committee the figures of the movement of aliens in and out of the country, the immigrants ar.d emigrants. W^e obtained that .information from official sources, and I will submit it to the Committee. It shows that for the five years, 1910 to 1914, the average number of immigrants that came into the country were 1,0.34.920. The average move- ment out was 288,578; so that the net increase from imniigration alone was 746.362 per year. In the five years since that — these are fiscal years, not calendar years — the number coming in had been 278,899, and the average number going out was 191,292, or a movement inbound of 87,606, on an average for those five years. It is significant that for the year 1919, the number going out has ex- ceeded the number coming in by 98,818. The bituminous coal mining in- dustry recruits a large number of employes from new immigration, which has been cut off quite materially for a number of years, anri has been cut off entirely from some countries. The coal fields most affected are the Eastern districts, W^est Virginia, Pennsylvania, Eastern Ohio, and, to some 83 extent, some of the other districts, but those, primarily, are the ones to which this information applies particularly. Now, if I may answer the ques-tions that the Senator asked me the other day. , Senator Walcott: Mr. Morrow is about to take up some questions that Senator Frelinghuysen asked him. Senator Elkins: Had he not better wait? Senator Walcott: Have you anything else? Mr. Morrow: No, Senator. Senator Walcott: Those are Senator Frelinghuysen's questions? Senator Elkins: He would probably want to hear tliem. What do you think? Senator Walcott: I shoul^l think he would. U I had asked those questions I would want to be here when they were answered. Mr. Morrow: Mr. Callahan has some additional Information to give you on the transportation situation. Senator Frelinghuvsen asked that he submit concrete, specific reports of the car shotage situation, and we have those reports up to the first of August. Senator Walcott: I should think we could hear Mr. Callahan. It is a mere matter of putting in some figures. Senator Elkins: You have no more information at this time? Mr. Morrow: No; that is all, Senator. Senator Walcott: I would suggest that you let Mr. Morrow step aside until Senator Frelinghuysen returns. ADDITIONAL STATEMENT OF MR. JOHN CALLAHAN. Detailed Car Shortages by Mines Senator Elkins: Proceed, Mr. Callahan. Mr. Callahan: Senator Frelinghuysen requested that the National Coal Association present some specific instances of car shortage. I have here a number of telegrams, several hundred telegrams which were re- ceived within the last few days in connection with this matter, and the telegrams relate to shortages in weekly and daily periods during the very recent past, and also some telegrams relating to shortages from June 1st to August 1st and from August 1st to date. It is not necessary to read the teleerams. They have been separated into piles in the classes that I have indicated. They indicate many mines shut down entirely on account of car shortage; other mines shut down part days on account of car short- age; other mines losine two to four hours on account of car shortage, and thev cover a number of different states. I also have a statement here from one particular coal operators' as- sociation which shows the npmes of the mines of that rssociation and the shortages and looses on acc^nnt of no cars or shortage of cars for the month of lulv. This is thp Lo^ran Co:^;! Operators' rennrt. which p-ives the nan-te«; of the nroducine- copI comnanies in th-^t Jjssoriatf'on and states that thev lost durino- the month of Julv a total of 252.033 tons on account of the shor^afife of c?rs. It shows the loss bv davs ^nd bv comnanies: and thpt dnrincr the month of Auf^nst nr. to and includino- the 23rd. thev lost 540.480 tons. Tin's is in the wav o^ specific information as to organizations and companies. Senator Wolcott: This is a report giveii to you by some coal asso- ciation. "^Vliat assoriation is it^ Mr. Callahan: The Loo-nn Coal Oopraiors' Ac;cociation of West Virginia. Their mines are all on the Chesapeake & Ohio Railway. vSenator Walcott: Does that cover one of the districts which Mr. Morrow has been referring to in submitting charts showing the price ranges? Mr. Morrow: No, it does not, Senator. Wc did not have the price infor- mation for that district. 84 Senator Walcott: This is a separate district, is it? Mr. Morrow : ^'es. We have received today a chart from that field showing the prices over that period, and if y^m wish we ran have it introdticed in the record. Senator Walcottj 1 think it woulcl he well to do so, because this summary of the car shortage in that district is shown by this chart. Mr. Morrow: The detail is shown here (indicating). Mr. Callahan : I have a chart that I will show you, containing the summary. Mr. Morrow : You understand that Senator hVelinghuysen wanted specific information. He wanted also a summary, and he also wanted the names of mines and their location that were actually short of cars. That is what we have here. Senator Walcott : 1 think it would he well to put it in as an exhibit, not to be copied into the record. Senator Elkins : How did the shortage of cars affect the price of coal? Mr. Callahan : 1 have a chart illustrative of that district which shows the tons of coal lost during that period, the tons produced by the field per day. This is the rating for that field, 44,200 tons in July. It varies in August by some several thousand tons. It is 50,050 tons for the month of August. The black is coal produced; the yellow is the coal lost. This line (indicating on chart) running down here, indicates that during that period there was no coal produced at all in that territory. It runs up along here, and the causes are also set out at the top, indicating that the lost tonnage, July 1st to August 23rd, was 925,280, about 95 per cent of which was on account of car shortage. Senator Walcott: What do you mean by a field rating? Mr. Callahan : The mines in that district have a total dail\ capacity of 44,200 tons Senator Walcott: In July? Mr. .Callahan: In July; and in August they had a total daily capacity of 50,050 tons. Senator Walcott : The black portion of the chart shows how near they were able to come up to their capacity? Mr. Callahan: That is right. Senator Walcott: The yellow portion shows how far short they fell in that capacity? Mr. Callahan : That is right. The dates run down on the side of the chart. The capacity is on the left. Mr. Morrow suggested that it fnight be well to indicate how the mine rating plan worked. When a mine loses men on account of car shortage the rating goes down. The rating is arranged on a productive basis; it is simply a } ard stick to deter- mine the capacity of the operator to produce. If a mine has not produced its rating ■?t the end of a month, it is determined what its rating has been for the month before, and it is given a status. He is told how much transportation he will be allowed during the following month ; how- much he will be given in the way of cars. Naturally, if he has not produced much coal the previous month he has to a certain extent lost his good status. Senator Elkins: How did the shortage of cars affect the cost of producing? Mr. Callahan : Naturally overhead charges go on, Senator, and you have a certain number of men who are employed continuously and who have to be taken care of, also the depreciation goes on. Manv other charges are ac- cumulating. Senator Walcott: This chart does not show what district it covers? Mr. Callahan : It would be well if I marked it on there. Senator Senator Walcott : You had better mark the other, too. Mr. Callahan : These are the Logan Coal Operators' Association reports Senator Walcott : Both the tabulation and the chart. The telegram-; which you have submitted are from all over the country? Mr. Callahan: From various states, Senator. 85 Senator Walcott : They are not confined to any one field? Mr. Callahan: No, sir; there are a very large number of territories repre- sented there. 1 should like to file with the Committee statements indicating the car shortage on the Baltimore & Ohio Railroad for the week ending July 19, and each sub- sequent week up to and including the week ending August 30, 1919, in the Pitts- burgh District; the same record for the Pennsylvania Railroad; likewise the record for the same period for the Panhandle Railroad and for the Pittsburgh & West Virginia Railroad. These figures speak for themselves and indicate an increasing car shortage from week to week. Senator Walcott: Have you similar records for any other districts? Mr. Callahan : Yes, sir. Also a record :.howing the shortage on the Hock- ing Valley Railroad of 106 cars on August 27 ; the names of the coal operators being included in this statement ; the shortage for one day, August 28, on the Zanesville & Western Railroad, of :i9 cars; 131 cars on the T. & O. C. Railroad on August 28, all indicating the names -of the companies. Senator Walcott: In what district? Mr. Callahan: The Hocking Valley, in Ohio. Senator Walcott: Is that a coal district? Mr. Callahan: Yes, sir. It is the Southern Ohio Coal Operators' As- sociation, Senator Walcott: Are these railroads which you have mentioned all the railroads that run into that district; are they coal transporting roads? Mr. Callahan: No, sir; there are other railroads in that district. The Pittsburgh statement includes all of the lines in the Pittsburgh District which have coal mines on them. Senator Walcott: The first figures that you have submitted, then, in con- nection with the Pittsburgh District, show the total car shorage in that whole district on all the railroads operating in there? Mr, Callahan : That is correct. Senator Walcott : Within the dates you have mentioned, July to some time in August? Mr. Callahan : That is practically correct, Senator. The other lines run in the neighborhood of the Pittsburgh District, but not in tlie Pittsburgh District as we understand it in the coal business. I have here, also, a series of table indicating the car shortage on the Caro- lina, Clinchfield & Ohio Railroad, July 24 to August 29, for a number of coal operations on that line. Senator Walcott: That is in what district? Mr, Callahan : It is the Virginia district, the Carolina, Clinchfield & Ohio Railroad. Senator Walcott: These figures are in what coal district? Mr. Callahan : Southwestern Virginia. Senator Walcott: Is that the only railroad that operated in that district? Mr. Callahan : There are several other smaller roads in there which, as I recall, are tributary to that railroad ; but that is one of the main roads in that coal section. My attention has been called by Mr. Morrow to the fact that the Pittsburgh District does not include the Pittsburgh & Lake Erie Railroad, a part of the New York Central Lines, nor the Montour Railroad in the Pittsburgh District, Mr. Walcott : So there may be some car shortage in addition to what your figures show in the Pittsburgh District? Mr. Callahan: Yes, sir; that is true. Senator Walcott : I suppose it could be said, also, that there may be car shortage in those other districts which you have referred to, but thus far not disclosed by your figures? Mr. Callahan : That is quite true, Senator, There is, to my certain knowl- edge, car shortage in southern Ohio on roads other than the Hocking Valley Railroad. 86 I would also like to submit a copy of the statemeut indicating -car shortage on the Eastern Kentucky Division of the Louisville & Xashvillc from August 1st to August 22nd, for that period and for the day of August 22nd. Senator Walcott : In what coal district is that? Mr. Callahan : The Hazard Coal Operators' Exchange. Senator Walcott : Arc there other roads in that field of the Hazard Coal Operators' Exchange? Mr. Callahan: There are, but the Louisville & Nashville is the principal coal road in that section. Senator Walcott : Might there be other car shortage in addition to that disclosed by this table that you are submitting for that railroad? Mr. Callahan : That is true. Senator. Senator Walcott : T am trying to rtnd out, as you submit that table, whether there might be car shortage in addition to that disclosed by your tables? Mr. Callahan : 1 will probably submit a little later on some figures — just simply file them with you, Senator — for the other territory Senator Walcott: Have you many more such statements? Mr. Callahan (continuing) : and I would like to submit a letter indi- cating car shortages on Tuesday, August 26, in the Western Kentucky Con- servation Association mines on the Illinois Central and the Louisville & Nash- ville Railroads, and also a similar letter for Wednesday, August 27. Senator Walcott: Those letters refer to the same district? Mr. Callahan : They do, yes. I should like also to submit a statement showing the tonnage lost on account of car shortage in the Somerset County Coal Operators' Association for the period June 28 to August 23, inclusive; also a statement for the Kanawha and Coal River Districts in West Virginia, for June, July and August, 1919, I would like also. Senator, to file some other similar statements a little later on. They are being received, and will be available sometime this afternoon, if I may do that. The car shortage * Senator Walcott : 1 suppose he has leave to file those statements. The Chairman : Yes. Senator Walcott: Before you proceed, I want to make a blanket question to cover all these tables. There may be car shortages in all these localities referred to by the various tables and letters, which are not disclosed on those tables or these letters, because of the fact that there are other railroads operating there on which you have no report; is that correct or not? Mr. Callahan : That is true, Senator, to my best knowledge and belief, with one exception. Senator Walcott : I say there may be. Mr. Callahao : Oh, there may be, yes. Senator Walcott : In other words, this does not pretend to represent the total car shortage, in all coal fields? Mr. Callahan: It does not. Slag in Open-Top Cars Senator Walcott : Now, I interrupted you. You started to say something ; go ahead. Mr. Callahan: There is a factor in this situation which was not dwelt on last week, but which it may be well to bring to your attention at this time, that there are constantly large numbers of open top cars standing around loaded with refuse, slag, mill slag, and commodities of that nature, if they may be called "commodities, and it is our belief that more attention should be given to that feature of the railroad's operation in order that these cars may be released for active service. Senator Walcott: Slag is the stuff used in building roads? Mr. Callahan: It is one of the resultants of the production of iron. Senator W^alcott : They use it in road-building. Mr. Callahan : They crush it nowadays in some places, and in other places 87 they dump it out and use it to fill in for building railroads, or any kind of fill. Senator Walcott : They use it in -highway construction? Mr. Callahan : Yes. It is largely refuse. It is waste material, and one way to stop this use of these cars as storage places is to require the mills to purchase additional territory for dumping it. In many places it has been dumped alongside of the mill until they have utilized all of their spare space. There are places, I will admit, that that cannot be done ; thickly settled territo- ries, but there are also places where they can purchase additional property for dumping instead of using these cars as storage places. Senator Walcott ; You do not megn to say, do you, that Cars are being used to store slag in? Mr. Callahan : Slag is emptied into them, and we will shortly come into a period, Senator, when open top cars will contain slag for months at a time. Slag is put in there dry, run under a drenching plant, and is covered with water, cooled off, and that mass freezes and remains there throughout the winter, in many instances. I am simply speaking of that as one of the ways in which we can overcome part of this car shortage. It occurred last winter. It occurred in 1917. There were thousands of cars containing slag for two and three months at a time. It is quite common to see refuse in cars for a period of thirty to sixty days. There are about four or five hundred cars of slag and refuse on hand on one railroad in the Western Pennsylvania District today. Senator Walcott: Now? You mean right today? Mr. Callahan : Right today. Senator Walcott: That is not due to the fact that stuff is frozen in there; that is just due to the failure to unload. Mr. Callahan : Well, it is not entirely due to that. I would say that they ought not to a have in this particular case more than one hundred and fifty of these cars. Senator Walcott : Do you mean there are some four hundred, how many did you say? Mr, Callahan : Between four and five hundred. Senator Walcott : Between four and five hundred cars in one of these Pennsylvania districts, loaded with slag? Mr, Callahan : On one railroad. Senator Walcott: On one railroad, loaded with slag, laying on the sidings? Mr. Callahan: And refuse, just standing there. Senator Walcott: Never has been transported to its destination? Mr. Callahan : It has not yet. Senator Walcott : Do you know, generally speaking, how long they have been standing there? Mr. Callahan: I do not know how long the delay is for that total number of cars. I have been informed that some of those cars have been there for ten days. Senator Walcott : You say slag and refuse. What do you mean by the term "refuse?" Mr. Callahan : Well, there are many kinds of refuse that come out of manu- facturing plants. It is just waste stuff that is abandoned. Senator Walcott: You do not call slag refuse, do you? Mr. Callahan : It is not refuse to the extent that it was formerly, but it has little, if any, commercial value, in its original condition. When it is crushed it is good for road-making, but all they do with the slags that come out of the mills is to waste them along the right of way, use them as fill. It is permitted to stand around for long periods of time, utilizing the railroad cars which would otherwise be employed in the transportation of coal and other commodities of that character. This is also true, Senator, in connection with railroad fuel. Senator Walcott: Before you leave that point, there is a Railroad Administration man here, is there not? Mr, A, G. Gutheim, Assistant Manager, Car Service Section, Railroad 88 Administration: Tiiere is a whole history of the slag question which goes back to the rate case before the Interstate Commerce Commission. We will be very glad to cover that when we submit what we have for the Committc. Senator Walcott: I wish you would bear that in mind. Mr. Gutheim: I will, vSenator. Senator Walcott: In what district are these cars? Mr. Callahan: On the Pennsylvania Railroad. Mr. Gutheim: I might interject here that the slag which Mr. Callahan speaks of is essentially a waste product. It is not the commercial slag that goes into road building, and this waste product is something that in- volves transportation by the railroad to a destination strictly for dumping purposes, just to get rid of it. Mr. Callahan: There is also the matter of railroads permitting cars of coal, which later on they will use for fuel purposes, to accumulate in num- ber beyond their current daily requirements. That ties up cars which would otherwise be available for service, and we should like to have the Railroad Administration give some data along that line, and along the line that Mr. Gutheim has indicated in connection with the slag. Senator Walcott: Do I understand the purport of your statement just made w^ith respect to allowing loaded coal cars to accumulate beyond the daily requirements of the railroads to be that the railroads are utilizing the cars for their storing of coal? Mr. Callahan: That is correct, Senator. vSenator Walcott: That is what it amounts to, is it? Mr. Callahan: Yes. That is not true to the extent during the months of July, August and September that it is during other months. Many rail- roads during the winter accumulate these cars and hold them for periods of weeks. I have seen cars on some railroads held three weeks at a time with coal. Senator Walcott: I gather now from your statement that what you are saying with respect to the storing of coal in cars by the railroads for their future needs, as those needs may arise, I understand you are com- plaining not of something which has now taken place, but you are speak- ing of things which have taken place in the past, and I take it you fear will take place in the coming months after September? Mr. Callahan: That is true. Senator, I think the railroads should indicate here fully what length o"f time is being consumed by the railroads in unloading their fuel cars now, and during the preceding months of this year. Senator Walcott: I understood you to say that this practice is not indulged in during July, August and September? Mr. Callahan: Well, not to the extent that it is at other times. They constantly keep on hand a supply of coal and in many instances it is my belief that they keep it on hand beyond the requirements of the local situa- tion. They are frequently within a very short distance of coal producing territory. Oftentimes on the same division on which mines are located they will keep a six and seven and eight days' supply. Senator Walcott: The only alternative I suppose for that practice would be for the railroads to equip themselves with coal storing places. Mr. Callahan: That is true, or else increase their car supply, get some more cars, an adequate number of cars to enable them to do that and still serve their patrons. Senator Walcott: That is hardly practicable right now, I guess. You cannot increase the car supply sufficiently in the immediate future to give those moving storehouses to the railroads. Mr. Callahan: Not today. Senator, but if these cars which are now 89 awaiting repairs were repaired promptly and without further delay, it would certainly relieve the situation tremendously. That is all. Senator Walcott: Is that all you have to say now? Mr. Callahan: Yes, sir. Mr. Morrow on the Stand Again Senator Walcott: Mr. Morrow, have you any other witnesses here this morning? Mr. Morrow: No, Senator, we have not. The gentlemen who were to testify in regard to the export coal situation have not gotten their infor- mation ready yet. They will not be ready for a few days. We have nothing else now to put on. Senator Walcott: I understood from Senator Elkins that you had some engagements that would take you out of the city soon. Mr. Morrow: I want to get away tomorrow night or tomorrow afternoon. Senator Elkins: Then we will take a recess now until half past two. (Whereupon, at 12:20 p. m., the Committee took a recess until 2:30 p. m.) AFTER RECESS. The Committee convened at 2:30 o'clock p. m., Senator Frelinghuysen presiding. The Chairman: All right, Mr. Morrow, you may proceed. Mr. Morrow: To begin with. Senator, I want to clear up one point of possible misunderstanding with respect to the official figures regarding labor shortage or labor. In the report of the United States Geological Survey, any one of their reports, I am taking the latest one for the week ending August 30th, on page 3, they have an analysis of the future to produce coal and the reasons for that lost production, sub-divided under "car shortage," "labor shortage," etc. Now, it is fair to say that they have a certain meaning for their term "labor shortage" there which ought to be clearly understood. It is not what we mean by labor shortage as we have been talking about it this morning, and I have obtained one of their reports in which the}'- explain what they mean by labor shortage; and I would just like to read it to make it clear. I am reading from the report of the Geological Survey, the weekly report for November 10, 1917, page 3, the top of the page: "The present capacity on which these percentages are computed is cal- culated for each mine on the basis of actual performance with the men who did work and the cars that were furnished, as shown by the tons produced in the hours the mine was operated and by the hours of operation lost because cars or men were not available. No account is thus taken of what might have been produced had more men worked or had the men worked more regularly. The output of any mine is limited by the cars fur- nished and by the men available who go underground; the" operator today has little control over either. In the aggregate the coal mines of the country have a capacity, that i-s, have room underground and facilities for loading, far greater than is indicated by these figures, but it is idle to count on that capacity under present conditions." The point I wish to make is that in the exhibits submitted this morning, when the mines said that they were short 100 or 200 or a thousand men, that shortage is in additon to any report of shortage shown here. This shortage means that the men who are on the payroll at that mine and are supposed to be working there daily did not show up on the given day. That is what the Geological Survey's figures show, and, of course, it shows 90 a much smaller percentage of labor shortage normally than these state- ments of ours. I make that explanation in order that no one would feel that we are in conflict with that report in this particular respect. Pittsburgh District Costs This morning, Senator Frelinghuysen, you asked us if we had the cost of production from the Pittsburg district, and I told you that I did not have it; but that I would obtain the information for you if possible. Some of the gentlemen from Pittsburg that are here have brought down with them their reports on costs for the district, and I wish to submit that infor- mation to the Committee, if I may. The first report there shows the average cost per ton in 1918 to be $2.0G per ton. The average price that was realized per ton during the year 1918, and that includes shipments on contract and everything, was $2.48, showing an average margin in cents per ton of 42 cents and an average return on the capital invested of 6.5 per cent for that year. It is analyzed further by months for 1919, showing that for the six months ending June 30, 1919, there was an average cost of $2.05 per ton, an average price realized per ton of $2.24, and that was on all the coal produced; or an average profit in cents per ton of 19 cents, and an average return on the capital invested of 2.9 per cent. There is a further analysis of it in that connection, two other analyses, in fact, that I wish to call to the Committee's attention, so that you may have all of these before you at one time. (The statement above referred to is here printed in full as follows): PITTSBURGH DISTRICT— COST REPORT BITUMINOUS COAL. 1918 and 1919. PROFIT Average Average Average Average per cost price realized in cents cent on capi- Period. per ton. per ton. per ton. tal invested. 1918 $2.06 $3.48 .43 6.5 1919— January 2.10 3.35 .35 3.9 2.22 2.31 .09 1.4 , . 2.18 2.29 .11 1.7 April 2.01 2.20 .19 2.9 May 1.92 2.18 .26 4.0 June 1.94 2.15 .21 3.8 Six months $3.05 $3.34 .19' 2.9 The Chairman: Well, according to this, they are making about three per cent on their capital, is that it? Mr. Morrow: That is right. Senator. Senator Walcott: For the first six months. Mr. Morrow: For the first six months of this year up to June 30th. The Chairman: Of course, in Julj'^ and August they got more for their coal, didn't they? Mr. Morrow: Slightly more on the coal that they- had free to sell during those months, which is only a small portion of the output, a small f fraction. The Chairman: They make about the same here as they did last year.? Mr. Morrow: No, I do not think they make quite that much. We have their figures here. I will just check that over and see what it indi- cates. During July they would average $2.37 against an average of $2.48 in 1918, and in August their price is $2.47 against $2.48 in 1918. Their 91 average would be just about what it was last year on that showing, if they were able to invoice all the coal produced at that price, which they are not able to do. Most of their shipments are on old contracts, and their realiza- tion would be distinctly below that figure. Senator Walcott: That averages about three per cent on the capital invested that Senator Frelinghuysen just spoke about. Mr. Morrow: Well, that is the rate for the year. That is the average. The Chairman: They have got to make really practically nine per cent for the last six months to average six, is that not right? Mr. Morrow: That is correct, Senator. Now, this second sheet that I have here sub-divides on the line of average costs. It is sub-divided into two groups, the high cost producing companies being those who are above the average line for the district of $2.05 and $2.06, respectively, and the other, the low cost companies, whose average is below. You see there for 1918 5,000,000 tons of coal produced by those higher cost companies that came out of the ground at an average of $2,246 per ton. In 1919 those same high cost companies averaged $2.38 for three million and some odd tons of production in those six months. The Chairman: What was the reason for that? Mr. Morrow: Just the physical conditions in the mines. Those high cost companies have thinper coal or less advantageous working conditions in the mine, and differences of various kinds, longer hauls, perhaps. Senator Walcott: There is less volume produced here. Mr. Morrow: Well, that is for six months. That is at the rate of 7,500,000 tons per year. Senator Walcott: You. have taken the average cost per ton, have you, in this last 1919 column and just proportioned that throughout the year, and said if they continue the same quantity of production it would be $2.38 for the year? Mr. Morrow: This is what it averages for the first six months. We do not know what it will be for the rest of the year. If they are fortunate and have steady running time and do not run into any faults or trouble, they may average that, or a little less; but they will not go over it very much. But if they have some little trouble and their running time goes down on account of car conditions, etc., it will be higher. (The statement above referred to is here printed in full as follows): PITTSBURGH DISTRICT— HIGH AND LOW COST , PRODUCTION, BITUMINOUS COAL. • 1918 1919 to June Average cost 30 — Average Companies. Tons. per ton. Tons. cost per ton. High cost 5.037.618 $2,246 3,848.472 $2,377 Low cost 12,301,1:30 1.913 10,630,146 1.924 ' Total all companies 17,238,738 2.06 14,478,618 2.05 Mr. Morrow: Now, here is another table which shows the percentage of bituminous coal produced at different costs per ton for the year 1919. You will see there that 18 per cent of the production in the Pittsburg dis- trict came out of the ground at less than $1.80 a ton; 21 per cent between $1.81 and $1.90; 7 per cent between $1.91 and $2.00; 25 per cent between $2.01 and $2.10; 12 per cent between $2.11 and $2.20; 3 per cent between $2.21 and $2.30; 3 per cent between $2.31 and $2.40; 4 per cent between $2.41 and $2.50; 2 per cent between $2.51 and $2.60; 2 per cent between $2.61 and $2.75; 1 per cent between $2.75 and $3.00; until you get to the figure of 92 2 per cent, which was produced at a cost of over $3.00 per ton. f'J'he* statement referred to is as follows: 1919 January February April May June vSix months' average 18 1919 January . February March . . April . . . May . . . June . , . Six months' average $1.81 $1.91 $2.01 $2.21 $2.21 Below to to to to to $1.80 $1.90 $2.00 $2.10 $2.20 $2,30 13 10 52 6 i 2 1 62 6 5 14 1 .3 6 51 5 1 57 10 10 9 4 61 9 1 18 1 1 12 52 13 7 8 •> 18 21 7 25 12 3 $2.31 $2.41 $2.51 $2.61 $2.75 Over to to to to to to $2.40 $2.50 $2.60 $2.75 $3.00 $3.00 7 3 4 4 12 3 2 1 6 4 5 4 4 1 1 3 1 2 1 3 1 1 3 4 2 2 1 2 In connection with that showing you gentlemen also want to know something about the investment in the mines, and we have this exhibit which shows the investment in the mines in the Pittsburgh district. (The statement above referred to is here printed in full as follows) : PITTSBURGH DISTRICT— IN VESTMENT IN BITUMINOUS COAL. Statement showing investment in coal lands, plant and equipment, sup- plies and working capital, as prepared by Ernst & Ernst, Certified Public Accountants, as of January 1st, 1918. Coal lands, less depletion $129,664,643.31 Plant and equipment, less depreciation 13,833,047.71 Supplies 896,379.31 Working capital 20,766,228.26 Total capital invested in 1918e $165,160,298.62 Average invested capital for each ton produced $ 6.45 The Chairman: You are taking just one mining district in Pittsburgh. Are you taking that to show the amount of investment in that district? Mr. Morrow: That district alone. We are giving- the information simply because you asked for it this morning with respect to this district, and it happened to be here available. , The Chairman: Are you submitting the same schedule of prices for the other districts? Mr. Morrow: Wc haven't it for all these districts I am not certain that we have it for any of the other districts. We could probably arrange to get it for you. It would take some time, though, I think. The Chairman: The Pittsburgh district :s the horrible example? Mr. Morrow: I would not say it was the horrible example. It is an example, and what you see there is more or less true of the other districts 93 without any question. The shrinkage in the profits this year as compared #ith last year is true generally. Senator Walcott: Please explain these items here, will you not? Why should the value of coal lands less depletion be a constituent elernent of the figure which goes to make up the total tonnage in 1918? Mr. Morrow: It has nothing to do with the tonnage except that it is the available ground from which coal is being mined by the operating com- pany. When you go into the coal business you buy twenty or fifty or one hundred years of raw material at one time. That is what your business is built on. You are different there from a manufacturer or merchant. You take a department store in Washington, it turns its capital over perhaps six times a year. Senator Walcott: I understand that. A mining company sells its capital. Mr. Morrow: A mining company sells its capital. The Chairman: It has nothing to replenish. Mr, Morrow: It has nothing to replenish. So this is the investment at the end of the year 1918 for the coal that was in the ground owned by the operating companies, that they were working on, and their plant and equipment less the allowances that have been made for depreciation since they have been put in. Senator Walcott: Coal lands less depletion $129,664,643..31 represents the value of the coal in the ground, does it? Mr. Morrow: That is right, just as it is there. Senatpr Walcott: Now, here in 1918, did they take all of that coal out? Mr. Morrow: Ih, no. They only took out — what was their tonnage? Mr. Gardner, do you know what it was? I don't know what it was myself. Senator Walcott: It does not make any difference about the exact figures. > The Chairman: How much money? Mr. Morrow: The tonnage sold for $165,160,298.62. Senator Walcott: I do not understand what the tonnage produced in 1918 means here. Mr. Morrow: Oh, that is a mistake of the stenographer. It should be "Total capital invested in 1918." The Chairman: Well, then, am I right, that you have got invested $165,160,298.62? Mr. Morrow: Yes, sir. The Chairman: And you take $165,000,000 of value out of the ground every year; is that it? Mr. Morrow: No, that is not correct. That line next to the last line should read there "Total capital invested.'' Mr. Morrow: If you go up there and undertake to buy an acre of coal land in the Pittsburgh district now you will pay about $500 an acre for it. It has about 5,000 tons of recoverable coal in the acre, from five to six thousand, say. That is, it will cost you about 10 cents a ton in the ground before you have done anything in connection with it, just to buy the coal in the ground. When you take that coal out, that ton of coal, and sell it gross, you sell it for $2.25, and if you are producing, if your total tonnage of coal in the Pittsburgh district — well, take 5,000 tons, wlien you have got that out you will have sold your 5,000 tons at $2.25, and that will be $112,500, and your total investment in the acre of land originally was $500, but your $2.25, Senator, for which you sell that coal, includes all your operating costs, your taxes, and all of the rest of it. Now, that is what goes to make up that $2.05 that we have been talking about. The Chairman: How much do you get net for your $500? Mr. Morrow: In the long run how much you get net for your $500 is problematical, because it is going to take you from twenty to fifty years 94 to get that $500 back, that is, uut from under the ground. You take a lit- tle of it out this year and a little next year, and so forth. The Chairman: How do you pay any dividends on it, then? Mr. Morrow: A lot of them do not. That is just where the interesting part of it comes in. The Chairman: How many do not? Oh, 1 do not know that there are any reliable figures on that. Senator. The Chairman: 1 see the point you make, but it does not take twenty years to get your $500 back? Mr. Morrow: In a given acre it does not, but if you are going to mine coal, you must have enough coal to justify the erection of your plant, be- cause if you do not you will have a price per ton mined which will be enormous. Of course, in the mining of coal, the larger the tonnage the more safe you are as regards the cost of mining it. The Chairman: Have you anything further to submit? Mr. Morrow: Not in connection with those costs. The Chairman: HAve you finished that? Mr. Morrow: Yes. I am through with that. The Chairman: I want to get down to these questions. Who is going to answer them? Mr. Morrow: Wiell, I am going to answer some of them. The first question you ask is that you would like to ascertain how much coal has actually been consumed in the present calendar year, up to this year, and how much is now in storage, and how this storage supply compares with what is generally stored at this time of the year. I have not been able to obtain any authoritative information on that question. The information that hitherto has been compiled on it has been obtained from the United States Geological Survey, and that is the only source of information that we have known anything about that was at all reliable, but its reports have been discontinued. The Chairman: When were they discontinued? Mr. Morrow: I think the last report was as of April 1st, at the end of the oreceding coal year, the end of the winter. The Chairman: Why were they discontinued? Mr. Morrow: The later reports have been discontinued — this is simply as -I understand it — because they hav eno appropriation to carry them on. The item which would have carried the report was taken out of the appro- priation bill. The Chairman: Is there any one representing the Geological Survey here? (There was no reply.) Mr. Morrow: That is very important information, and we ought to have it; everyone ought to have it. Is that all on that question, Senator, No. 1? The Chairman: Well, I understand that you cannot answer how much coal has been consumed in the present calendar year. Mr. Morrow: No, sir. The Chairman: And you cannot answer how much is in storage? Mr. Morrow: No, sir, we have no information. As I say, we have relied on the Geological Survey for that information, and it is not any longer available. We have not arranged to get it. They would have to get that information. N. C. A. Aid to Geological Survey Senator Walcott: Wasn't the work carried on by the National Coal Association by paying the bill for it, that particular work? Mr. Morrow: Not that part of it. The portion that the National Coal Association has paid the expenditure for is this weekly report that we 95 have here. Wle have sent over to Secretary Lane each month enough enough money to keep up that report. I do not know even the names of th people who work on it, but we simply sent him a check for the amount that would cover that weekly report of production on the tonnage, and so forth. We feel that that is so important that wc ourselves will pay the bill rather than have that particular report stopped, for the time being anyway. i Otherwise all of this Geological Survey information of that kind would have been dropped. The Chairman: This is the production, isn't it? Mr. Morrow: Yes, sir, that is the weekly production. The Chairman: Well, will that be continued during this year? Mr. Morrow: I do not know that it will. Our Board of Directors has authorized the payment of the expenditure of that, the expense for that, up to the first of October. The Chairman: Then, in other words, you mea« to say that informa- tion very important in regard to the question of supplying the country with bituminous coal, information that would tend to show the consumption, the annual consumption, has been abandoned by the United States Geological Survey Department? Mr. Morrow: Because of lack of funds, yes, sir. Senator Walcott: The Congress failed to appropriate the money? Mr. Morrow: That is it. The Chairman: You do not happen to know whether there were any appropriations which could have been used? Of course you do not know anything about that. Strike that out. Mr. Morrow: No, I do not know anything about that, Senator. We merely know that they have nothing for this purpose now. The Chairman: Then, what is the next question? Mr. Morrow: No. 2, an estimate as to the probable consumption for the balance of the year for United States domestic purposes; also an esti- mate as to the prospects for export coal? The only estimate that we have been able to discover that is presumably reliable is the estimate of Dr. Garfield, the one that he announced in Chi- cago on June 6th, in an interview to the Chicago newspapermen, in which he said that the estimate for the current year was fo" a consumption of approximately 6.30,000,000 tons of bituminous coal, and that 30,000,000 tons of coal was on hand in stocks on January 1st, which left a production re- quirement of fresh coal from the mines during this calendar year of ap- proximatelv 500,000,000 tons. The Chairman: In other words. Dr. Garfield estimated that we needed 500,000,000 tons of bituminous coal for use in the United States for the calendar year of 1919? Mr. Morrow: 530,000,000 tons, with 500,000,000 of it to be produced. The Chairman: 500,000.000 of it to be produced. Mr. Morrow: Yes, sir; there were 30.000,000 tons in storage at the be- gmning of the year, but 500,000,000tons, the production of 500,000,000 tons would not restore the stocks on January 1st. The Chairman: What do you mean by that? Mr. Morrow: I mean this, that if the total consumption would-be 530.000,000 tons, and you went in with 30,000,000 tons in stocks and only produced 500,000,000 tons, you would use up both your sotcks, your re- serve and vour production. The Chairman: You would need more reserves? Mr. Morrow: Yes. vou cannot pto throujrh the winter in New England and the Northwest without some reserve. So that 500,000,000 tons is the mmimum m that resrect. My impression from the statement in the Chi- raero newsnapers is that that statement of Dr. Garfield was based on in- formation m the hands of the Geological Survey. I have seen no estimate 96 since that date. We have been using that estimate. The Chairman: Now, the government has got to go along blindly as far as any information is concerned as to the needs of the country for bituminous coal? Mr. Morrow: That is right. The Chairman: That is the present situation? Mr. Morrow: Yes. The Chairman: Did the Geological Survey before the expiration of the time when those funds were available make an estimate as to the national need for coal? Mr. Morrow: I take it that they did, because of the statement in Chi- cago by Dr. Garfield. The Chairman: You have not checked that up? Mr. Morrow: Not with the Geological Survey, no, sir. I went through their reports, but I did not find any estimate of production in their reports. W,e have the statement of Dr. Garfield, however, that that was the esti- mate, and I take it that is where it came from. The Survey could doubt- less give you information about that, Senator, either Mr. Lesher, their statistician, of Dr. Smith, head of the Bureau. The Chairman: Could we get an estimate of that by ascertaining how much coal you have delivered by contract and how much free coal has been delivered? Mr. Morrow: Well, no. Senator. The difficulty about that is the prob- lematical question of how much resumption of industrial activity there will be later this year, and what kind of a winter you will have. Nobody can estimate a thing like that. The increase in the consumption of coal for household purposes is 30 per cent greater at zero than it is at 32 de- grees. It makes just that much difference, so, if you have a cold winter, with stormy conditions, we would consume a great deal more coal than otherwise. So any other estimate in that respect is bound to be distinctly problematical. You could only get a line on it. Various factors enter into it. You could use railroad consumption as one. You could base an esti- mate on that. You could base an estimate on the tonnage used by the steel companies, but neither one of those will tell us what they are going to use next-jnonth or the month after, or the next year, which they do not know. Now, as far as the export condition is concerned, we have not the information there outside of Canada. Canada will presumably need fifteen or sixteen million tons of bituminous coal this year. The Chairman: Have you the export sheet now? Mr. Morrow: No, I haven't that. Mr. Wilshire and Mr. Farrell are getting that together. The Chairman: When will that be available? Mr. Morrow: I hope we will have it a week from today. We may be able to get you some of the information in answ^er to Question 3 before that time, if possible. Analytical Estimate of Nation's Coal Needs The Chairman: Go back to this question of consumption. The rail- roads use about 30 per cent, don't they? Mr. Morrow: In round figures. 28 per cent, I believe, exactly. The Chairman: That is about 150,000 tons. Mr. Morrow: 150,000,000 tons, 154,000,000 tons last year. The Chairman: How much will the domestic trade use? Mr. Morrow: The household trade, do you mean? The Chairman: Yes. Mr. Morrow: It will use in the neighborhood of 80,000,000 tons of bituminous coal, and that includes your theaters and apartment houses and hotels, etc. The Chairman: How much will the steam trade take? 97 Mr. Morrow: I can get you those figures for 1917 certainly and prob- ably for 1918, the actual consumption. The Chairman: Isn't it practically 200,000,000 tons? Mr. Morrow: For industrial use? The Chairman: Yes. Mr. Morrow: No, it is more than that. It will run a little over 200',- 000,000 tons last year, and a little more the year before. The Chairman: 225,000,000 tons? Mr. Morrow : Somewhere in that neighborhood. The Chairman: That is 380,000,000 tons; and if we need 500,000,000 tons, or 530,000,000 tons, the domestic trade will take 120,000,000 tons, unless it is very cold. That is what is left? Mr. Morrow : No, You have not allowed for your exports in there. The Chairman: But that is what we want to find out? Mr. Morrow : Yes ; that is a very rough estimate. The Chairman : What I want to get at is this : We have got to get at this thing in some practical way, to find out where we are. We have got to find out how much coal has been shipped, and we want to find out how much has been consumed, if possible ; and how much we will need, not for the balance of the year, but until next spring. That is our problem today. Mr. Morrow : You want to go through until April 1st? The Chairman : Yes, until April 1st. Mr. Morrow : That is the coal year. The Chairman : Now, I want your Association to furnish any information that will help us to know the needs — the practical needs. I am looking for cooperation in this thing, so that, first, we will have enough coal ; and, second, we will try to prevent any raise in price, if it is possible, with your assistance, Mr. Morrow : We will be glad to help you in any way we can, Mr. Chairman. The Chairman: I want to avoid a runaway market, if I can, by trying to gather together the various interests, in order to avoid a crisis of this char- acter — all of those interested. Now, that is the practical question, and if we are exporting too much coal, or if too much coal has been engaged for export and our own people need it, this Committee wants to know that and we want to face that situation. Mr. Morrow : Surely. The Chairman : But if we do not hurry up and get the facts about that export coal, it will all be exported before we get them. Mr. Morrow : Not quite. It is a difficult matter to get that information, however. We have done the best we could v/ith it, but we have not ob- tained it today. The Chairman: Now, we have 155,000,000 tons for the railroads and 225,- 000,000 tons for industrial purposes. If the figure is 500,000,000, that means 120,000,000 for the domestic trade, which you figure at 80,000,000 tons? Mr, Morrow : No, I do not think it will run to 80,000,000 tons. The Chairman: That would leave 40,000,000 tons for export? Mr, Morrow : I do not believe you have figured in the coal that will be consumed at coke ovens and by-product plants, in that estimate, Senator. The nearest authoritative information that we could give you on that would be the analysis of consumption in 1917 and 1918. I can get that information for you and have it over here tomorrow, I think, without any difficulty, because that is available; and when it comes to an estimate for this year, we could work out something with you on that basis. That is the nearest we could come to it, in the absence of authoritative figures. Then, when it comes to the question of how much has been consumed up to the present time, there is only one source for that information, and that would be through the Geological Survey, because we would have to ask those 90,000 consumers of carload coal to report what they have used to date and what they have on hand. That would give us a line on it. We would know their consumption prospect for the rest of the year then. The Chairman: There were 580,000,000 odd tons produced in 1918. Will you produce as much as that this year? 98 Mr. Morrow: No. The Chairman: How much less? Mr, Morrow: We are 95,000,000 tons behind now, or worse than that. I have the figures right here — just what it is. The Chairman : Then, we are blocked in our efforts to find out how much coal is in storage and how much will be needed, are we not? Mr. Morrow : To get at it exactly, we are. 1 regret that very much, but that is the case. Now, there is another factor there in respect to export coal, and I have written for that information, but it has not come in yet. That is, the capacity of the piers at tidewater and along the Atlantic ports. There is a physical limitation to the coal that could be handled over the piers, even if it were mined and sold; and it is much smaller than any of us realize, when we deduct our domestic coal and our bunker coal that is handled over those piers. The Chairman: Is not this the fact: That there is such a tremendous demand for coal in Europe — I know, because I have been urged to try to get shipping for orders for coal that the industries in France are very anxious to get. In fact, they are closing down on account of a lack of it. Now, is not every outlet — Newport News, Baltimore and all the' shipping points — being utilized, and all the storage capacity for the shipment of that coal, and is not the demand today a very great one? Mr. Morrow : This is true about that, as I get it — and I want to explain tnat it is only from general information, and you would have to rely on some of these gentlemen in the export trade to give it to you definitely — but there is a great demand for coal abroad. There is no question about that. They are short in the production of bituminous coal in Europe ,this year far more tonnage than it would be physically possible for us to transport, if we had all the ships we could ask for. It would not be possible for us to handle it over our piers ; and it could not be dumped at tidewater, with the existing facilities ; but, as I understand, the present limitation is ships, as you say. The Chairman: But there is a certain amount of tonnage available? Mr. Morrow: Oh, yes. The Chairman : And if we are going to face a coal shortage here, should we not only develop a surplus, or should we allow sales for export? Mr. Morrow : That is a question of policy that I would not want to go into. I do not know what the feeling of the Government would be in respect to that — what our obligations may be abroad. The Chairman : I would like to see a situation where we could not only produce enough for ourselves, but let our allies have as much as they need. Mr. Morrow : If we can get the cars at the mines, and they can be moved, we can produce all the coal that this country will need, and we will also have a large supply for our allies abroad. The Chairman: Well, I want to be shown that. You say that we are 95,000,000 tons behind last year's production? Mr. Morrow: That is right. The Chairman : That means that at this period of the year we are prac- tically 20 pe^ cent behind Mr. Morrow (interposing) : Last year's output. The Chairman: Yes; and you say there were 30,000,000 tons at the begin- ning of the year — or Dr. Garfield says so — so we are really 65,000,000 tons behind last year? Mr. Morrow : Net. The Chairman: Yes. Mr. Morrow: Correct. The Chairman : Now, how on earth, even if they could get the cars and the labor, could they meet that? Mr. Morrow: We cannot make up all of that 65,000,000 tons, but we do not have to. The Chairman: Then, there will be a coal shortage anyhow? Mr. Morrow: No; not necessarily. Our requirements this year are only 99 estimated at 500,000,000 tons — and I presume that allowed a liberal amount for exports, because Dr. Garfield evidently knew about the export demand, and while I do not know how that is divided between home consumption and the export demand, I have no doubt that he understood there would be an increase there. We have that 500,000,000 tons that we are still shooting at, and we have produced, up to date, as shown by the Geological Survey, .289,000,000 tons — up to August 3 — which leaves 211,000,000 tons to be produced in 18 weeks, if we are to get out 500,000,000 tons. That is an average of a little over 11,000,000 tons a week. The Chairman : But you are not producing it. Mr. Morrow: No, sir; we are not. During the week ended August 23 we produced 10,671,000 tons of coal, and the mines were not running near their capacity. There was a car shortage in that week — a lot of it. During the week before that we produced 9,100,000 tons, and 25 per cent of the capacity of the mines was idle on account of a lack of cars. Sentor Walcott : Last July you produced 13,000,000 tons? Mr. Morrow : Yes, last July we produced 12,286,000 tons in a single week. In two months we produced 111,000,000 tons. That is at the rate of 666,000,000 tons a year. We have practically as much capacity now as we had a year ago. We are not greatly below that. Certainly not very much below it. I have not any doubt at all that we could steadily produce 12,500,000 tons a week, if we could run somewhere near the capacity of the mines, but we cannot do that with a 25 per cent car shortage at the mines, or even a 15 per cent car shortage at the mines. We have got to have steady running time, and those cars have got to be moved. That is the practical question. The Chairman : Have you gotten any figures for the Committee showing the record of the specific mines that are short of cars? Mr. Morrow: Here is the beginning (exhibiting papers). The Chairman : I do not want to put all that into the record. You are going to compile it, are you not? Mr. Morrow: We have already compiled it. The Chairman : Where is the compilation ? Mr. Morrow : What we have done with it. Senator, is this : We have sent those telegrams over to the Railroad Administration — copies of them — as they have come in. Now, if you want that summarized by fields, you have prac- tically the same thing in the United States Geological Survey reports, which show the shortage in each district. We could arrange to get that by railroads. The Railroad Administration already has it that way, I suppose. If you will go to their operating officials, they will certainly have it that way; they know the rating of the mines and the number of cars fuj-nished each day. That is a con- crete record of what has come in in the last three or four days. The Chairman: You did that at my instigation? Mr. Morrow: Yes. The Chairman: Now, Mr. Gutheim, I would like to have you take the stand at the same time that Mr. Morrow is testifying, for a moment. STATEMENT OF MR. A. G. GUTHEIM, ASSISTANT MANA^^ER, CAR SERVICE SECTION, UNITED STATES RAILROAD ADMINIS- TRATION. The Chairman : Mr. Gutheim, you heard Mr. Morrow's statement regarding the reason for the shortage of production, and, in this connection, I want to read into the record two or three telegrams of like character which have been sent to me. Here is one from Henrietta, Oklahoma, under date of August 29, 1919: "Joseph S. Ferlinghuysen, Chairman Senate Interstate Commerce Committee, Washington, D. C. "Mines on M. O. G. lost three days last week and three days this week account no cars ; transportations very poor account slow movement ; commercial business suffering;, kindly advise if we may expect immediate relief and what 100 the future will be; unless car situation improved we will be forced to close down our M. O. G. mines, and we cannot operate under present cost of pro- duction on two or three days per week. (Signed) BLACKSTONE CONSOLIDATED COAL CO." Now, Mr. Gutheim, I am going to turn that over to you for reply (handing paper to. Mr. Gutheim). Now, here is another one, from Cleveland, Ohio, under date of August 29, 1919: "Jos. S. Frelinghuysen, Chairman Senate Interstate Commerce Committee, Washington, D. C. "The car supply available for mines on Pittsburgh and West Virginia Rail- road District in August has been but fifty-five per cent; this includes three hun- dred ninety bad order cars today; stop members of this Association operating mines on this railroad; have orders for all the coal they can produce, but with car supply of this kind unable make good on our orders; suggest Mr. Hines' attention be called to this poor car supply which, if anything, is getting worse; can we not have some constructive action? (Signed) WM. TAYLOR, President Pittsburgh and West Virginia Railroad Coal Operators' Association, 540 Leader-News Bldg." The Chairman : I also have a letter sent to me by Senator Lodge, under date of August 25, 1919, from General John H. Sherburne, Chairman of the Special Commission on the Necessaries of Life, 481 State House, Boston, under date of August 22, 1919. He is a very good man, it is a good Commission, and it has done good work. "Hon. Henry Cabot Lodge, United States Senate, Washington, D. C. "Dear Mr. Lodge: "Relative to the coal situation in New England : In advance of sending you full data as to the shortage, there is a present situation which should be looked into at once. "The Philadelphia & Reading barges, a fleet of about seventy-two, have been tied up for over a month owing to a strike under differences with the Railway Administration. These barges transport coal to New England exclusively. The average per barge is between 1,500 and 1,600 tons of coal and they make about a trip and a half each month. New England has already lost over 100,000 tons of coal which cannot be made up. This is a continuous loss and will of course grow greater the longer the barges are inactive. Senator Ferlinghuysen may be able to do something on this phase of the situation, either to get the barges moving or to place at our disposal a sufficient number of coal cars to make up a part of the deficit. If he or you desire it, I will be glad to come down personally at any time. "I may say I do not think that you can overestimate the importance of this situation, as it appears from information we have at present that our coal supply is already below the normal. Very truly yours, (Signed) JOHN H. SHERBURNE, Chairman." The Chairman: Now, of course, as the chairman of this subcommittee, I suppose I should be able to wave a fairy wand and produce coal cars, but I am going to pass the buck to you, Mr. Gutheim. Mr. Gutheim: You are usurpingr our function, Senator. The Chairman: I might be able to do a little better than you are doing. (Laughter.) Senator Walcott: Here is another collection of "bucks" that you might pass over there (exhibiting papers). The Chairman: But, barring^ the facetiousness of that remark, the point is that I want you to explain to these gentlemen, if you can, your 101 problems, and what you are trying to do to solve them, and whether the situation will get better or worse. Mr. Gutheim: I would like to say at present just, this. Senator: I have not talked with the Director General himself. He has been pretty busy, as you know, with these labor difficulties; but his secretary informed me this morning that it was the Director General's own desire to come before this committee himself, and he was going over the notes which I gave him of the testimony that had been given to date. He said also that he might find that his time would immediately be turned to something else, so that he could not keep up with it, in which event he might want me to take his place in this respect; but, personally, he would like to come before you himself. Now, to take up this Blackstone Consolidated Coal Company's comr plaint, I have nothing here as to the Missouri, Oklahoma & Gulf. It is a physical impossibility, and I am sure all of these coal men appreciate it, to distribute cars to individual mines from Washington, D. C; it cannot be done. We have to do it through the intermediary of the Regional Direc- tors and the individual railroads. Now, as to the Pittsburgh & West Virginia complaint, I can only say this; that the informant who sends this telegram says that in the month of August they had but 5 per cent of distribution. The figures which I have, which are the latest available, show that in the week ended August 2d thev ordered 1,492 cars, and were given 1,492. Senator Walcott: That is the concern that sent this telegram? Mr. Gutheim: Yes, the Pittsburgh & West Virginia Railroad. That in the week ended August 9th they ordered 1,466 cars, and were given 1,466. In the week ended August 16th they ordered 1,343 cars, and were given 1,343; and in the week ended August 23, they ordered 2,392 cars, and were given 1,948. Now, I should surmise, at this distance, that the reason that their car distribution was cut in that week was because they had run in the three previous weeks much better than most railroads, and their car supply was diverted, in part, to other railroads. That is all the infor- mation I have on that oarticular road there. The Chairman: What do you mean by "their car supply was diverted"? Instead of sending a sufficient number of cars for this mine, they sent them to other mines? Mr. Gutheim: No, I was speaking of the railroads as a whole. The coal cars in what they call the territory of the Eastern Railroad Car Pool, which is, roughly, east of Chicago and north of the Ohio and Potomac rivers, which would include the roads in Southern West Virginia — all those cars are handled through a pool manager in Pitlsburgh. His job is to get the greatest efficiency out of the cars. Where a railroad, as com- pared with other railroads, runs along for a couple of weeks better than its competitors, he endeavors to even things up. It cannot be done with mathematical precision, but that is his effort. That may account for the fact that their supply went down that week, although, tc be sure, their re- quirements jumped considerably. Now, let me take up this complaint from General Sherburne: So far I do not know about any strike in the Reading Barge Service. I do know — and I think all the coal men here who are interested in the New England trade will bear me out — that New England has not taken anythino: like the coal this year by water from the Northern Atlantic ports that she tooV last year. In the last couple of weeks we have been having correspond- ence with certain New England people, who are supposed to be well in- formed on the coal situation, in an endeavor to find out how New England stands. We have h^d one report that New England was better of? than she had been in five years. That seemed almost unbelievable, and we have taken it up with other people, who say their opinion is just the con-' 102 trary. Now, to the extent that New England does not take coal by water, Senator, it means that. instead of the cars going to Baltimore or to Phila- delphia or to Hampton Roads from the coal fields, they have to go all ran to New England; and it will take just about twice as long to do the job with a fifty-ton load of coal, and we have just that much fewer cars at the mines. In other words, the more coal that is sent to New England by rail — all rail — and the less by water, the more you deplete your car supply at the mines. That is the situation in New England today, and if I am not correct, some of the men here who know about the New England sit- uation will correct me. The Chairman: Is there anyone here who knows the New England situation? (No response.) The Chairman: I will send a wire to Mr. Sherburne asking him, if con- venient, to appear before the Committee day after tomorrow. I am going to hold three sessions this week. Mr. Morrow: What little information I have. Senator, is of a general nature, and is along the same line as Mr. Gutheim's — that the water move- ment to New England is much below what it was a year ago. The Chairman: Is there any one else here who can give us the infor- mation in regard to New England? Mr. Gutheim: I can think up a few names and let you have them. The Chairman: Then we will get the names from Mr, Gutheim and send them telegrams asking them if they will appear before the Committee here. Now, will you not tell the Committee — I think it is two weeks ago, or a week and a half ago since we began these hearings — what has been done in the meantime by the Railroad Administration in an effort to help improve the situation? Has any speical effort been made? I talked with Mr. Kendall regarding it, and told him what the testimony showed, and asked him if he could not spurt up a little bit. Mr. Gutheim: In the last two weeks. Senator, we have made some very exceptional efforts to improve the general situation. We knew that as soon as the shopmen's strike came on it was going to be bad, as com- pared with what it had been. We have all of the Regional Directors posted, and they have their Federal managers posted, to do everything possible to speed up the movement of coal, and of empty coal cars. We are making extraordinary efforts to take care of all cases where coal is delayed en route, by requiring daily wire reports from the Regional Direc- tors as to what the situation is, and checking one Regional Director against another, so that at overlapping points they will not get caught. We are arranging for and are getting daily reports of all instances where coal is held at destinations for unloading in excess of the free time that is allowed; that is, forty-eight hours; and I might say, on that point, that on one railroad the first report that came in showed that the loss was the equivalent of about 200 cars at the mines that day, as compared with what it would have been if they could have had the cars back at the mines, in- stead of waiting for unloading at destination. Now, I cannot tell you, from memory, certain of the other things that have been done, but I think that everything that could reasonably be ex- pected, with due regard to the rights of other commodities, is being done. The great problem that we have to consider, Senator, is this: The coal operator has just one commodity to think about, and that is coal; but we have to think of every other commodity that moves on the railroads; and the laws that you gentlemen lay down, which is just railroad practice, re- quires us to give due consideration to all of them, and not to permit any- unjust discrimination against them. The Chairman: You have priorities, have you not? Mr. Gutheim: Priorities are a wartime measure, and they put a good 103 many people out of business who desire to ship other c6mmodities than coal in open-top cars; but we have been attempting to give them a chance to recoup. You are right in the questions you ksked Mr. Morrow. — that the whole business — the whole question is how much coal have we got to have? We know what we did last year, and we know what we had to do that job with. We went over 13,000,000 tons of bituminous coal for two weeks. The Chairman: We know that we have got to have more than we are going to get; is not that true? Mr. Gutheim: The question is: how much more? We got over the strike in the week of the 23d, and we went up to pretty nearly 11,000,000 tons; but if we have got to go up to 12,000,000 tons, we ought to know it, and if we have got to curtail transportation for something else in order to accomplish that, we should know that. The Chairman: Has not the testimonv here shown that we will have to have at least 11,000,000 tons production to meet the requirements of last year? Mr. Gutheim: You mean if you take this estimate of 500,000,000 tons? The Chairman: Yes. Mr. Gutheim: Oh, yes; if that is correct, we will have to have that much. Wants to "Play Safe" on Requirements The Chairman: Why is it not fair to take an estimate of 500,000,000 tons? We used 585,000,000 tons last year. Is not 500^000,000 tons a very conservative estimate for this year? Mr. Gutheim: Let us go back to 1916, Senator. I appreciate that we want to play safe on this, but let us take 1916, and you have a year when all the industries of the United States were running full tilt. We were not in the war at that lime, but we were practically on a wartime basis. We producecf in that year about 500,000,000 tons of coal. When we got down to the end of that year, I understand we were pretty lean as to stor- age. I do not know how much storaq-e they had at the beginninqr of the vear: I do not know whether the Geological Survey could tell us that, but now let Us compare 1919 with 1916, and we have a vastly dififerent situa- tion. You take vour industrial consumntion, as represented by vour steel manufactnrinp- districts, and in the Pittsburgh-Youngstown district for several months of this ve^r we had fewer bl^st furnaces in ooeration than was the rase in 1916 There are thinirs of that sort that might be taken as an indirntion of what the problem before us is. The Chairman: Yes. but we also have the industries in other siections transferrinp- from war nroduction to peace nrodnrtion. Take the automo- bile indnstrv. for instance, and the steel industry. Are they not running as full time as thev were dnrine the war? , Mr. Gutheim: The steel industry certainly is not. The Chairman: Ts not? Mr. Gutheim: No, it is not, and it certainly was not in the' first six months of the vear. A voice: How about 1916? Mr. Gutheim: 1916 was a prettv full venr. Mr. Walsh. The Chairman : Then, your theory is that we will not need 500,000,000 tons? Mr. Gutheim- No. Senator. T wiH not theor^Ve on that. Tf von will nerrm't me, T wonid like to sav this: T do not believe there is anvbodv in the Pailroad A dminictrption but who is willinp- fr. admit that onr iob is to transport all the coal von have eot to get to the consumers, in order to satisfv their needs. That mav be a lot different from +he coal that ought to be transported at the instance of the operator. It is auite common prac- 104 tice, when coal cars get short, and coal gets short, for a man to place an order with two or three operators, thinking that he will get the coal from some one of them. Now, if we gave all of them the cars — as many as they wanted — they would all ship those orders. We saw last year how it worked out, when we had two or three weeks of good production, and in- variably there was a slump because the country would not absorb the coal and the cars would not get back to the mines. We ought to transport, and we will transport all the coal that we have got to have. That is the first test — to find out what we have got to do. If the Committee finds that we should go ahead now on the 500,000,000 ton basis, that is the end of it. The Chairman: We are approaching winter, and there were needed 95,000,000 tons last year. Is it not a pretty safe proposition to assume, in view of the situation, that we have got to have all the cars we can get tO| the mines and not have to stop to figure out how much production we need to meet the consumption? Is there not enough before us now to in- dicate that we need all the coal cars we can get? What is the use of stop-« ping and theorizing? Is there not merchandise which it is not necessary to transport at the present time, of which there are large amounts in storage, such as lumber, trap rock, or lime, or things of that character, so that the cars could be diverted for a month or two and so that we can rush this coal to the consumer? Mr. Gutlieim: That could be done, Senator; and the result would be that the complaints that you gentlemen are now getting from the coal operators would merely be superseded by the complaints from the jobbers and their competitors. Senator Walcott: I know that in my state I would be pretty well be- sieged by complaints from constructors of highways. Mr. Gutheim: That is true. Senator Walcott. Let me give you this thought Senator Wblcott — It was mentioned by Mr. Callahan that there was something like between four and five hundred cars loaded up with refuse, slag and things of that kind, that was to be dumped somewhere, but it had been in those cars, as I recall it, something like ten days. Those cars certainly could be liberated and moved. Mr. Gutheim: Mr. Callahan did not tell us the specific cars. Probably there are some, Senator, but the transportation of slag and burnt molding sand and brick bats and ashes by the use of railroad facilities is absolutely necessary in a territory like Pittsburgh and Youngstown, where practically all of thosp things must be produced to keep your plants going, and you must use your railroad cars for that. Up to about the middle of last January we were running that business on the permit system. That is, we would not take it from everybody. If a man had a possible chance of getting rid of it without using railroad cars we would not let him use the railroad cars. That was a strong arm proposition. TJiat had to come off, with a lot of other wartime practices, and we have been besieged recently, very strongly, to the effect that it would b a good idea to out it on again. There would be some improve- ment made by putting that permit system on again. Senator Walcott: The particular difficulty seems to be in moving the cars after they are loaded, getting them away and dumping them. Mr. Gutheim: I do not know the specific instances that Mr. Callahan had in mind. The last report I had from the Pittsburgh district said that the total slag accumulation was l,20o cars. When the Interstate Com- merce Commission considered the slag situation about three years ago they reported that the movement of slag per annum was about 200,000 carloads, and it is mostly in the Pittsburgh-Youngstown district. The Chairman: You spoke of the West Virginia situation and read some figures showing that you had supplied their demand for cars. 105 Mr. Gutheim: Yes, sir. The Chairman: And yet there is a mine in that district — I think it is a mine or a concern representing several mines — which states that it is 55 per cent short on cars. It seems to me that someone ought to have got those cars. Is there a scramble? Is there competition on the roads among the operators to get cars, and have your deputies or under officers in the different railroads under the Railway Administration the right to divert or direct those cars, or are they directed from Washington? Mr. Gutheim: As between the individual mines, they are directed by the officials of the railroad in charge of that mining district. As between the individual districts they are directed by the official lieadquarters of the railroad, usually the superintendent of transportation. As to the railroads in this pool territory that I spoke to you about, they are directed from Pittsburgh, which is a subsidiary of our office here. The Chairman: Is their opportunity, instead of having to prorate the division of cars, for one mine to get more cars than another mine? Mr. Gutheim: No, sir; that is absolutely forbidden under the rules; and the rules are in general use, as Mr. Callahan and Mr. Morrow stated to you. The Chairman : It is stated that there were 35,000 new cars being stenciled and that those would be available. What is the situation with regard to the new freight cars? Mr. Gutheim : The Director General advised me to get in touch with Mr. McManamy, the Assistant Director of Operations in charge of mechanical matters. Mr. McManamy is here, and he has some figures on that subject with him. The Director General had asked him to get that together, and he had asked me to get the figures together in the event that he should come down here to talk to you. The Chairman: We will call Mr. McManamy in just a moment. What is the situation with regard to the repairs of those- cars? Are you making any headway on them? Mr. Gutheim : We are. Mr. McManamy is immediately in charge of that, and he has figures on that point. The Chairman : Is there anything that you care to suggest further to the Committee? I am following out the policy that the Committee had that we are all trying to get together. Are there any suggestions that you can make as to how we can meet this situation? Thinks "War Powers" Necessary Mr. Gutheim: I will make this general suggestion, Mr. Chairman: If we are going to produce 500,000,000 tons of bituminous coal this year, and take out what we have produced so far, it means that for the balance of this year — and I assume that means through this next winter — we have got to go along at prac- tically the top speed* we hit in 1918, on the average. In the period from about the middle of July until the middle of November, 1918, when everything -possible was done to favor production of bituminous coal, we averaged less than twelve million tons a week. To^o that we had a situation as to repairs that was better than it is now. It has been accentuated somewhat, of course, as to the bad order situation, by the strike, but in accom- plishing that record last year we had a preferential movement of coal cars, loaded and empty, on a great many railroads. We had also, a curtailment of the use of coal cars hy certain commodities of lesser necessity in the war than coal, and the prohibition of other commodities that were not necessary at all. Your road building jobs, for instance, practically stopped. Those things are within the power of the Railroad Administration to put back into effect, and they contributed materially to that record. But there were other things that were done that are entirely in the hands of the coal operators. Last year we had the Lake coal movement pooled, and the result was that we got through the year with an average detention per car at the Lake ports of less than a day and 106 a half per car. This year it is well up over three days. If you apply that lost day and a half on each car to the thousands of cars that move to the Lake ports, you have lost a good many million tons of coal. The same is true as the tidewater car movement. That was pooled last year. This year it is only pooled in part, and wc have lost a great deal of transporta- tion efficiency there. Last winter, when coal production was away down and we anticipated that this was coming, late in the summer, we had a committee of the Railroad Administration that labored for a long while and labored very earnestly with the Lake coal operators and the tidewater operators to get them to continue to pool their coal. We made very little headway. If we are to make the record that was made last year it is my opinion that we have got to have assistance of that sort this year. That extended not only to the Lake coal and tidewater coal pools, but to others. In addition to that, last year the Fuel Administration and the Railroad Ad- ministration together assigned the movement of the coal. That was for two reasons. It was, first, to get the coal down to the lowest possible use of trans- portation that would give the country the coal it needed, and, second, and per- haps more important, was the fact that it kept out of the West certain high grade coals that the western people would have liked to have had, and it kept it in the East, where it was needed for war purposes. The result was that it compelled the people in the West to burn their coals, which they did not prefer to use. It saved a lot of transportation and that ' in itself contributed to the abiliy to handle all of this coal last year. Another point I might mention is that last year tha detention of cars at destination was penalized by wartime demurrage rates. As I recollect, after the 48 hours free time that a man had in which to unload his car of coal, he paid $3 a day for the first four days and then $6 for the next four and $10 a day after that. This year, after the expiration of the free time, he pays $2 a day for four days, and then he pays $5 a day. It is practically back to the basis that obtained just before we put on the war- time demurrage rates. When you begin shipping^ coal in great volume you will inevitably find that some consumers will get more coal on their tracks than they can unload promptly, and we will be up against the proposition of having cars at destination that ought to be running back to the mines. Last year the distribution was effectively controlled by the Fuel Administration. That meant that we got away from the spectacle we had in 1917 when one man- ufacturer might have a year's supply of coal in storage, or six months', and another fellow be down to the boards. If we are going to have this record this year and get the most effect from it, there ought to be some power that is going to guarantee that one man is not going to get a mass of coal that he is not going to consume, because he has a contract at a higher price, perhaps, when another fellow, whose contract is not at so high a price, vv^ill not get so much coal. I do not mean to attribute to the .coal operator that he is working a mean game; he is merely playing 'human nature. If cars are short and he IS not getting out as much coal as he wants— if I were in the coal business I would probably ship on the highest price I could; but there is not much to be gained by getting out a lot of coal and not putting it where it is needed. _ Then there should be some method found where, if New^ England is going to be short of coal, as a good many people think, she will begin to take It via coastwise means, even if the ocean rate is perhaps a little higher than the rail rate, and in that way use the cars only so far as the port in- stead of taking them all rail into New England as far as Maine. That, in a general way, without stopping to prepare something definite- ly, and to read it, is how the situation sizes up to me. In other words, if we have got a wartime job. Senator, we ought to appreciate that we need 107 wartime methods; and if the railroads are going to put in other wartime methods, the coal operators, I think, should consider seriously if they can assist by putting in theirs. Outside of that there comes the question of price, which is not within my province at all. Senator Elkins: What about motive power? Have you sufficient mo- tive power? Mr. Gutheim: Mr. McManamy is thoroughly posted on that, sir. Senator Elkins: You spoke about delays of cars at both ends. Are they delayed in transit? Average Daily Car Movement Mr. Gutheim: Mr. Callahan spoke of the decrease in the average movement per car per day. It is a subject that has been considered a good deal in our organization, and pne difficulty in the way of an accurate com- parison or, rather, two difficulties, is this: I spoke of the preference last year in the movement of coal. Preference was the rule last yaar. For instance, when we got into the big jam on gasoline and petroleum pro- ducts in the fall, they took care of tank cars in such a way that the move- ment per car per day went straight up. This year, in addition to the fact that we are not running those preferential movements, we had during the first six months of the year. — and that is the period covered by Mr. Calla- han — 2i mass of cars in storage. In February and March the number of coal cars available in surplus of all demand for them, averaged 200,000 a day — pretty nearly that — and with approximately, in round numbers, a million coal cars in the ownership of the Administration lines, 200,000 of them in storage, practically, and 800,000 running, you are making miles hy 800,000 and dividing^ it by 1,000,000, whereas, last yeav, you were making miles by a million and dividing^ it by a million; and you can see that the inevitable tendency would bring your car miles per day down. There is no accurate way of measuring^ it, but it tends to explain what the situation is this year as against last year. I would like to emphasize again, sir, that we do not belittle the job that is before us, but we appreciate thoroughly that if we have got to do extraordinary things, equivalent to what was done during the war and perhaps necessitating some preference in the matter of handling coal, which, of necessity, means some discrimination against other commodities, we ought to know where we are treading. There should not be anything that will tend to curtail production in another line. If you stop road-build- ing, which you will do if you take the cars that are being used in the crushed rock and sand traffic and put them into coal, you will stop your cement mills and you will stop a lot of other lines of industry, and that brings up your labor problems. Those are things that we must of necessity consider. We were up to 16,600,000 tons in the week of the 23rd. My guess is that by the 30th it may have dropped a little bit. You will have a considerable drop because of the labor situation. But if you can do 10,600,000 or 11,000,000 tons and that is enough, and you cannot get 11,500,000 or 12,000,000, without discrim- ination against somebody else, then, if it is possible to get that 10,500,000 or 10,000,000, we ought to get it. Senator Elkins: Have you any questions. Senator? Senator Walcott: I take it that Mr. Hines really prefers to present his side of the case. Mr. Gutheim: I know he has stated to his secretary that he would very much like to come down himself. He is tied up still on some of these labor questions. He would like to come down here. I have given him notes of what has passed across the table, and I am sure he will be able to give you helpful suggestions. That is really what you have got to have. 108 We can talk about car shortage and individual mines from now until doomsday. There never was a tmie in the late summer or fall that we did not go into that question. Let me point out, Senator, that if you will take these figures of the Geological Survey and apply to the tonnage that is produced the percent- age of time worked to get the potential capacity of your mines, you will find that in June it was running^ about 14% to 15 million tons a week. In July it got up to ISVg. It has been running in August at the rate of 16,000,000 and up a week. That means pretty close up to 850,000,000 tons of production, potentially, per annum in this country. Mr. Morrow says that is outside of this labor shortage at the mines. I do not know how much that would produce, but you can readily see that if you have got a potential production of 835,000,000 to 850,000,000 tons your mines do not have to work anything like full tim-i to get it out. In other words, there will always be time lost on account of-car shortage, labor shortage, no market, mine disability and other disabilities, and they could still get out all the coal this country ever needed. Very few people would guess that we burned more than 550,000,000 tons. Wants Senate Committee to Determine What Country Needs The Chairman: Do you want the Committee to determine how much coal we shall have for next year? Mr. Gutheim: I think. Senator, that would be very helpful. I make this suggestion, that we might be able to help you this way: If the Fed- eral managers of all the railroads were to get telegraphic information from the consumers of carload coal, some idea of what they have had or what they want, it might help you — and whatever the National Coal Asso- ciation can contribute. The Chairman: How can that information be procured? Mr. Gutheim: That information could be procured by a brief tele- graphic survey and report. It would be pretty hasty. Senator Walcott: Can the Railroad Administration do that? Mr. Gutheim: The Railroad Administration could help in that, I think. Senator Walcott: It seems to me that the Railroad Administration, being in the business of transportation, so to speak, ought to undertake to say what estimates are going to be made upon this business and to prepare for it. Mr. Gutheim: That is always what they try to do, Senator. Senator Walcott: I, for one member of this Committee, certainly would not want to undertake to guess how much coal the country would need, and hand that figure over to the Railroad Administration, if the Railroad Administration is going: to accept that figure as a basis, because it would be a poor guess. I would not assume responsibility for it, and then have the Railroad Administration act upon it by guessing. Mr. Gutheim:' Would there be some way by which you could adopt Mr. Morrow's suggestion — at least, I think it is his suggestion — that the Geological Survey is the body that is probably best qualified to do that? Senator Walcott: We might get it from them. The Chairman: Mr. Leshtr, of the Geological Survey? Mr. Gutheim: Yes, sir. The Chairman: He is not here, is he? Mr. Gutheim: He was here this morning, but he does not seem to be here this afternoon. The Chairman: You feel, Senator Walcott, that there should be no attempt made by the Committee to make any statement regarding their belief that Senator Walcott: That is my idea, Senator, that the Committee can only guess, and if it should happen to guess wrong it would be assuming 109 to speak about matters which it knows nothing about. Do you not think we should make some etfort to ascertain? benator Walcott: From authoritative sources? The Chairman: Yes. Senator Walcott: Undoubtedly; yes. The Chairman: You feel, Mr. Gutheim, that it should come from the Geological Survey? Mr, Gutheim: I think of all the Government Departments that is the one best qualified. Do you agree to that, Mr. Morrow? Mr. Morrow: Yes, 1 agree to that. The Chairman: 1 do not suppose you could inform the Committee whether any further appropriation should be necessary to procure that information? Mr. Gutheim: I understand that Secretary Lane asked for $40,000 to continue this work, and that it was not obtained. Whether that whole ap- propriation would be necessary for that particular job, 1 doubt. The Chairman: Have you any further suggestions to offer to the Com- mittee? Mr. Gutheim: I would not care to go any further, because I might involve myself in questions of policy, and I would prefer, if the Commit- tee is agreeable, to let the Director General appear if it is possible for him to do so. The Chairman: I will say for the benefit of the Committee that I have conferred with the Director General and Mr. Kendall and received from them, under the policy which we had adopted, certain suggestions and a statement that they would cooperate in every way possible to relieve this situation. I think that the Committee feel that Mr. Hines himself is goinp: to take up this question ancf do what be can to improve the situa- tion, and that is very agreeable to the Committee. If Mr. Hines is ready we shall be very glad to hear him. I know the problems that he has, and I hope that he can come soon before the Committee. Mr. Gutheim: I will convey that message to him, Mr. Chairman. STATEMENT OF MR. FRANK McMANAMY, Assistant Director of Operation in Charge of Mechanical Matters, United States Railway Administration. The Chairman: You have heard the testimony that has been given .•regarding the condition at the mines, and the shortage of cars by the mine pperators? Mr. McManamy: Yes, sir. The Chairman: Have you any general statement to make in regard to .that? Mr. McManamy: The general statement that I would have to make would be in connection with the work of the Railroad Administration to meet the situation with respect to furnishing the necessary car supply. To give a fair outline of the general condition of locomotives and cars it will be necessary to go back at least one year. In July, 1918, there was a total of 62,270 locomotives on lines in Fed- eral operation, 14.9 per cent of which were out of service for repairs, with 798 locomotives stored serviceable, on account of not being needed. In January, 1919, there were 63,969 locomotives with 16.9 per cent out of service for repairs and 1,582 stored serviceable on account of not being needed. In April there were 64,499 locomotives on line with 18.4 per cent out of service for repairs and 4,604 stored serviceable on account of not being needed. In July, 1919, there were 64,828 locomotives in service with 17.9 per 110 cent held out of service for repairs, with 3,6G8 stored serviceable on ac- count of not beinjsr needed. Senator Walcott: These locomotives that you have mentioned as stored serviceable are included in the number of locomotives in operation? Mr. McManamy: Included in the number of locomotives on the line, the total number. Senator Walcott: Included in that first large number which you gave? Mr. McManamy: Yes, sir. It will be noted that the number of locomotives held out of service for repairs closely follows the number stored serviceabJe and as the num- ber of stored serviceable increases the number held out of service for re- pairs shows a similar increase. This indicates that the number of locomo- tives held out of service for repairs does not always correctly represent the actual condition of motive power. In this case it simply indicates that due to the fact that there is a surplus of locomotives in good condition that locomotives are held for repairs which would be continued in service if needed and are held awaiting^ repairs for a longer period of time be- cause there is not the same urgent need for returning them to service. As a matter of fact the general condition of locomotives is better to- day than it has been at any time during the period of Federal operation or during the three-year test period preceeding, therefore, so far as loco- motives are. concerned there is no ground for apprehension, as there will be sufficient power to handle all business offered to the maximum capacity of terminal facilities. FREIGHT CARS. With respect to freight cars the situation is somewhat different. , On July 1, 1918, there were 167,403, or 7.1 per cent of the freight cars in bad order. At this time, however, a vigorous campaign to reduce the number of freight cars had been under way for some months, the effect of which was becoming very apparent. The force of shop men was at its maximum at that time and were being worked approximately 70 hours per week which was entirely justifi- able under war conditions. As a result of this the percentage of bad order freight cars gradually decreased to 130,506, or 5.4 per cent in December, 1918. ... Immediately following the signing of the armistice the hours of the employes in the car department, who for many months had been working 10 or more hours per day, seven days a week, were reduced to nine hours per day, six days per week, and on December 9 they were further reduced to eight hours per day or 48 hours per week. This was necessary for two rasons; first, because of the severe strain under which the eijiployes had been working and, second, because of the importance of reducing^ main- tenance costs by reducing the amount of overtime paid for at punitive rates, and it was fully justified by the prospective decrease in business. The decrease in business was sufficient to enable us to maintain the low percentage of bad order cars up to March at wh:ch time it was 5.3 per cent, which for the country at large, is almost an ideal condition. The necessity for further economy on account of over-expenditure for maintenance of equipment as compared with the test period made it seem advisable to make further reductions in car department forces and this was done by furloughing men at many points and by further reducing car department hours. As a result, the number of bad order cars began to increase with Aprjl until they reached the maximum in July of 215,953 or 8.7 per cent. The Railroad Administration fully realized the situation and with the increase in business shop forces were increased to meet the situation. This 111 was first done by increasing the work on box cars to meet the early grain movement in the Southwestern Region and before the grain movement be- came heavy sufficient cars were provided to handle it as promptly as ele- vator capacity and terminal facilities would permit. This was followed by providing for the supply of grain cars for the Central Western Region which was handled in the same way and the same is now being done for the Northwestern Region where the grain shipments are now getting well under way. . , During this period the low coal shipment could not properly be charged to the Railroad Administration, because if you will refer to Ex- hibit B of the Director General's letter of August 14, it will be noted that on March 1, out of 47.1 per cent of the loss of production of coal 43.4 per cent was due to no market, while only 1.3 per cent was due to car shortage. This loss due to no market increased to 46.5 per cent on March 29 with but 8-10 of 1 per cent due to car shortage. On May 1, the loss due to no market was 40.7 per cent, with but 9-10 of 1 per cent due to car shortage. On June 1, the loss due to no market was 32.1 per cent while the loss due to car shortage was but 3 per cent, and only July 5 the loss due to no market was 26.2 per cent, while the loss due to car shortage was 3 per cent. It will then be seen that there was ample justification for the policy of the Railroad Administration in decreasing forces during this period when as high as 46.5 per cent of the loss of coal production was due to no market. The Chairman: What do you mean in that connection by "no mar- ket"' — no demand? Mr. McManamy: No demand, no orders. Anticipating the increase in production — — The Chairman: One minute. Was the Railroad Administration also out of the market for coal at that time?^ Mr. McManamy: I could not say, sir. I have nothing to do with the purchase of coal. Anticipating the increase in production which must come, the Rail- road Administration on June 19, issued the following instructions to Re- gional Directors: "Dear Sir: "Confirming the understanding^ reached at our conference this after- noon, arrangements should be made at once to condition freight cars to handle prospective traffic. "1. Car repair forces should be put on full time at all points where a reduction in hours has been made. "2. Car repairers who have been furloughed should be returned to service in ^11 cases where they can be used to advantage. Such increases should be made at principal shops and at points where the work can be most economically performed. "3. Where additional work is needed and penalty overtime can be saved thereby, a second shift may be organized at shops where the facili- ties are such that it can be profitably employed. "4. Special attention should be given to grain cars, coal cars and re- frigerator cars in the sections where such cars are most needed, so that the possibility of a shortage may be averted." This was followed on June 27 by instructions that wherever the de- mand for coal cars made it necessary, cars requiring light repairs should be given preferred attention so that a sufficient supply of cars might be provided at all times, and this was followed on August 16 by instructions all roads where the number of bad order cars was sufficient to keep men profitably employed or where work could be furnished from connecting 112 lines without excessive empty car mileage. Also, to give special attention to grain cars, coal cars and refrigerator cars in the sections where such cars are most needed. The result of this action on the part of the Railroad Administration which was begun at a time when the loss of production of coal was 41.4 per cent, of which 26.3 per cent was due to no market, and but 3 per cent due to car shortage; therefore, the car shortage can not be said to have seriously affected the production of coal. The effect of this has already become apparent in a reduction of 8,414 in the total number of bad order cars, and a reduction of 5,741 in the number of bad order coal cars. ,The number of employes has been increased about 8,000 and the hours have been increased to nine per day, which means ISVg per cent increase in the number of hours worked, assuming that all shops were previously working 48 hours per week. As a matter of fact, however, prior to July 1, many of the shops were working but 40 hours per week; therefore, the increase in hours since June will amount to approximately 15 per cent. The increase in bad. order cars is not all'due to a slowing up of the repair pro- gram. It is, to a very substantial ^tent, xdue to the fact that since the close of the war, the railroads are endeavoring to get their cars in better condition and, therefore, are sending cars to repair tracks for repairs which, at. any time during the past four years, would have been con- tinued in service without repairs. They are also holding cars for heavy repairs which, at any time during the past four years, would have been put in service with comparatively light repairs and which, if the demand for cars became sufficiently urgent, can again be returned to service with com- Darativelv light repairs. With respect to the new coal cars The Chairman: Just one monjent before you leave that. What is your estimate of the number of coal cars awaiting repairs? Mr. McManamy: I can give you that exactly, sir. The Chairman: Just approximately. Mr. McManamy: Roughly speaking, 99,000 now. The Chairman: Wl^at was it on the first of July? Mr. McManamy: Between 105,000 and 106,000. The Chairman: You have reduced it 5,000? Mr. McManamy: Yes, sir. The Chairman: How long has it taken you to do that? Mr. McManamy: The strike on the first of August which lasted in a good manv sections of the country for a period of fifteen days, and which completely tied up such roads as the C. & O., seriously interfered with the car repair program. That condition existed on many of the coal carrying roads and affected some of our heaviest coal car repair jobs. The Chairman: That condition is eliminated now, is it? Mr. McManamy: Unless we have another one today. The Chairman: Another one today? Mr. McManamy: Yes, sir. The Chairman: If you did not have any, and you repaired 5,000 a month Mr. McManamy: We reduced the number 5,000 per month. The Chairman: Will you do that right along if vou do not have any more labor troubles? Mr. McManamy: I think, sir, we can do better than that, because we did better than that beginning July 1, 1918. We were working under the pressure of war demands at that time, and everything was worked to the utmost. But I think we can reduce the number of bad order cars very sub- stantially, within the next two or three months, unless we have some un- forseen labor troubles — and I do not look for them. The Chairman: Continue. 113 Mr, McManamy: With respect to the new coal cars, the total number constructed to date is 16,438 50-ton composite gondolas; 21,051 65-ton steel hoppers, and 668 70-ton steel hoppers; of these, 8,173 50-ton composite gondolas, 15,354 55-ton steel hoppers and 668 70-ton hoppers are in serv- ice; the remainder, 8,265 50-ton composite gondolas, 5,697 55-ton steel hoppers, are in storage. The total cars constructed by the Railroad Ad- ministration number 68,598, of which 51,428 are in service, 17,170 are in storage waiting to be stencilled. These are now being stencilled at the rate of 700 per day. On the whole, while the number of baci order cars -is high at present, the action which has been taken by the Railroad Administration more than two months ago and which is being diligently followed, will, I be- lieve, be sufficient to meet the demand for coal cars unless it reaches abnormal proportions, in which event the difficulty will not be so much due to car shortage as to terminal facilities. It is worthy of note that with approximtaely 1,000,000 coal cars, an increase of 10 per cent in the mileage of such cars will be equivalent to an addition of 100,000 new cars'; therefore the delay both at the mines and terminals is an important factor in the matter of moving the coal supply and should not be overlooked. The Chairman: It has been stated to me by some Senators that in Ohio and other places there is a large number of coal cars on tracks, empty cars stored on the side tracks. I saw a photograph that one of the Senators had of several hundred cars, large steel coal cars, that had been in one locality for two months. I can get that information in the photo- graph, but pending that evidence can you give me any information as to cars that are stored on side tracks? ;^r. McManamy: That could be accounted for in two ways. Senator. First, the photograph may have been taken three months or four months ago when we had approximately 200,000 coal cars surplus. It may have been taken of some of these new coal cars that were turned out waiting for stencilling, of which I have just reported that about 13,000 remained to be stenciled. The Chairman: Why does it take so long to stencil them? Mr. McManamy: It does not take long to stencil them, but they were turned out without being stencilled, on account of financial difficulties in the matter of assigning them to the dif¥erent carriers; and until those financial arrangements were made, so that the cars could be taken by the different carriers and paid for, they could not be stenciled, because no- body knew to which road they were going. Thev are now, as I have stated, being stenciled at the rate of about 700 per day. That is being done by the car builders, and in order to expedite the work we have as- signed 4,100 of those cars to be stenciled by different railroads to help out the cmr builders. So there is no time being lost in that work. It is being pushed with a telegraphic report daily, followed by a written report as to what is being done. The Chairman: Have you any knowledge of any great number of empty coal cars on any side tracks anywhere? Mr. McManamy: Not specifically. I am of the opinion that there are in different sections of the country — Ohio, and probably through West Virginia and Western Pennsylvania, quite a large number of light capacity wooden coal cars that have been taken out of service at a time when they were not needed because the heavy capacity coal cars could be used more efficiently. At certain of the car builders' plants there are quite large numbers of those— 13,000 new cars that we are drawing on at the rate of 700 a day, still standing idle on side tracks. The Chairman: Are those small cars? I presume you mean the short wooden cars, the old fashioned cars? 114 Mr. McMaiiamy: Yes, sir. The Chairman: Are they serviceable? Mr. McManamy: Some of them are and some of them are in such a condition that it would be more loss than gain to put them into service. They are light capacity and weaker. Mr. Gutheim: About two weeks ago instructions were issued in Wash- ington that took care of those particular cars. Usually the roads that own them have service for them on the home line, but in the war emergency they were stored where they happened to be. They have now been or- dered back to the owning line unless there is some place on the road where they happened to be stored, when they go back to the home line. But the idea is that they will be put into that particular service and release what might be other good coal cars that are now in the service on the home lines. Mr. Callahan: That was August 20th? Mr. Gutheim: Within the last week; I do not recall the date. The Chairman: You are going to put every available capacity that you have to the endeavor to get the cars into service on tne line? Is that it? Mr. McManamy: We have done so, sir, and instructions have been issued to use the light capacity wooden open-top cars for non-revenue service, such as gravel service, ballast service, cinder service, and other services of that kind where they can be used on short hauls and kepi on the home lines. But putting them in a heavy coal train simply means smashing them up and delaying the trains; so we are putting them in serv- ice for which they are fitted. Mr. Gutheim: May I ask the reporter to read your last question? . The Chairman: Yes. (The reporter read the question referred to as above recorded.) Mr. Gutheim: I would not go that far, because we must of necessity keep a lot of them in the service of other lines. You cannot run your blast furnaces unless you have the cars in the limestone service, in coke service or in ore service The Chairman: All that are available without breaking down that service. Mr. Gutheim: We are doing our level best and will continue to get all to the mines that we possibly can. The Chairman: I understood Mr. McManamy to say that there was a considerable number of the old fashioned cars which had been stored on side tracks and that you were taking those cars and utilizing them on the roads to which they belonged, for cinders and other materials of that character, thereby heleasing larger and better cars which were being used for that purnose by coal mines. Mr. Gutheim: That is correct; you are correct in that, Senator. Mr. McManamy: I would like to modify my answer to this extent. My answer was intended to cover the question of putting all of these cars in service. I did not mean by that that other products would be neglected and that every car would be put at the mines; but they are being put in service. Each car relieved from non-revenue service on the railroads means one more coal car for coal or other commodities for which they arje used. The Chairman: Is that all, Mr. McManamy Mr. McManamy: Yes. sir; I think that covers the situation as to w^hat we have done and are doing in order to meet this emergency. The Chairman: Have you any questions to ask, Senator Elkins? Senator Elkins: Are any new cars being built? Mr. McManamy: Yes, sir. We have 31.400 cars under order and being constructed; they are being turned out at the rate of about 220 per day. Of those, 10,658 are double sheath box cars, 40-ton capacity; 13,075 are 115 single sheath box cars, 50-ton capacity; 3,562 are 50-ton capacity gon- dolas; 949 are 55-ton hoppers; 1,826 are 70-ton low side gondolas; 2,332 are 70-ton steel hoppers. Senator Walcott: Is the repair problem now more acute than is nor- mally the case? Mr. McManamy: There is a greater number of bad order cars than normally, which I presume makes the repair problem more acute, but the steps that I have explained have been taken to get that down to normal. There is a difficulty in obtaining men in some sections of the country. We have a shortage of car men and skilled mechanics; and of course under our rule we cannot do as the mines do and offer a bonus to get our neigh- bor's men. We have got to pay them all the same rate and take the sup- ply as it comes. The Chairman: In other words, your bonus is universal? Mr. McManamy: Yes, sir; it is equally divided^ — if it can be termed a bonus. Mr. Callahan: I would like to ask when you stopped paying bonusciP on the different railroads. Mr. McManamy: We have not been paying bonuses to employes since January 1st. Mr. Callahan: I mean among shopmen, one shop against another. The Chairman: That is the information that you wish, Mr. Callahan? Mr. Callahan: My information, Senator, is that that system did pre- vail during the last year, one shop bidding against another on this bonus matter. Mr. McManamy: Shall I answer? The Chairman: Yes. Mr. McManamy: Your information is only partially correct. Certain railroads paid bonuses to their employes for, for instai:ce, a 14 or 12-day service within a pay period. Certain other railroads paid bonuses for various reasons; but on January 1, 1919, all bonuses of every character were cut out and all shop employes are now on a standard rate, so that there is no one shop bidding against another in money pay. The Chairman: Are there any other questions you would like to ask? Mr. Callahan: No, sir. The Chairman: Mr. McManamy, is there anything further? Mr. McManamy: Nothing, sir, that I have to offer. The Chairman: Now, Mr. Morrow, how much longer do you desire? Mr. Morrow: About five minutes. Senator. Senator Walcott: I have heard so much talk about coal barons that I am wondering how in the world there can be such creatures, making 2.9 per cent on their investment? Mr. Morrow; How many of those coal barons can you name, per' sonally? Senator Walcott: None at all. I hear them talked about. Mr. Morrow: Yes, sir; that is just it; but when you come down to locate them individually and personally they are very hard to find because there are not many. Senator Walcott: There is a common impression that there are such neople. Mr. Morrow: True. Senator Walcott: This return on capital invested is to my mind sur- prisingly low, and I am curious to know M'hether or not it can be abso- lutely correct. I want to ask you how this item of capital investment less depreciation, aomunting to 129 odd millions, is fixed? Mr. Morrow: I do not know the details of that, Senator. Senator Walcott: Does that figure represent money that the coal oper- 116 ators have paid out of pocket for their lands, or does it represent an ap- praised value of the lands? Mr. Morrow: I do not knov^^ exactly about that. As I understand it, it is intended to be a correct statement of the capital invested, actually- invested in the property. Senator Walcott: I noticed that the statements you presented are pre- pared by Ernst & Ernst, certified public accountants. You do not know whether or not that is simply an appraisal put upon the land? Mr. Morrow: No, sir; I do not believe it is an appraisal. It is my , understanding that that is the result of their study in the district. It is their report on it. Am I correct about that? Mr. Gardner: That is a study of the investment, made by Ernst & Ernst. Mr. Morrow: They went into the investment features and it has no relation whatever to the capital stock. I am told that in some instances that was the valuation that was. put on the lands as of March 1, 1913, as allowed by the Internal Revenue act. Senator Walcott: I have heard the statement made somewhere that coal operators pay. proportionately speaking, a larjs^er income tax to the Government than any other line of business. Mr. Morrow: That was for the year 1917, T think. Senator Walcott: I think it was stated as to 1918, last year. Mr. Morrow: I doubt that. It may have been true as to 1917. It could readily have been true as to 1917^ As I recall it. the excess profit return in the case of coal under the 1917 revenue law did not make adequate allowance for difTerences in the income in the pre-war period. In the case of bituminous coal the income in the pre-war period, 1912, 1913 and 1914. was very small, down to practically nothing-, just about the interest on the investment, nerhaps, but I doubt if it was even that. So, when it came to taking the return on the pre-war period agciinst the return in 1917. there was a wider diflference in there than there would be for other industries, some of which made 10 or 15 or 20 per cent in the pre-war period as acrainst their 1917 return. 1917, Senator, would not be a fair basis of comparison in any event, because all of the bituminous coal industry doubtless made more money than it ever had made before. That was the period before the regulation of prices went into eflPect, and it is not a normal condition. Senator Walcott: In 1918 this statement shows that the average yield was fiVo oer cent. Mr. Morrow: In this district. Senator Walcott: Of course, there were some companies that made more and some less Mr. Morrow: And some made none at all. Senator Walcott: But assuming thev all made that 6I/2, the industry would probably pav no income tax at all? Mr. Morrow: It would pay a very small income tax in 1917, without any question. Senator Walcott: I am speaking about 1918. Mr. Morrov/: It would pay a smaller income in 1918 than it paid in 1917. \ Senator Walcott: It will not pay any in 1919 if your figures are cor- rect? Mr. Morrow: It will not pay anything in 1919 if that figure is cor- rect. I presume that is true. You see we do not say that the figure is the same for the district. Senator Frelinghuysen this morning asked if we had an advance in cost in the Pittsburgh district. We did have an increase in costs in the Pittsburgh district. That happens to be the district in which the investment is higher. The average investment in coal mines 117 generally is not $6.00 a ton. I do not know what it is. I have not seen any figure — perhaps $2.00 would be nearer correct. Senator Walcott: Are there many mines that are operated where the land is not owned by the company but is leased on a royalty basis? Mr. Morrow: Yes, sir; you have a royalty in your cost account. Senator Walcott: There is no investment in rent? Mr. Morrow: No, sir; there is an investment in the equipment and plant. Senator Walcott: But none in the land at all? Mr. Mor-row: In these cases not in the property. The return on the investment in the land goes to the lessor. The Chairman: Are these prices available for all of the mines in your Association? All of the different fields? You have presented only the Pittsburgh district. Mr. Morrow: On costs? The Chairman: Yes. Mr. Morrow: Senator, the National Association The Chairman: No, I mean the price. Mr. Morrow: Not all of it. It is for most of them. We submitted another of them this morning. Senator Walcott asked that we submit this. I have it here. It can be copied into the record. That is realization, not sales. It is the return on all the coal shipped during six months. Senator Frelinghuysen, we do not have those figures for every dis- trict in the United States, but as I said a week ago, the conditions that are shown by these charts that have been submitted are typical, because the competitive conditions would not permit a man in an adjoining dis- trict to charge much more than the same general level of prices that his neighbors are getting for their coal under like conditions. The Chairman: Are there not some fields in some zones, where they are putting prices up and getting a great deal more for their coal than ^ could be obtained in the Pittsburgh district? Mr. Morrow: There are other districts in which orices are higher than in the Pittsburgh district. The Chairman: I mean excessively higher. Mr. Morrow: I do not know whether they are excessively high or not. I believe if you will notice here (indicating on statement) after Au- gust 27, you will see the entire range of prices up and down The Chairman: I intend to study that tonight. Does it show all the fields? Mr. Morrow: All the fields for which we have reports, currently, and it will cover the great bulk of the production. The Chairman: Is this your weekly report? Mr. Morrow: Yes, sir; this is one that is published weekly. That is the fullest information we have available with respect to prices. It is quite conceivable that you will find some instances there iji which higher prices are being: charged for coal, but the facts are, so far as we have them available, right there in that form. You will find that they range both up and down, high and low. The Chairman: You wanted to finish, did you not, Mr. Morrow? Mr. Morrow: Your fourth question was as to the number of mines in operation in previous years, particularly the years prior to the war. The Geological Survey reports that there were in operation in 1910 6,126 mines producing more than 10,000 tons per annum; in 1911, 6,179; in 1912, 6,022; in 1913, 6,065; in 1914, 5,863. From 1914 to 1918 there are no Survey figures available, but for the year 1918 there were 4,736 mines producing 10,000 tons per annum. In addition, there were 5,888 mines producing less than 10,000 tons. Similar figures as to the number of mines producing less than 10,000 118 tons in the war period are not available, but the tendency in coal mine de- velopment is toward- larger and larger mines. The Chairman: Is that per day? Mr. Morrow: No, sir; that is the total number producing 10,000 tons per annum. These are the number of mines that mine above 10,000 tons per year. The Chairman: All under 10,000 tons are "snow birds"? Mr. Morrow: Perhaps a good many of them are. The Chairman: What does a big "snow bird" produce? Mr. Morrow: I never saw any exact definition of a snow bird. It would depend a little on conditions. The Chairman: You know what I mean — a wagon mine. Mr. Morrow: I know what you mean, Senator. Some would produce a car a day. They only run in these short periods. They might produce from two to three cars a week. The Chairman: Are they figured in that 4,800 mines? Mr. Morrow: Yes, sir; they are included in the 5,888 in 1918, so far as they are known and recorded. The total figure in 1918 was 10,634 mines, the total number open in operation. The Chairman: How many of those mines under 10,000 tons were in production prior to 1918? Mr. Morrow: There are no figures available for them. It is a guess. The Chairman: How many in 1914? Mr. Morrow: They do not show a figure there of less than 10,00o tons. They have no information prior to 1918 in the Survey as to those small mines. We do not know what the number was. There were a lot of them, two or three thousand I suppose, anyway. The Chairman: There are larger mines operating than there were? Mr. Morrow: Fewer larger mines, but they are producing more coal. So the output of the individual mine is greater. The next question was. What bearing has this on car supply? Mr. Gutheim could probably answer that question more accurately than I can, and I will be quite content to accept his answer to that ques- tion. Mr. Gutheim: That would come right down to this, can a railroad with a certain number of cars and a certain number of mines increase the mines by 50 per cent because of the constant demand for coal? The num- ber of cars is the same. You put those cars at more mines, and it takes more switching expense to do it. You collect those loads from more mines, and it takes more switching expense to do it. In the aggregate you get out just as much coal, but having more mines and fewer cars at them you have more car shortage, so that to increase your number oi mines you would get out just the same amount of coal and you would have vastly more car shortage. A situation somewhat similar to that is shown in these reports of the Geological Survey, where, I believe, in the week of July 12, the car short- age was about 80 per cent. In the week of the 15th it was about 15 per cent, and in the next week I think it was something like 20 per cent. Still your production was going up each week. That is probably a reflection of what I spoke about previously when I said that the potential capacity of your mines was going up. In other words you have more mines, the same number of cars and more car shortage, with just the same amount of coal but with more operating ex- pense, for the railroads. Mr. Morrow: I think, Senator, that Mr. Gutheim would infer from that change in the reported capacity of the mines that some of these "snow birds" have had a chance to sell their coal for more money and have opened up. That has quite probably taken place. The Chairman: Are you talking about the small mine situation? 119 Mr. Gutheim: I do not know what it is each year, but I do know that the capacity of the ditierent railroads is increasing fast, particularly in the East. We have no control over that situation this year, whereas, last year, at least in the last six months, a mine could not open and get a sid- ing connection without the consent of both the Railroad and the Fuel Ad- ministration. The Fuel Administration considered pretty carefully whether the coal was necessary or whether it was just a gamble on the market. The Chairman; Have you anything further, Mr. Morrow: Mr. Morrow: Your sixth question was with reference to the extent to which mines are now failing to produce to capacity, and the reasons; what part is due to no market, what part is due to lack of labor and what part to lack of cars; what part is due to other mines' competition; what part to insufficient transportation. Then show a comparison with the same period in previous years. The best information we have on that is the analysis on page 3 of the current annual report of the Geological Survey, which analyzes the ton- nage by causes, car shortage, labor shortage, no market, and all other causes. The Chairman: Where is that? Mr. Morrow: I will hand it to you, Senator. That is the fullest in- formation I know of. It is on page 3 of the report, No. Ill, dated August 30, 1919. The Chairman: The Geological Survey are conducting certain por- tions of this work, but they have not made estimates of consumption. Are you paying for this? Mr. Morrow: We are paying for this. The Chairman: You did not think it important to pay for figures re- garding consumption? Mr. Morrow: On the contrary, sir, we did think it was important to pay for a good deal of the other work that the Geological Survey was doing, but we did not wish to start cut spending $40,000 for it The Chairman: I see. Mr. Morrow: We felt that it was a matter of public concern and it ought to be financed by the Government. We would like just as well as anybody else to have those figures. The comparison with the same period in previous years, so far as the causes of loss of production go — the figures are given in this report. This table will show the production of bituminous coal in previous years and up to date in 1919. This other table gives the production of bitummous coal by months in 1918 and 1919 (handing papers to the Chairman). The Chairman: This will show 95,000,000 tons shortage? Mr. Morrow: It is right here, Senator (indicating). It is also noted on the first page of the Survey Report No. 111. You will notice in the middle of the sheet a table of estimated United States production of bitu- minous coal, total bituminous, including coal coked, 1919-1918, the cur- rent week on the left and the calendar year to date. An accumulative total is run. Up to August 23, the daily average was 239,151,000 tons against 383,383,000 up to the same date last year, which would indicate a diflference there of approximately 94,000,000 tons. The production of anthracite, you will notice, is shown in the second table. We are dealing just with bitu- minous coal. The Chairman: That completes your questions? Mr. Morrow: Yes sir. The Chairman: And the only question that is not answered is in re- gard to the consumption and the estimated needs? Mr. Morrow: Yes, sir. The Chairman: Does that complete your testimony, Mr. Morrow? 120 Mr. Morrow: That is all we have at the present time, Senator. The Chairman: Where are Ernst & Ernst located? Mr. Morrow: I believe their main office is at Cleveland. The Chairman: Have they any representatives in Washington? Mr. Morrow: I do not know. The Chairman: Any in New York? Mr. Morrow: Mr. Gardner, do you know about that? Mr. Gardner: Yes, sir; they are located in New York, and they also have an office in Cincinnati, and one in Pittsburgh. (After informal discussion, oflf the record, the Sub-committee ad- journed until Wednesday, September 3, 1919, at 10:30 a. m.) WEDNESDAY, SEPTEMBER 3, 1919 The sub-committee met at 10:30 o'clock a. m.. Senator Frelinghuysen pre- siding. Present: Senators Elkins and Wolcott. The Chairman : The committee will come to order. We will hear Mr. Saint this morning, representing the Shipping Board, whom we requested to come. Then we will hear representatives of the Westmoreland Company who desire to be heard, if that is satisfactory. STATEMENT OF H. Y. SAINT, HEAD OF THE EXPORT COAL DEPARTMENT, U. S. SHIPPING BOARD The Chairman : Mr. Saint, the committee have requested you to appear before the sub-committee of the Interstate Commerce Committee in order to give us some information regarding the export situation. As I understand it, the Shipping Board at the present time is allocating tonnage for the export trade, and you have charge of that Department in the United States Shipping Board? Mr. Saint: Yes sir. The Chairman : This committee is making an investigation of 'the coal situa- tion in order to avoid, if possible, by legislation or understanding, a coal famine this year and run-away prices. We have taken considerable testimony on the subject of prices and cost, and we are trying to get at the amount needed this year for consumption for the balance of the year, and for next year. We thought that we ought to know something of the export situation, how much coal had been exported and what coal had been engaged for export. I am going to turn you loose on the committee to give us what information you can. Mr. Saint: Senator, I might say, first, that the Export Coal Department of the Shipping Board was organized in the latter part of May this year, and began operations with the first of June, practically. I will give you, just briefly, to start with, the amount of tonnage which the Shipping Board has in the coal trade. On August 13, which was the last date that we made up figures, we had 194 vessels in the foreign coal trade, not including the West Indies, and a total tonnage of 929,684 tons. Would you like to know, Senator, how this was divided as among the foreign countries, to see where our coal was going? The Chairman : Yes. Allocation of Shipping Board Tonnage Mr. Saint: Of that tonnage there was 85,111 tons in the Swedish trade; 235,633 tons was in the Swiss and Netherlands trade. By way of explanation I would say that we are sending our Swiss coal to Rotterdam, transporting it up the river to Switzerland. Consequently our Netherlands business and our Swiss business, in our statistics, are combined because it is all going to the Netherlands. To Denmark, 7,000 tons; Italy, 105,503 tons; France, 138,380 tons; South America, 207,512 tons. I perceive that they have put into these figures the coastwise trade, the New England trade. There were 103,661 tons in the New England trade, and that 121 should be deducted in order to arrive at the total of 929.684 -tons, in order to arrive at the foreign tonnage. To Greece we were sending 26,284 tons; to Portugal, 9,500; Belgium, 10,500; and we have sent one small shipment up to Greenland of 2,600 tons. Senator Walcott : Is this tonnage of ships owned by the United States? Mr. Saint : This is all Shipping Board tonnage, owned by the United States. Senator Walcott : Of course there is tonnage outside of that? Mr. Saint: Oh. yes. Senator Walcott: Have you any figures on that? Mr. Saint : I have not the figures on that, but the Shipping Board is handling, relatively, about 30 percent of the coal trade. Senator Walcott : Foreign and coastwise ? Mr. Saint : No ; that is foreign. Senator Walcott: Just foreign? Mr. Saint : Yes sir ; that is, roughly. The Chairman: The Shipping Board handled 30 percent, confining them- selves entirely to American bottoms? Is that true? Mr. Saint: Yes sir; confining ourselves entirely to American bottoms. The Chairman : You have no control over the export situation in foreign tonnage? Mr. Saint : No ; we have not. The Chairman: So whatever information we procure from you relates, 30 percent to the export trade in coal? Mr. Saint : Yes, approximately that. •The Chairman: Have you any figures covering the whole situation of exports? Mr. Saint : Yes, I have. The Chairman : We will get to that later. Do not let me interrupt you. Senator Walcott: Just a moment, if you please. I understand this 30 per- cent of tonnage owned by the United States, through the Shipping Board, is 30 per cent of the total foreign trade, whether carried in other American bottoms or whether carried in foreign bottoms? Mr, Saint: Yes; that is relatively the figure. I just arrive at that roughly. The Chairman: It is an estimate? Mr. Saint : It is an estimate. Let me explain that this 929,684 tons repre- sents all tonnage which we have on the ocean at any one time in the coal trade. It does not represent the amount of tonnage which we allocate each month to the coal trade. For instance, it takes a vessel leaving the coast, going over to Europe and coming back, approximately 75 days. All that time on our allocation sheets she stands to the coal trade. Consequently, all the tonnage at a given period which we have in the coal trade is represented in these figures. During the month of June we allocated to the coal trade of our shipping 260,830 deadweight tons, and during the month of July we allocated 313,317 tons. During the month of August, our figures not being entirely made up, we allocated approximately 350,000 tons to the coal trade; showing the gradual increase in the amount of tonnage which the Shipping Board is putting into this trade. Now we are taking on at this time a large amount of additional business for Italy. Senator Walcott: These three allocations of June, July and August total 900,000 odd tons ? Mr. Saint: Yes sir; they would practically total 900,000. In other words, it takes approximately two and one-half to three months to make the round trip, so it represents three months' allocations to the trade. As I was saying, we are taking on a large amount of tonnage additional to that, for the relief of the Italian situation, and our allocations will be increased approximately 100,000 tons above the figures which we have given you here. Are there any questions on that part of it. Senator? The Chairman : We are increasing the tonnage under the American flag, are we not? Mr. Saint: We are. 122 The Chairman : That is being increased month by month ? Mr. Saint : Yes sir. The Chairman : Have you any estimate as to the increased tonnage available in the next twelve months? Mr. Saint: I cannot give you any figures on that, Senator, for this reason, that we put certain kinds of boats into the coal trade. We are putting a large proportion of our wooden tonnage these days into the coal trade, plus certain small steel tonnage, plus boats which are larger boats, steel boats. The amount of tonnage which we can put into the coal trade is limited by the character of boat which we have had at any one time and by the pressure which comes upon us from the other trades. For instance, the cotton trade in certain seasons brings a great deal of pres- sure to bear upon the Shipping Board; the lumber trade, the steel trade; and the amount of tonnage which we will have to put into the coal trade will vary from time to time. It is being increased at this time, owing to the tremendous pressure from European Governments upon various departments of our govern- ment and being reflected upon the Shipping Board to relieve that situation abroad. What tonnage we will have eventually in the coal trade when conditions settle down more nearly to normal is only problematical. Senator Walcott: You have been speaking in terms of tonnage and ships? Mr. Saint : Yes sir. Senator Walcott : Can you translate these figures into terms of tons of coal that have been carried out of this country during these months? Mr. Saint : Yes sir, relatively. I have been speaking in deadweight tons. The actual coal cargo tons against dead weight tons was about 20 per cent less Senator Walcott: Twenty percent, less than the dead weight tons? Mr. Saint: Yes sir. Senator Walcott : What was the total dead weight tonnage in the coal trade, in the foreign trade, I mean? Mr. Saint: The total deadweight tonnage was about 86,223 tons. Senator Walcott: 826,223 deadweight tons shipped in the foreign coal trade? Mr. Saint : Yes, as of August 13. It is increasing right along. Senator Walcott: That means, in terms of coal, 660,978 tons? Mr. Saint : Yes. Senator Walcott: I reach that figure by taking 80 per cent of the dead- weight tonnage, -826 odd thousand, roughly speaking. Mr. Saint : That would represent the amount we have afloat at any one time. The Chairman : Is that the capacity on one trip, 668,000 tons ? Senator Walcott: Yes, as I understand it. Mr. Saint: Yes sir. The Chairman : It takes about 75 days to make the round trip ? Mr, Saint: Yes. The Chairman: Every 150 days you would multiply this figure by two? Mr. Saint : Yes sir. The Chairman: But from the time this allocation of ships was made there has not been a chance yet to take a second cargo out? Mr. Saint: The boats which we started out when we organized this depart- ment are now just getting back. Some of them have started on their second voyage already. Senator Walcott. That figure of 660.978 tons of coal is the quantity of coal constantly moving in the United States Shipping Board tonnage in the foreign trade? Mr. Saint : Yes. Senator Walcott: And if that coal is approximately 30 per cent of the total coal going into foreign trade, then, as I figure, we have moving all the time m the foreign trade in United States Shipping Board vessels, and all the bottoms together, 2,203,260 tons of coal? Mr. Saint: Yes; that would represent it in months. Divided into months it would represent about what you have every month. 123 Senator Walcott: If you multiply that by four you would get approximately the annual foreign export movement in all sorts of bottoms? Volume of Exports Mr. Saint : Yes. Last year our foreign business ran 21,000,000 tons, and of that Canada got sixteen. The Chairman: Does this include Canada? Mr. Saint : This does not include Canada. Canada's coal is carried practically all by rail. Senator Walcott: Every three months there would be 2,203,260 tons of coal moving in the foreign trade, and every year four times that. Mr. Saint: That is a little strong. The Chairman : Do you figure that the export trade will amount to about 7,000,000 tons? Mr. Saint: The export trade, so far this year, Senator, is a little behind the export trade of last' year, owing to the dropping down of our Canadian trade; but the foreign export trade has increased over last year. That is, we are carrying more coal abroad and carrying less to Canada and less to Cuba. The Chairman: How much did we export last year? Mr. Saint: We exported, all told, 21,051,979 tons. The Chairman: That included Canada? Mr. Saint: That included Canada. The Chairman : Deduct the Canadian exports from it, so we can arrive at how much was transported overseas. Mr. Saint: I do not know that I have the exact figure here. Senator. The Canadian is approximately 16,500,000 tons. The Chairman: Then we exported last year approximately 5,000,000 tons? , Mr. Saint : Yes. The Chairman: This year we will export 7,000,000 tons or over, according to your estimate? Mr. Saint: Yes; I think by the time the year is up we will. The Chairman : The amount exported has, therefore, not a very serious effect on American needs? Mr. Saint: No, it has not. The Chairman: What countries are in great need of coal at the present time? From what countries come the demands? Mr. Saint: Well, there are demands from practically every European country. Much to your surprise, I might say that we have had demands from the British Isles; demands from Scandinavia, from France, Switzerland, the Netherlands, Denmark, Italy, Greece, Portugal, North African countries ; but the greatest pressure right at the present time is from Italy, seconded by France. The Chairman : What are the causes creating this demand, if you will mention the production that has been destroyed through the war, the destruction of the mines and also, I presume, the labor situation? Mr. Saint: The European situation is due to the falling down of the pro- duction in England. England was the great exporting coal nation before the war, and her exports have dropped down from, I think, 67,000,000 tons to 23,000,000 tons, approximately. Italy got the great bulk of her coal from England. France got a very considerable amount. The northern neutrals got their coal mostly from England, and South America got a great deal of her coal from England. In addition, England kept up practically herself the bunker- ing situation of the world. Now, with her coal exports falling down, she is trying to keep up her supply of bunker coal, due to the fact that her nationals own the bunkering companies, and she is trying to supply certain coal to South America in order to keep her hold on that market. The Chairman: What db you mean by bunkering coal? Mr. Saint : Bunkering coal is the coal shipped to bunkering stations through- out the world to supply the world's shipping. 124 The Chairman: In this connection I want to read into the record an editorial in the Washington Post of September 3, entitled "Plain Talk to the British : "When plain speaking suits his purpose, Mr. Lloyd George is not the man to mince his words. Probably not since Henry VII ceased to hector and brow- beat his parliament has such a tongue thrashing been given to the people ot England as that administered to them by their present prime minister during his recent three hours' speech. He had, it is true, a good text, and it must be said that he certainly made the most of his opportunity. When we remember that he has been under terrible fire and that he is battling for his whole political future against a powerful combination of foes, we cannot but admire his courage in tackling so boldly such appalling truths. ^ . . , t i j "Staggered by the fearful cost of the war to Great Britain and Ireland, which shows a total of $200,000,000,000, by an adverse trade balance of $4,000,000,000, which will probably go speedily to $5,000,000,000, and by a national debt swelled from its pre-war standing of $3,205,000,000 to $39,000,000,000, the premier saw only one way of saving his country from economic ruin, of preserving its very existence in fact, and that one way is an increase in produc- tion. He was able to show that, except in agriculture alone, the output in everything else has decreased. He attributed this falling off in large part to the shorter hours of labor. He complained, apparently with reason, that, whereas it had been argued that the reduction in working time would not involve a reduction in output, the result, on the cotitrary, proved that the output had been cut down almost in the same mathematical proportion. "In proof of his contention he instanced the coal-mining industry. The production of coal this year would, he said, be 200,000,000 tons, as against 287,000,000 before the war, although 30,000 more miners are now employed than were employed in 1914, and the ton of coal which cost $2.50 in 1915 costs $6.50 in 1919. He believed that there had been intentional slowing down of production, and he emphasized what he called 'the dangerous and fatal fallacy' that the less men worked the more work there would be for others. "Deterred by his experience in the recent strike of the Yorkshire miners, the prime minister declined to accept a proposal for government operation of coal mines and other mineral resources, but he advocated the principle of reorganization, amalgamation and unification, so as to reduce working expenses and give the workman a voice in the' controlling of the policy. "On the whole the word picture of the economic future of Great Britain, as drawn by its official spokesman, is pessimistic in the extreme. The speech may spur some lazy individuals to activity, but we do not share the idea that the British people will not extricate themselves from their troubles." Mr. Saint, I read that in order to show in a brief way the situation in England. You have stated that England is taking part of our coal Mr. Saint: No Senator, let me correct you. The Italian Situation The Chairman : Then I misunderstood you. Mr. Saint: We have had applications for tonnage to carry coal to England, but we have refused to allocate any tonnage for that purpose. The Chairman: If any of this export coal for which you are furnishifig tonnage are we relieving the situation for any other nations, any other mari- time nations, so that we are carrying the coal in American bottoms for them and they are utilizing their tonnage for their general merchant marine, carrying other merchandize? In other words, are they taking advantage of the situation so far as our tonnage problems are concerned? Mr. Saint: Senator, I cannot answer that question as to what they are doing with their tonnage. I can say to you this, that it was the understanding that England was to take care of the Italian situation, I believe that conclusion was reached at Paris during the economic conference there ; but England has radically failed to take care of the Italian situation, which is shown by these figures. 125 The Italian imports of coal from England before the war were approximately 10,000,000 tons. Last year England sent to Italy approximately 4,000,000 tons and this year she is, up to date, doing very little better. That leaves between four and five million tons of coal to be supplied to Italy by other nations, and we are practically the only nation which can supply that coal. Consequently, we are relieving England to the extent of whatever coal we are sending to Italy, because that as supposed to be her part of the settlement over there, that she was to take care of that situation. The Chairman: Is Italy carrying any of this coal in her own bottoms? Mr. Saint: Yes sir; I understand that Italy is carrying some of this coal in her own bottoms, and that the Italian High Commission in this country has chartered a number of vessels of other governments to carry coal to that country. Just to clarify .the English situation and to make the figures I have given you more exact, in 1913 England exported 77,307,000 tons of coal. This amount decreased until, in 1918, she exported 34.430,000 tons; and it is estimated, due to the increased hours of labor which went into effect in the middle of July and the decreased efficiency in operation of her mines, that she will drop this year to approximately 23,000,000 tons. If we could get' our foreign shipments up to approximately 1,000,000 tons a month, bv the end of this year I think we would be reaching a maximum possible figure. The Chairman : Did I understand you to say that England sent Italy 4,000,000 tons last year? Mr. Saint : Yes sir ; she sent Italy 4,000,000 tons last year, and she is sendiing this year at a rate a little better than that. It may be coming up to 5,000,000 tons. However, I doubt it. The Chairman: What did she agree to send this year to take care of the Italian situation ? Mr. Saint: She agreed to take care of the Italian situation, as we got the reports from Paris. That was the understanding. The Chairman: Is she utilizing her tonnage for other purposes? Mr. Saint: Supposedly, she is. Senator, although I do not know to what use she is putting her tonnage. I do know that she is trying to take care of her coal situation in South America which we consider our natural market in preference to these other countries. The Chairman: Are we relieving England at our expense in any direction, in your opinion? Mr. Saint: Well. Senator, that depends upon how you look at the export trade. If you mean expense in the sense of taking coal that should go to our own people, I do not believe that sufficient coal is going abroad to particu- larly injure domestic situation. If you look at our foreign shipments as a development of a legitimate foreign trade, which will mean a very great deal to this country in future years, I think that we can well send what we are sending now, and considerably more, abroad at this time. The Chairman: Can we continue to hold that trade in the future when England's production increases? Mr. Saint: I think there is a considerable part of it that we can hold. I d® not anticipate that England is going to get back on her feet for several years to come. Her own best posted men admit that it may be a matter of years before she gets on her feet ; and from private investigations which the Shipping Board has had made through its London Office, we are convinced that it will be a number of years before England can get back on her feet into the coal business — if ever, in the meantime, by making time contracts abroad, I think our people can inherit a very considerable part of this coal business. The Chairman : I want to understand this South American situation. Are we surrendering the South American market to England by relieving England of her obligations to furnish Italy with coal? Mr. Saint: No, I do not think so, Senator, because although England'has made an effort to protect her South American situation, she has not 126 been able to do so to any very great extent, and the coal which is going into South America today is, in very large proportion, American coal, although very much of it is carried in foreign bottoms. In other words, from the Shipping Board's standpoint, for instance, the tremendous pressure upon us from Europe is leading us to put vessels into the European coal trade, that otherwise we might send to South America; but we do this realizing that our coal, at the same time, is being carried to South America and is protecting that market for our coal men, although not carried in our bottoms. In other words, we are not losing the trade. The Chairman : Is not that trade at the present time bought and sold to South America through England's agency, and in the event of England's pro- duction increasing, could she not simply control the trade and ship her own coal, when she has a supply, by reason of the fact that she is making the negotiations with South America? Mr. Saint: Yes, that is true. Senator, in very great measure. The English are in control of the South American situation, as they have been in control of practically the whole world's coal situation. Now, we are preaching to our coal men every day that they should take advantage of the present situation to not alone absorb the coal trade, but to absorb the facilities of the coal trade abroad. The Chairman : The Shipping Board in its relations with the English maritime authorities is in entire accord in regard to this, is it? You have close relations with them, and are working in co-operation with them? Mr. Saint: We certainly are not. Senator. The Chairman : Do you feel that their position is in any way unfair to America? Or that there is active competition at this time, when we want to relieve the entire world situation? Mr. Saint : No ; I cannot say, Senator, that there is anything unfair in their position. I think they are doing simply what they can to protect them- selves. I do not think they are doing anything other than we would do under the same circumstances. The Chairman : Let me put that in another way : You feel, as controlling this situation through the Shipping Board — the American facilities — that it is our duty, if we have a surplus, first to relieve the situation that exists in the world; is not that your position? Mr. Saint: Yes. The Chairman : And you are disregarding any elements of commercial advantage in doing that? Mr. Saint : Not all the elements of commercial advantage, but we are taking into consideration at all times. Senator, the situation or the conditions of the people in these various countries. In other words, we are trying to distribute our tonnage not alone equitably among American exporters, but equitably among the countries that need coal. The Chairman: You feel that that is the broadest policy to pursue? Mr. Saint: I do. The Chairman: How much coal is needed in Europe, in your opinion? Mr. Saint: There have been a great many sets of figures prepartid on that subject. Senator. The Chairman : I wish, Mr. * Saint, if you have any compiled figures you would insert them in the record, for the information of the eommittee. Mr. Saint: I will be very glad to. Senator, and I would also be very much pleased if the Shipping Board will permit me — I will ask their permission to place in your record a copy of a report prepared by our London office on the English situation. It really is the best report that we have gotten. The Chairman : Just take that and hold it for release by the Shipping Board, Mr. Reporter. Mr. Saint: I will furnish another copy of that later for the committee. The Chairman : Very well. Mr. Saint: Now, answering your other question, as to the need of Europe for coal, we have prepared some figures of our own in the Shipping Board's 127 coal department, and we have made up a total of approximately 62,463,000 tons as the world's shortage. The Chairman: Is thajt the annual shortage? Mr. Saint: Yes, which must be made up from somewhere; presumably, from this country. The Chairman: Is that the accumulated shortage, or just the shortage during the calendar year? Mr. Saint: No, that is the shortage per year, estimated upon present con- ditions. I could give you some detail figures on that, if you wish, Senator. The Chairman: I think the committee would like toliave them, briefly. The World's Coal Shortage in Detail Air. Saint : We have figured that the total amount of coal available for export in countries other than the United States, is 97,723,000 tons; that the total needs of all the countries are approximately 179,511,000 tons. That leaves a total to be supplied of 81,788,000 tons. Now, substracting the pre-war exports of the United States, 19,325.000 tons, leaves an additional amount U) be supplied of 62,463,000 tons, which I gave you to start with. Now, this shortage, we figure, is made up of 48,300,000 tons in Germany. Germany loses a large portion of her coal territory, and at the same time, burdens of 23,0OO,00i3 tons of exports are imposed upon Germany by the peace treaty. Taking those things into consideration, we have made up that total. This includes the whole world, of course. We figure that Canada will need 16,853,000 tons; China, 3,135,000 tons; France, 17,000,000 tons ; Belgium, 12,000,000 tons ; now, those figures may be a little high for Belgium, because late reports show that she is getting her mines back in shape more rapidly than was anticipated. She is making great progress in that direction; the Netherlands, 8,000,000 tons. I have these other countries all figured out. There is a long list here. The Chairman : I suggest that you simply put the list into the record. Mr. Saint : Yes. I will submit later the figures for these other countries for the record. The Chairman : I want to ask you, Mr. Saint, what Germany's sources of supply are, outside of the Saar Valley. Mr. Saint : Well, she had the Silesian fields, which now go over to Poland, and I do not know how she describes her other districts. The Chairman : From those sources, including the Saar Valley, Germany exported 23,000,000 tons, did I understand you correctly to say? Mr. Saint: No; her pre-war exports were 34,880,000 tons. Now, her estimated post war production is 91,500,000 tons ; and she is compelled to export, under the peace treaty, 23,000,000 tons. The Chairman: Is that in addition to the loss of the Saar Valley? Mr. Saint: Yes. The Chairman: And the loss in the Silesian mines? Mr. Saint: Yes. The Chairman: Well, how can she do it? Mr. Saint: She cannot do it. That is the reason we figure 48,300,000 tons she has to get from somewhere. The Chairman : Then, you figure we have got to let her have coal, or the other countries will have to? . • Mr. Saint: She is asking us for coal right now. Senator Elkins : To what extent does oil cut into those figures ? Mr. Saint: At this time? ■ Senator Elkins : Yes. Mr. Saint : Well, these figures are all exclusive of the oil business. Senator Elkins: Oil is displacing coal, is it not, to some extent? Mr, Saint: It is figured that it will, to some extent, but I have not seen any reliable figures that would indicate how much the oil business is liable to displace coal. Where we are experencing some decrease is in Cuba. Now, our exports to Cuba have fallen off about one-half, due to the development 128 of the oil industry in Mexico; and, of course, the consumption of coal for bunkering purposes the world over in future years is going to be radically affected by the development of oil-burning ships. Senator Elkins : Is much oil being sent up into New England? Mr. Saint: At this time? Senator Elkjns : Yes. Mr. Saint: As to that I cannot tell you; as to whether oil is cutting into the coal trade there or not. Senator Elkins: Is oil cutting into coal in South America? Mr. Saint : To some extent. Just how much, I cannot tell you. The Chairman : Have you any figures that you can furnish the committee on that? Mr. Saint : Yes, I think we can develop those figures. The Chairman : Then, I will ask you to do that, at your convenience. . Mr, Saint: Yes. The Chairman : Are you familiar with the prices that are now being paid for American coal by the European ijiarket? Mr. Saint : I can give it to you relatively only. I have that knowledge in this way, Senator : I ask all the American exporters who obtain ships from the Shipping Board, to furnish us with copies of foreign orders, before we make allocations. This is going into the record, and I would like to explain the reason for that. It is due to the fact that we want to know where coal is going, and for what purpose it is being used abroad. We would like, as far as possible, to rehabilitate the industrial situation in the countries where we are sending coal, and, consequently, we regulate to a certain extent to whom our coal, carried in Shipping Board vessels, goes ; and through these orders, I can give you the price of coal. The Chairman : Can you furnish us a range of figures, prices — I presume, at the point of embarkation — asked by the various coal operators in the country? Mr. Saint: The c. i. f. prices. The Chairman: Yes. What do you mean by "c. i. f." prices? Mr Saint: That is the cost of the coal to the man on the other side. It includes the cost of insurance and freight— c. i. f. The Chairman: Is that the way the coal is invoiced? Mr. Saint : That is the way the coal is quoted abroad ; itis quoted c. i. f . The Chairman : Can you give us the cost at the mines ? Mr. Saint: I could not give you the cost at the mines. I have no way of obtaining that. The Chairman : You could figure the cost at the mines by a deduction of freight to the shipping port, and then adding freight and insurance charges, could you not — sub'stracting that from the total invoice cost? In other words, you could give us a rule to figure it by? Mr. Saint: I cannot tell always. Senator, what this coal costs at the sea- board on this side, because the price quoted in the orders which come under my observation is a. c. i. f. price lumped; say. $34 or $35 per ton laid down in Italy, and so much laid down in France. The Chairman : Well, I can supply the marine rate of insurance. Mr. Saint: I can supply you with our freight rates abroad. The Chairman : If you will give us the range of prices to the various exporting points, we will do the figuring. Mr. Saint : All right. The Chairman: Including, of course, your freight rates. What is the freight rate to Italy? Mr. Saint: $26.50 is the basic rate to the west coast ports. The Chairman: Is not that rather high? What was it prior to the war? Mr. Saint : I do not know that. Senator. I want to answer your question, though, as to whether it is high. You must realize that our rates are based upon a round trip for that vessel. If you know the shipping situation todav, you know that there are very few of our boats which are coming back full, and we have to figure on coming back in ballast. 129 The Chairman: You cannot get a cargo back? Mr. Saint: They are not in position to export yet, very much. That is the reason we are concerned in developing their industries — to get them on a basis where they can furnish return cargoes. The Chairman: Is that higher or lower than the freight rates during the war ? Mr. Saint: That is practically the same. We have been sending coal, abroad for a considerable time. Just how it compares to rates during the war, I can- not tell you. The Chairman : Could you answer that question from your office records ? Mr. Saint: Yes, I could get it. The Chairman : You will kindly supply that to the committee? Mr. Saint: Yes. The Chairman: You 'might tell the committee now the ports that you are shipping export coal from. Mr. Saint : We are sending coal out of Baltimore, Philadelphia, and Hampton Roads ; and we are sending it abroad alj the way from Oxelosund, Sweden, clear around to Pyreus, Greece ; and the rates vary from a basic rate of- $22.50 at the nothern ports, to $26.50 at the southern European ports. Of course, the rates vary from those figures, but those are the basic figures. The Chairman: If this coal is to be supplied to Germany, will Germany have to pay practically $34 a ton for coal that she supplies under the peace treaty? Mr. Saint : Unless she takes her own coal, which amounts to the same thing, it would seem to me. The Chairman : How is she to get it, Mr. Saint, with the loss of the Silesian mines and the .Saar Valley mines? Mr. Saint : I cannot even dream. The Chairman: IToes it not become a very important part of the solution of the industrial problem to make these stipulations against Germany so that she can carry them out? Will not her failure to produce that coal have an important bearing on the whole industrial situation? Mr. Saint : Germany's coal industry undoubtedly is the basis of her industrial prosperity, and if these burdens are too heavy for her, it must produce an ill effect over there. I might say, by way of explanation, that the peace treaty provides that Germany shall furnish Italy with 8,000.000 tons, France 8,000,000 tons, and Belgium with approximately seven and a half million tons. I think that is the figure. The Chairman : Under the treaty provisions, does she get any credit for the amount of production in the Silesian and the Saar Vajley fields? Mr. Saint : Not that I recall, Senator. The Chairman : Under the terms of the treaty, she has to provide 34,000,000 tons. Where is she going to get it from? Mr. Saint: No, 23,000,000 tons. The Chairman : Yes, 23,000,000 tons. The Westphalian field is the only field she has left, is it not? Mr. Saint: That is the only large field that I recall, Senator, although I have seen lately that she has been developing some new fields ; but how much she can develop, I cannot tell. The Chairman: Is it in the ground? Mr. Saint: When you say "Is it in the ground," do you mean whether the desposits are there? The Chairman : Yes. Mr. Saint: Oh, undoubtedly the deposits are there; but whether it is a practicable proposition to get them out, in quantities so they can supply from year to year these requirements, I cannot say. I am not sufficiently versed in their situation. Senator Elkins : Are they running night shifts in the coal business there now? Mr. Saint : That I cannot say. 130 Exports Not Stinting American Consumers The Chairman: What I am leading up to, Mr. Saint, is this: The whole situation indicates an unusual demand for coal. The United States must supply that by export. Your added facilities will undoubtedly give you mcreascd tonnage. Now, are wc not facing this situation; that by reason of that demand we will exhaust—not "exhaust." but there will be a greater supply of coal taken from our American production, at prices which arc more attractive to the coal operators than through the domestic market? Mr. Saint: That thing, Senator, is controlled entirely by the available ton- nage. There is only so much tonnage which at this time we can put into the coal trade. I might say to you that I have had offers enough made to my department to put the whole of the Shipping Board tonnage into coal, but, of course, that is an impracticable thing to do, and under no conditions wiW be done, although a larger amount of shipping may be put into coal from time to time as the pressure abroad becomes greater. The Chairman: Are not panic prices practically offered for coal for export? Mr. Saint: No, sir; I would not say panic prices. I think a considerable portion of the coal which is going abroad was contracted for sometime ago, and it probably was bought at figures less than the prevailing figures today. The Chairman: The European market is trying to get coal now from America, is it not? Mr. Saint: Yes. The Chairman : And they are bidding for that coal ?• Mr. Saint: Yes. The Chairman : And it is more advantageous for the American operator to furnish the export trade than it is the domestic trade, is it not? Mr. Saint : No, I do not think that necessarily follows. The Chairman : Well, you have stated that Europe needs 62,000,000 tons, and if the tonnage were available we could supply Europe with coal, and if we did we would deprive our own market of that amount. Are we not facing a situa- tion of European competition with our domestic needs? Mr. Saint: Yes, to a certain extent, but the quantity that is going abroad. Senator, is not sufficient of itself at this time to radically increase prices. It is one element entering into the price situation. The Chairman: Have you any control over the price situation? Mr. Saint : We have not. The Chairman: Are these freight rates apt to come down in the near future? Mr._ Saint: I can only give you my opinion, and that is that they are liable to continue for sometime to come. The Chairman: In the Shipping Board operations do you figure to ship at cost, or do you include a profit and figure on a profit for the government oper- ating the ships? Mr. Saint: I cannot tell you, Senator, what profit has been made by the Division of Operations with our merchant marine, but I have understood that it is being operated at a profit. The Chairman: Who can give us that information? Mr. Saint: The Comptroller of the Shipping Board. The Chairman: Who is the Comptroller at the present time? Mr. Saint : Let me see, Mr. Nevin resigned. I do not recall the gentleman's name. He is a man here from the District of Columbia, I believe. The Chairman : You have a report, have you not, a special report made of the shipping rates before the war, during the war and at the present time a special report? ' Mr. Saint: No, I have not made up a report of that kind. Senator. Ihe Chairman: You have no figures of that kind? Mr. Saint: No. The Chairman : Could you give us a comparison of the rates, shipping or freight rates before the war, during the war, and the present shipping rates? Mr. Samt: Do you mean on coal? 131 The Chairman : On coal, yes. Mr. Saint: I think we could make that up, Senator. The Chairman : Have you anything further, Mr. Saint, to add to your testi- mony? Mr. Saint: No, I do not thmk so, Senator. The Chairman: The committee thanks you very much for commg here and giving us this information, and if you will supply the other information asked for we will be very grateful to you. Mr. Saint: Yes, sir. , r i . i j i The Chairman: Is there a representative of the Westmoreland Coal Com- pany here? Mr. Hutchinson : Yes, sir. STATEMENT OF S. PEMBERTON HUTCHINSON, PRESIDENT OF THE WESTMORELAND COAL COMPANY The Chairman: You are the president of the Westmoreland Coal Company? Mr. Hutchinson: Yes, sir. The Chairman: Have you heard the testimony that has been given by Mr. Morrow and others representing the National Coal Association? Mr. Hutchinson: Only part of it, Senator. If you will permit me, I would like to say this : I wr«)te a letter dated yestoday, which probably your Secre- ary has, calling attention to two subjects that I thought my testimony would he of some assistance regarding. One was the car situation in our district, and the other was the labor situation. If you will permit me I would like to have a correction made in that letter. We stated that the loss from shortage of cars during a certain period was 40,000 net tons. That should have been 60,000 tons. The Chairman: To whom is the letter addressed? Mr. Hutchinson : It is addressed to you, sir. The Chairman : Would you mind reading it into the record. Mr. Hutchinson: (reading) : "September 2, 1919. "Hon. J. T. Frelinghuysen, "United States Senate, "Washington, D, C. "My Dear Sir: You may remember that you granted me an interview in Washington on Thursday last. I took the liberty of calling your attention to the fact that our district, that is, the Irwin District, had suffered all summer from 1 shortage of cars. From the latter part of June to the first of September we lost about 60,000 net tons in production through this cause. This is especially serious to the trade that we serve, that trade being manufacturers of coal gas, steel work, and certain European customers. "I feel that the statements issued by the Railroad Administration are too general and in trying to cover the entire bituminous coal field give a mislead- ng impression. The rules for distribution of cars to the different mines, fur- thermore, are not sufficiently elastic to take care of the ever-varying conditions which arise in the daily operation of the railroads. "I have no criticism to make on the operating officers of the Pennsylvania Railroad, from the Regional Director to the yardmasters, I think they do their bast, but as stated above the rules for distribution as formulated in Washington rnder the personal direction of the Director General of Railroads, are not ufficiently elastic. Here for instance is an illustration of what I mean. These cases are taken from our daily reports. July 24, 35 system cars on tracks near imtown, and 64 between Shafton and Irwin; these cars arrived at 7 A. M., July 24th, and were held for distribution until July 25. On July 30, 28 system :ars standing on 'Mud Siding,' held up for distribution on the 31. The ques- lion naturally arises, why were these cars held when the mines were calling for cars and had to shut down before the regular closing hour for lack of cars. 132 The reason is, the car distributor alleged, that under the rules he could not give our mines any more cars that day because we had received our allotment, con- sequently the railroad equipment stood idle for 24 hours, which, of course, was a loss of revenue to the railroad as well as to the coal company. These two cases are only samples of a number of instances." I took the matter up vigorously with the Regional Director at Broad Street Station, and I wish to say that as soon as the facts were made known the practice was stopped. I would like to say further; I would like to emphasize the fact that we get all the assistance that we can reasonably expect from the railroad people. 1 think they are doing their best but they cannot, of course, do anything beyond their power. Now, as to labor. We are about 40 percent, short of the proper number of miners and mine workers. Our mnies have a capacity of 18,000 tons per day. We are barely averaging 10,500. A point which I have not yet seen brought out in this investigation, or any other, is the fact that a large percentage of the coal mined in this country is mined by immigrants from southeastern Europe. Thi/ supply has been cut oft. The English-speaking workman will not become a miner. In this country he can find more attractive work even if the wages are not quite so high. It is a fact, I believe, that very few of the children of immigrants who are miners become miners. They have the advantage of the American schools and they easily get work in our expanding country. I am going to take the liberty of saying to you that I do not think your committee will accomplish its purpose unless it examines into the conditions in the various bituminous coal fields as to car shortage and labor. I do not think that a general statement averaging, so to speak, the conditions in the different fields, will be of much value; in fact, I think it will be actually mis- leading. I am sorry that I differ from my friends, the President and Vice- President of the National Coal Association, who I understand hold different views. Now, I took the liberty of making those suggestions to you. The Chairman : The committee is very glad to hear your suggestions. Now, won't you kindly state to the committee how they can arrive at or procure this information regarding the labor conditions and car shortage, and what more can be done than an effort to study the situation and see if it cannot be relieved through the agencies that control it. Mr. Hutchinson: If your committee wants more detailed information about the labor conditions and what will probably result from a continuation of restricted immigration, I have our general manager, who can tell you more in detail about the labor situation, as it affects us, and I think is affecting all the. fields where foreign labor is employed. As far as the car situation goes I do not kno\y. Senator, that there is very much more to be said. I think the Rail- way Administration are alive to it now. They certainly ought to be, and with that the decrease in the number of shop cars and better movement, the car situation ought to improve. The Chairman : How much coal do you produce in your mines ? Mr. Hutchinson : Well, we are averaging now, getting out now, at the rate of about, this year, 1 think about 3,000,000 tons. The Chairman: How many miners do you employ? Mr. Hutchinson : We have altogether today employed about 2,500 or 2,600, of whom about ^,400 are miners. The others are the tipple men, the men that work on the surface and the hoisting engineers and track men and the day laborers. The Chairman : What nationality are the miners ? Mr. Hutchinson : Well, they are Russians, Poles, Bohemians, Italians, and a few Greeks ; mostly Italians. I think probably the Italians are the largest. The Chairman: What proportion are foreigners of foreign birth? Mr. Hutchinson : Well, I could not answer that question. I could not tell 133 you how many are of foreign birth or how many were born in America, but I think perhaps our general manager could tell you that better. The Chairman : Well, I will question him in that direction. Do you export any coal? Mr. Hutchinson : Yes, we export coal. The Chairman: How much have you engaged this year for export? Mr. Hutchinson: We have actually exported this year about 100,000 tons up to the first six months. Just how much we exported in August I cannot answer offhand, but I will give you that information. The Chairman: Do you mean from the first of this year? Mr. Hutchinson : From the first of January. The Chairman: About 100,000 tons? Mr. Hutchinson : Yes. The Chairman: Really a very small proportion of your production? Mr. Hutchinson : Oh, yes. The Chairman: What are you getting for your domestic coal at the mines? Mr, Hutchinson : Well, of course, the price varies. It is sometimes less than the prices fixed by the Fuel Administration. The Chairman: What is the highest price you have gotten for prepared coal? Mr. Hutchinson : That I would like you to ask our sales manager, because I have not got that figure in my head either. He is here and he could tell you all about it. The Chairman: Do you know what price you have gotten for mine run? Mr. Hutchinson : Well, we do not sell much mine run. ' The authorized price was $2.35, and I think it runs along about that. The Chairman: Have you gotten over $2.35 for any mine run? Mr. Hutchnison: I do not think so. We sell very little mine run. We sell screen, lump, and slack. The Chairman: What have you gotten for slack? Mr. Hutchinson : I will have to ask you to ask Mr. Seyms that too. The Chairman : Have you considered the question among your employes of endeavoring to retain them in your employment by urging them to remain in America? Is there any missionary effort being conducted along those lines? Mr. Hutchinson : Oh, yes ; we have done that ever since the shortage of labor began to manifest itself. The Chairman: Under what nationality are they returning? What nation- ality is returning to Europe rrfainly? Mr. Hutchinson: The Italians mostly. The subjects of the old Austrian Empire are too uncertain. Of course, they are mostly Hungarians. They are too uncertain yet about the conditions at home, but the Italians, I think the greater number of Italians is going back. The Chairman: Can you tell me what percentage you are losing?. Mr, Hutchinson : I will have to ask you to ask our general manager that. The Chairman: Are they naturalized or not? Mr. Hutchinson : I do not think so. The Chairman: Have you any system? Do you employ any system in your mines to naturalize them and induce them to become American citizens? Mr. Hutchinson : No, we do not make any special effort along that line. The children, as they grow up, of course, are Americans, The Chairman : I know, but take an alien, an Italian, if he returns he takes his children with him, , Mr. Hutchinson : Sometimes he hasn't his wife and children here. Very often he has left his wife and children on the other side. That is the reason why so many of them are going back; they want to see what has become of their wives and children. The Chairman : Have you made any effort to ascertain for them through government forces, the condition of their families further to induce them to continue their operations in your mines and remain here and make their home here? 134 Mr. Hutchinson: No. , • The Chairman: Do you feel that that in any way would be valuable in retaining your employes? t .u- i Mr. Hutchinson: I do not thnik so, Senator. That class of men, 1 Ihnik, would look on your efforts with suspicion. They might possibly be satisfied if one of their own countrymen did it, but I think if we did it that class of man would look on our efforts with suspicion and feel that we were trying to deceive him and trying to keep him here against his will. The Chairman: What do you believe is the reason for their desire to return? Is it entirely the domestic reason? Mr. Hutchinson: Oh, no; I think some of them want to see what has hap- pened. Possibly some of them may have heard of some little property or other that has come to them and they want to look at it. Some of them want to retire. They can live over there on very much less. They have made a good stake for them with the very high wages that have been prevailing recently. The Chairman: What is the average amount that the miner has saved? Three or four thousand dollars? Mr. Hutchinson: I could not answer that question at all. The Chairman: Do you think that the difference in the rate of exchange is attractive to them? Mr. Hutchinson: Well, I should think that that might influence them, yes. The Chairman: A man who has a thousand dollars would have a thirty to forty percent, advance under the rate of exchange, would he not? Mr. Hutchinson: He would have an advance. The Chairman : What position are the labor unions taking in regard to this return of the aliens? Mr. Hutchinson : I do not know regarding that. The Chairman: Are these men members of labor unions? Mr. Hutchinson: In our field? The Chairman : Yes. Mr. Hutchinson: Oh; I suppose some of them are, yes. The Chairman: What percentage? Mr. Hutchinson : That I could not tell, I never asked them. The Chairman : Have you any other statement to make ? Mr. Hutchinson : No, sir. STATEMENT OF MR. A. P. CAMERON, GENERAL MANAGER OF THE WESTMORELAND COAL COMPANY The Chairman: You have a statement to make to the committee? Mr. Cameron : Well, I had a statement, but the statement has been covered largely by our president. I wish to say, however, that we are short of men. That is the all-important matter today, but we are not giving the men whom we do have sufficient work, because we are short of cars, and if we had more cars we could get more coal out. We lost a great many miners during the war. They went to the munitions factories where there were higher wages paid than could be earned at the mines. Then we lost quite a lot of our young Americans and young foreigners that went to war. They are returning to this country, but they are not return- ing to the mines. They are returning to the factories and the places where there are possibly more advantages along social lines than ever existed in the mines. A great many of the young foreigners have had visions of things that they did not know of before; in other words, a young foreigner who has been about the mines all the time, well, that was his world; that was his outlook, that was his vision. He has been out in the world ai^d comes back and finds there are bigger places than the small mining camp, and bigger opportunities for advance- ment elsewhere. That is one reason why we are not adding to our amount of 135 labor ; we are not adding, and I do not know how we are going to add to the amount of labor; I do not know how we are going to get them. As Mr. Hutchinson stated, the young Americans do not mine coal. You can get them to work as drivers, as motormen, as electricians, or as tipple men, or what we call overhead men, but you can not get them to mine coal. They prefer to do the other jobs about the mine. This is also largely true of the young foreigner. He is becoming an Ameri- can very fast, and our mines are very old ; that is, they are a long distance underground. Our nearest working place is from one to three miles; that is, under ground. The Chairman : Do you mean that the miner has to go from one to three miles before he arrives at the point of operation? Mr. Cameron: Yes, sir; after he has dropped down the shaft. That is not contemplated with any degree of eagerness by some of our younger fellows. They do not .like it. They do not like to go into it. We always drew our supply of labor from the immigrants that came to this country. That has been cut off. The electrical factories and the industrial plants are taking those young men and, unless we conserve what we have, the miners we have, and get the greatest efficiency possible out of them by keeping them constantly at work, we cannot increase our coal supply. On the matter of cars, Mr. Hutchinson gave you several instances. We have got a number of instances of that kind, but there is one particular thing I would like to speak about, namely, the time that the cars are placed at the mines for loading. The railroad may allot us what they call our allotment for the day, but if it does not get there in time to load that day, it is no use tq" us. That is, we have lost the efficiency of those miners for that day, if the cars are not there at a certain time, namely, seven o'clock, if they do not arrive until eight or nine o'clock the miner is not going into the mine that day. If we get him in there probably he will stay, but if the cars are not there to dump the coal we cannot use him and he cannot use himself, he is of no use. He must have the cars to load the coal. The Chairman : Then you believe that the most crucial condition is the supply of cars ? Mr. Cameron : Yes, sir ; absolutely. The Chairman : In other words, if you had a supply of cars, a lot of these difficulties would be eliminated? Mr. Cameron : Well, we would keep what men we have fully employed ; their efficiency would be high and it would probably attract some other men to that particular employment, but if they see the men going to work in the morn- ing and coming home and not earning a full day's pay, it is not attractive at all. We had 260 hours at our mines in July during which we had no cars. That is, the tipples were standing during the working period from seven to four ; those were periods at which there were no cars at the tipple, and that caused us a shortage of about 20,000 tons. In August we had 314 hours, which caused us a shortage of 40,000 tons. So that we lost 60,000 tons, the 60,000 tons that Mr. Hutchinson told you about, in the two months on account of the car shortage. If we are to get, as I stated before, full efficiency out of the miners, we have to relieve the situation and get all of the coal that the miners in this country are capable of producing, if we want to do that, the railroads must give us cars all the time, and it must not be fixed at a certain rating, the allotment must not be handled the way it has been, in that it does not get to us in time to be loaded on the particular day. The Chairman : They will not leave them there ; they will not leave the cars there? Mr. Cameron : They do not get them there. They will- leave them there, but they will count them on the next day's rating, and that day is gone if we do not load the cars that are put there. If they are put there before nine o clock m the mornmg of the 15th they are counted on the 15th and they must 136 be loaded on the l5th; in other words, we have a reduced allotment to that extent. The Chairman: And then you are one day behind? Mr, Cameron : Yes, sir ; and the miners have gone home. That is all I have to say, sir. The Chairman : I would like to ask you something" about this labor situa- tion. How many men are you short now at your mines? Mr. Cameron: We are about 600 to 800 miners. The Chairman: Short? Mr. Cameron: I am speaking of miners. The Chairman: You would not need any more miners if you were short of cars, would you? Mr, Cameron : No, certainly not. The Chairman: The whole thing depends upon the car shortage? Mr, Cameron : Yes, sir. The Chairman: About this exodus from the mines of the foreigners — what is happening to these young soldiers? Any of them coming back at all? Mr. Cameron : Yes, they are coming back, but they are going to the electrical works and the railroads and shops and places where they are out in the sunlight all day. They never knew what it was before. The Chairman : What do you do to furnish sunlight when they are out of the mines? Mr. Cameron: What do we do to furnish sunlight? The Chairman : Yes ; what are the living conditions ? Mr. Cameron : Well, I think the living conditions about our mines are equal to anything anywhere in the State of Pennsylvania. The Chairman : I understand that during the war the Coal Administration paid considerable attention to the living conditions and to other conditions in the mines, at the mine settlements, in regard to amusements, club houses, and things of that kind. What do you do in regard to that? Have you an inspec- tion of living quarters? Mr. Cameron : Yes, sir. The Chairman : You furnish living quarters ? Mr. Cameron : Yes, we furnish that and we furnish nurses. The Chairman : I am simply asking that in order that you may go on record as to what is being done, because I think when anyone is engaged in employ- ment of that character, it conduces to efficiency to take a little interest in the men. I would like to have you tell us what you do in the Westmoreland Com- pany along that line? Mr. Cameron : Well, we do everything that we can to make the men comfort- able at their homes. That is the first thing. Then we have halls at each of the mines where we have moving picture shows, and attractions of that kind. We have nurses and we have visiting inspectors at the hSuses. That is, with refer- » ence to the nurses, we send them around to look after the children of the womenfolks, to see if there is any sickness among them and to take care of them. And then we have what we call settlement workers, that teach them Ameri- can ways of doing things, cooking, saving, and things in the way of sanitation, things of that kind. We try to keep them as nearly as we can, try to take care of them as near as we can according to the methods usually employed with a view to taking care of these people in the mines. The Chairman : Mr. Hutchinson felt that there was no inspiration to these men to become American citizens, that their families were on the other side and really their hearts were. Is there any effort made in the mining districts to induce these people to become American citizens and to bring their families here ? Mr. Cameron: Yes, sir; we do that all the time through our mine superin- tendents and mine foremen, and we usually have a foreigner who speaks the 137 different languages, that works among them, but the exodus at this particular time is on account of the relatives that they have left over there. The Chairman: Well, that is perfectly natural. Mr. Cameron: Yes, sir; and the money that they have earned. They have the money. A man may not have his family here or his wife here so you can realize that he wants to be where his family is, and he has a nice little bit of money saved up and he feels that he can go back to Italy and spend that money and produce much more for it than he can in this country today ; or he can buy a little farm. He has visions of what he left there, and he can go back and buy a little farm and live independently for the rest of his life. The Chairman: It is the universal opinion among all these races that come over here that a great opportunity awaits them. Mr. Cameron : Yes, sir. Well, I would not say all. The Chairman : Well, I will not enumerate the different ones. Mr. Cameron: I think the Hungarian comes here to stay; that is, the pure Hungarian. I think he comes here to stay. The Chairman: I thought the Italian felt that way too. That has been my experience. Mr. Cameron: Well, the Italian does to a large extent. The northern Italian, the Tyrolean and people of that kind do. The Chairman: But the Sicilians are anxious to get away? Mr. Cameron: Well, they do not stay anywhere. The Chairman: What suggestion would you make in regard to trying to improve this labor situation? Mr. Cameron : I cannot suggest anything, sir, I do not know where we will get them from. Senator Elkins : How about mechanical mining? Mr. Cameron : We have mining machines of all kinds. Senator Elkins: Are you trying to perfect those? Mr. Cameron : Yes, sir ; we are going as far in that direction as any other company in the United States and are constantly on the alert for any apparatus that would increase production. We are buying shoveling machines and drag- ging machines and mining machines, and chain conveyor machines; anything that anyone sells we buy. The Chairman : I do not know anything about coal mining. I am learning more day by day, but you spoke of the conditions in some of the shafts, the point of operation being three miles away. Mr. Cameron: Yes, sir. The Chairman : Is it impossible to sink new shafts nearer the vein that is being operated? Mr. Cameron : Not always, but the railroad is there. That is the factor. It is not possible to get the railroad back there three miles on top of the hills. It is possible, of course. There is nothing impossible, but it is not practicable ' to do so. Here is the railroad and here is the plant. Our territory stretches away in different directions from the shaft or slip, or mine, or whatever it may be, and, as I say, our mines have been in operation for forty years, and they are a little distant from the railroad, and as we work on back, of course, we have to take men out in the morning and bring them back at night. We convey them by trolley in the mine cars. The Chairman: It would be impossible to sink a new shaft and run a switch to that shaft? Mr. Cameron : Yes, in most cases it would be impossible, or rather, imprac- ticable. The Chairman : In regard to prices, do you know anything about prices at your mines? Mr. Cameron: Sales? The Chairman : Yes. Mr. Cameron : No, sir ; I do not. 138 The Chairman: Someone else can testify to that? Mr. Cameron : Yes, sir. The Chairman: Have you anything else to say? Mr. Cameron: No, sir. The Chairman: We thank you very much. Is the sales manager of the Westmoreland Coal Company here? Mr. Seyms : Yes, sir. STATEMENT OF MR. G. B. SEYMS, SALES MANAGER OF THE WESTMORELAND COAL COMPANY The Chairman: You are the sales manager of the Westmoreland Coal Company? 'Mr. Seyms : Yes, sir. The Chairman: How long have you been employed in that connection? Mr. Seyms: About two years and a half. The Chairman: You have a statement to make to the committee? Mr. Seyms : Why, I believe the committee wishes to know about the prices prevailing, and in that we do not give our prices out — we are a little more independent, perhaps, than some of the other operators — I would like to say that our prices practically coincide with the prices of the Pittsburgh District. They are somewhat on the average lower than the government prices fixed a year ago. Our highest price would net about $3.53 a net ton. That is, for" export business on which there is considerable risk for demurrage. Our coal is all sold at port; the others provide the vessels. The Chairman : Do you mean demurrage for railroad transportation or marine transportation? Mr. Seyms : Railroad transportation. We have had a great deal of trouble trying to get our coal to meet the vessels that have been allocated by the Shipping Board, and we have been subject to demurrage on that account. The Chairman : Well, that is the reason you charge $3.53 for coal ? Mr. Seyms : A little higher for our export. The Chairman: Is that prepared coal? Mr. Seyms : Yes sir. The Chairman: What do you get for that coal in the domestic market? Mr. Seyms : We contracted for all our coal last April, last January and last April. We have practically been out of the market since that time, with the exception of this export business which we took on practically at that time. The Chairman : In other words you are out of the domestic market and in the export market; is that it? Mr. Seyms : No, we are out of both markets. The Chairman: Because your coal is contracted for? Mr. Seyms : Yes. The Chairman : What do you contract for your domestic coal similar to that which you export? Mr. Seyms: The price? The Chairman : Yes. Mr. Seyms: $2.60 per net ton. The Chairman: And you get nearly a dollar more on the ton for your export coal? Mr. Seyms : Yes sir. The Chairman : What proportion of coal is domestic and what proportion is export at the present time? Mr. Seyms : Ten per cent. The Chairman: Ten per cent export? Mr. Seyms : Yes. The Chairman: What are you getting for your slack? Mr. Seyms: We get $2.35 on the contracts for coal in January, and $2.10 on the contracts in April. 139 The Chairman: Isn't that rather high? Mr. Seyms : No, sir. Senator Elkins : What does it cost to produce it? Mr. Seyms : I think our costs are practically the same as were given by the Pittsburgh operators. We have the same seam and very much the same conditions. Senator Elkins : What was that : Mr. Seyms : About $2.05. or $2.06, I should say. I do not know it exactly, but it is about that. Senator Elkins: Does that include royalty? Mr. Seyms : No sir. Senator Elkins: Where do you ship to your export trade? Mr. Seyms: Why, we are shipping to France and Italy; to one of the French railroads, and to our friends in Italy who bought coal prior to the war. During the war the Fuel Administration issued a blanket order against us, even though we had contracts, not allowing our high grade coal to go out of this country. I might say that the price of $1 a ton higher for export business is taken by the exporters in that they are very glad to get that price for high grade coals, in that when you add $26.50 freight to the price of coal, ten per cent, alone would be $2.60 that they can pay for our coal on the other side and have it just as economically as a coal ten per cent poorer. The Chairman: Of course, if you have got a better product than anyone else you are entitled to a better price for it. Mr. Seyms : Well, I mean that the foreigner himself has bid. Freunghuysen States Position of Committee The Chairman : I think that the committee ought to state its position at this point. The committee wants to be very fair with producers of coal in this country. I personally feel, and I think the committee feels — I have talked with some of them — that their only obiect this year and at this hearing is to see that there is a proper supply of coal produced for the needs of United States, and to urge in a broad way all the agencies to produce that coal, to do everything in their power. They also feel that the coal operators are entitled to a reasonable profit and a reasonable profit only; and that if there is any evidence that by reason of car ol rabor shortage and the unusual conditions any advantage is being taken of the situation bv any coal operators in this country, without a desire in any sensational way to punish them or do anything antagonistic to them, the committee shall feel it their duty to see what can be done to right any wrongs. I want that distinctly understood. We are all working to one end, and that is to meet the problem, and we do not want anybody to sell coal at a loss. We feel that the conditions which increased the cost of coal in regard to the price asked, we think that those conditions should be covered, but when it comes to a price fixed which is excessive, if there is any evidence before the committee, the committee feels that thev must in some way do something to correct that wrong. I am saying this to you because you have brought out the necessity of charg- ing a higher price for export coal. I just want the postiion of the committee understood. So that if, as the hearing goes on, there should develop any evidence, which the committee has not yet, of profiteering in any way the committee shall feel it its duty to take notice of that condition. Mr. Seyms : Those prices I speak of, Senator, were made when there were plenty of cars and plenty of coal. This price was made last April. The Chairman : Let me ask you this question : Suppose by reason of the shortage of cars, by reason of labor conditions, you felt that it was a greater risk to sell export coal, would you advance your price above that, or does that give you enough leeway to cover all contingencies? 140 Mr. Seyms : Unless the cost should go up, demurrage costs by the railroad should go up— and they are talking about it, demurrage costs, and they are talking about it in order to try to keep the cars in more active service to the seaboard ports — why, that would certainly be sufficient. The Chairman : I might be a little slow, but I do not understand it. For instance, you ship this from the mines to Baltimore, we will say — you ship to Baltimore? Mr. Seyms : No, sir, Philadelphia. The Chairman: Where are you apt to be penalized for demurrage? Mr. Seyms: Right at the port of embarkation. We have the Shipping Board allocate to our friends vessels. Our friends tell us these vessels will be placed there on a certain day. The Shipping Board changes those vessels quite fre- quently and substitutes another vessel. We start our coal. Our coal is at port and there is no vessel there. Then it is subject to demurrage. The Chairman: It is the fact that by reason of the inefficiency of one government agency another government agency penalizes you; is that it? Mr. Seyms : Yes, sir. I might add that last Friday there was some talk in Mr. McDonald's office of the Pennsylvania Railroad trying to obviate that situation by permitting shippers to ship a certain tonnage to ports, brought about because we ten or fifteen companies may have export business, and they may have vessels all assigned to theme at Philadelphia and they receive the capacity of the port. There is no harmony between the two administrations. The result is there is too much tonnage for Philadelphia and perhaps not enough at Baltimore. The coal starts. Embargoes are placed and there is congestion of the cars, fewer cars for distribution. Now, they intend to ask all shippers to give intimations as to the tonnage at the different ports, and prorate that tonnage if it is in excess of the particular port. The Chairman : If there were an agreement between the Shipping Board and the Railway Administration that deliveries were on time, but that tonnage was not provided by the government agencies when engaged, if there were a provision whereby relief could be afforded, if it were shown that you were not guilty of the delay, what could you ship your coal for, export? Mr. Semys : Well, there is no reason why the coal should not be The Chairman: Possibly you do not want to answer that at this time. It may be an unfair question, but it would be considerably less, would it not? Mr. Semys: Yes, we could make a reasonable profit for considerably less. The Chairman: Have you anything further to say? Mr. Seyms: I wish to bring out another point. I have spoken about the cars at tide. I wish also to state that this year I was forced by three of our largest buyers in New England to sell or to ship via railroad the coal into New England. It takes a longer, time for the cars. Last year I insisted that that coal be shipped via water. Several of our smaller companies, several of our smaller buyers, have it shipped by water sending it to the Wilkesbarre piers at Providence, and the Mystic wharf at Boston, and then the cars are distributed to the smaller operators at those points Now, when we shipped it that way it kept the cars going between our mines and tidewater, a very short run and a very good run. The price is something like, well, I should say. a dollar or two dollars difference, depending on whether It IS that port or whether it is a little inland The Chairman: The freight rate you refer to? Mr. Seyms :-in preference to the all-rail route. This has made the buyers Therl 'l.' on rail coal. It seems to me that the prices to tide ports there should certainly be put on a parity with the now present vessel ratel which have gone up considerably in the past year T.^n! Chairman: Let me understand this; I have not got it through my head Mr. Seyms Ye" sir"" ' ""^" 141 The Chairman: Your contention is that the Railway Administration, or your customers Mr. Seyms (interposing) : No, the Railway Administration makes the rates to Boston in competition with the water rates, as they were prior to the war; they are lower than the rates to Worcester, for example. Now, the vessel rates have gone up considerably because of the increase in wages paid to vessels, and the very much higher cost of vessels, all of which is more or less brought out by reason of higher rates laid down by the Shipping Board and things of that kind. There is no comparison between all-rail routes into New England for delivery at ports and the rail-and-water delivery. The Chairman: Well, you want to ship by water? Mr. Seyms: We ought to ship by water for the benefit of the cars, yes; but you cannot make our customers up there buy that way this year. The Chairman : Well, now, it is the customers and not the Railway Admin- istration that is at fault. Mr. Seyms : The customers do not want to pay a dollar or two dollars more a ton. The Chairman : I wish Mr. Sherburne, who is on the Boston Committee, were here. That is a very important and influential committee. He will be here to testify next week. I wish you would bring that point up here and be here if it will be convenient. If it is not, I will question him, but it seems something should be done in a missionary effort to change the attitude of those buyers up there, and to enable you to get the coal, if they are 100,000 tons short, as he has stated. I am very glad you brought the point up. Is there anything else you wish to say? Mr. Seyms : No, sir. The Chairman : Thank you very much. We will now take a recess until 2 :30. (Whereupon at 12:45 p. m. a recess was taken until 2:30 p. m.) AFTER RECESS (The hearing was resumed at the expiration of the recess.) STATEMENT OF MR. C. E. LESHER, IN CHARGE OF MINERAL FUEL STATISTICS, UNITED STATES GEOLOGICAL SURVEY The Chairman: Mr. Lesher, have you been present at any of the hearings? Mr. Lesher: I was present last week and yesterday morning. The Chairman: You represent the Geological Survey, do you not? Mr. Lesher : Yes, sir. The Chairman: Under Secretary Lane? Mr. Lesher: Yes, sir. The Chairman : You are engaged in the compilation of figures and estimates regarding the coal conditions in the country? Mr. Lesher : Yes, sir. The Chairman : Will you state for the benefit of the Committee the nature of your activities at the present time? Mr. Lesher: We are now collecting, as they have been collected every year for thirty-five years, the official statistics of coal production in the United States on an annual basis, on both bituminous and anthracite; also coke. Beginning in the sumrner of 1917, we inaugurated the system of weekly reports on pro- duction, which we have maintained and are now maintaining, and a copy of which you have before you. The Chairman: How do you base these estimates? Do you have a full survey, or do you have ju^t a partial survey and, by a system of duplication, arrive at the figures? Mr. Lesher: For production, ok the first page of our report we show each week the estimated coal production of bituminous coal in the United States. Those figures are based upon the number of cars of coal loaded by all the 142 railroads in the United States and arc determined absolutely independently of any reports from operators. j • The Chairman: Then you have a complete survey of coal production? Mr. Lesher: I consider it is accurate within possibly 2 percent, week by week. It has proven out in the last two years by summmg the total of the week's estimate within practically 1 percent, of the actual fmal figures. The Chairman: In other words, you figured last year's production at 585,000,000, did you not? Mr. Lesher: Yes, sir. The Chairman: What was it? Mr. Lesher: 579,386.000— within 1.1 percent. The Chairman: Therefore your estimates are more than reasonably accurate? Mr. Lesher: Yes, sir. As to coke, we estimated it within a fractioi of 1 percent. They are practically exact figures. The Chairman: Were you connected with or under the Fuel Administration during its activities? , Mr. Lesher: I was detailed to the Fuel Administration in October of 1917 and served through the life of the Administration as Director of the Bureau of Statistics. The Chairman : During that period did you estimate the consumption of coal in the country? Mr. Lesher : Yes. We did more than that : we estimated in advance what we expected the consumption to be in order to determine the allotments of coal that the Fuel Administration placed first on the producing fields to supply, and upon the consuming states in order to advise them on what they might expect in the way of coal. The Chairman: Have you any means of ascertaining the amount of coal consumed up to the present time in the calendar year? Mr. Lesher: No, not with the accuracy that we can determine production, because we can, by getting reports from less than two hundred railroads, deter- mine the production within lYi per cent. To get the consumption it would require practically a census of the United States to determine the figure within that degree of accuracy. We did not even attempt that during the Fuel Administration. During the Fuel Administratioji work we found it necessary to know how our program of distribution was working out. We established a budget of so many million tons in a certain state to come from a certain field or fields. We could not know how nearly accurate that might be. Conditions were changing all the time. So, in order to be sure that we were not too greatly under or over estimating, we secured figures of consumption and stocks in the hands of industrials, retail dealers, and public utilities, weekly. If the stocks were increasing uniformly, our budget was approximately evenly divided. If the stocks were not increasing uniformly, our estimate of requirements and consumption were too low for that spot. The figures that really served ^as the index of what we were doing were the stocks. We arrived at a figure of what the consumption was, for instance, by industrial and domestic uses — we canvassed retail dealers and industrials, but we could not begin to get everybody ; there were so many of them and so small that we had not time and it would not have paid to have made that sort of a census. By determining the larger items, such as export, bunker, railroad fuel, all the steel plants, which consume a very large tonnage, and the coke plants, we arrived by difference at a figure which gave us the consumption by these various classes of users, from all of whom we could not get reports. The Chairman : You have estimated production this year as being 95,000.000 tons less than last year, have you not, up to the present time, approximatelv ? Mr. Lesher : A little more than that ; about 96,000,000. The Chairman : Have you any means of determining the amount of coal that will be needed for consumption between now and the first of next April? Mr. Lesher : It can be estimated. 143 The Chairman: In what manner? ^ , ^ ^ , , Mr. Lesher: By direct inquiry ot all of the largest consumers and by dnect inquiry of a percentage of the smaller ones. . , r The Chairman : Have you any facilities for procurmg those figures m your department? , ^ , , , , Mr Lesher: I have the records of those to whom I would send such an inquiry. I have no funds for clerical assistance for doing such work. The Chairman: There are no funds available? Mr. Lesher: No. ^ , ^ r -i i . i The Chairman : Is that by reason of the fact that the Congress failed to make the necessary appropriation for that special work? Mr. Lesher: Yes, sir. , , • 4. The Chairman: Are there any other funds under blanket appropriation that might be utilized for that purpose? Mr. Lesher : Not in our Bureau, not available funds. The Chairman : You are under the direction of the Secretary of the Interior, Mr. Lane? , • , . r i Mr. Lesher: Yes, sir. I am in the Geological Survey, which is one ot the bureaus of the Department of the Interior. The Chairman : Do you think that Mr. Lane might, in view of the exigency of the situation, be able in some manner to' make an inquiry to that character? Mr. Lesher : I really could not say, for I do not know how the Department's appropriation, separate from ours, is handled, or how much it is. I have no knowledge of it whatsoever. The Chairman: Have you had any conversation with Mr. Lane on this subject at all? Mr. Lesher: Not on this particular subject. The Chairman : Do you think it would be advisable for the chairman of this committee, or could you take up with him the question of procuring that information? Mr. Lesher : I will, if you so desire. The Chairman : I should very much like to have you do it ; and let me know whether anything can be done in that direction, if you please. Mr. Lesher: That is, whether he has in some lump sum an appropriation available and sufficient to carry out such an investigation? The Chairman: In other words, can he procure funds through your Depart- ment to estimate what the consumption of coal will probably be in this country between now and the first of April. Mr. Lesher : I will ask him. I do not entertain any hopes, however. The Chairman : I think we ought to try, if we can, because I think it is verv important for us to know the situation. The committee would like to have you voluntarily make any statement regarding the testimony which has been given during the time that you have been here, and any impressions you have gained which might help in this problem whiclr confronts us. Mr. Lesher : If it has not already been explained, I might say with reference to the statistics of operating conditions on page 3 of our weekly report that we are now getting reports from about 65 to 70 percent, of the production, which are considered absolutely representative of conditions. We would have the figure larger if we had m.ore money to follow up the work. I have heard a good deal about labor shortage here. I would like to say that our statistics of labor shortage might more properly be labeled, where we have labor shortage and strikes, in two columns, "Labor Troubles." It repre- sents a loss in running time of the mine, with the men that are there. The capacities that we deduce from these figures of full-time operation are capacities with the present labor force, and I have no reference to the lack of men that any company or district may have below the number of men they might use. I personally do not feel that at the present time, nor perhaps this winter, will labor shortage as such— not this labor shortage, but lack of men that could be used — be a factor in the situation. It undoubtedly will affect many companies. 144 In times of car shortage a mine depends upon the rating that it has with the railroad, and the more coal that a mine can load in eight hours the higher the rating. It therefore behooves every operator to have the most men that he can get in order to have his rating as high as possible and get thereby a larger percentage of cars. . . I do not believe that we are any shorter of men now than at any time in the past two years. The number of men engaged in the mining of coal appears from the statistics I have, covering about three years, to be lower in the middle of the summer than in the middle of the winter at any mine, practically. We had last year, according to the report of the operators, 615,000 men engaged in the production of bituminous coal, excluding the force of coke workers, compared with 603,000 in 1917. Some districts had less last year than in the year before. Allegheny County, Pennsylvania, had less men in 1918 than it had in 1917. That is in the Pittsburgh district, mainly. But the State of Pennsylvania had more than it had the year before. The total number of iTren is not greatly different, if at all different, from either 1918 or 1917. It may change later. But it is certainly evident from these statistics that the labor supply that is now with us is ample to produce the coal that we require, whether it be 500,000,000 tons or 550,000,000 tons, and that the labor shortage is a matter that is internal as between districts and com- panies, and not a national question, in my opinion, at this time. The Chairman: You mean it is local and not general? Mr. Leshcr : Yes. The Chairman : Have you any further observations to make ? Senator Elkins : Has oil displaced coal to any great extent? Mr. Lesher : I cannot say quantitatively. I do know it has displaced coal in the Atlantic and Gulf Seaboard, and it is tending to encroach further upon the use of coal. I had an inquiry but recently from a company that desired to know the conditions in New England, because they were about to determine where to put distributing stations all over New England for fuel oil. I did not have the information in that detail. They stated they wanted it for that purpose. The Chairman: What is the cost of oil as compared with coal for fuel? Mr. Lesher : At present the price of fuel oil is very much cheaper — imported Mexican oil. I have not in mind the actual comparison. It would depend upon the port or the location and, in fact, upon the freight. Fuel oil is at a low price now. Coal is higher than it was before the war. The Chairman : Senator Elkins, you know the conditions in the West Vir- ginia field. Mr. Lesher is of the opinion that the labor shortage is local rather then general, and that there is sufficient labor available to produce the necessary coal this year for consumption. Senator Elkins : They cannot produce it in our section. The Chairman: Have you any questions to ask Mr. Lesher in that regard? Senator Elkins: What section has plenty of labor? The Chairman : He explained that it was due more to the conditions Senator Elkins: Shifting, you mean? The Chairman : Will you explain it again, please. Mr. Lesher : My point is this. If you will show me a section that is so low- on labor that it has no car shortage, that they have only enough men to load the cars that they can get now, then they are comparatively short of labor. Senator Elkins : They are starting up our mines and they cannot get enough labor in nine mines to run one, well. That is what I know personally about it. I do not know whether the cars will keep up with it. We are short of cars, any way. Mr. Lesher: Would you get any more coal if you had a hundred thousand more men ? That is my point. Senator Elkins: You mean it is held back because of cars. Mr. Lesher : At the present time that is the truth. Two months ago or three months ago nobody bought coal. Senator Elkins: The steel plants were all shut down. After the armistice 145 was signed the business went flat. Now, when it starts up, you cannot get men enough for the mines. Mr. Lesher : We have men enough to load all the cars that are available. If you would get a steady supply of cars you might run more coal, but we have not men enough to start a mine, hardly. The Chairman : I think the testimony we have had shows that there is a shortage in almost every section. Mr. Lesher : Yes, and the testimony we had a year ago was that every section was extremely short of labor, but we got out 586,000,000 tons of coal. (Informal discussion took place which the reporter was directed not to record, after which the following proceedings occurred:) The Chairman : Mr. Morrow, can you state what the record shows about immigration ? Mr. Morrow : It shows that in the last five years, up to June 30, 1919, the average number of immigrants coming into the country, deducting the outgoing number from those coming in, had been about 126,000 per year, and that in the last year there was an exodus of 98,000, whereas in the five preceding years the average had been 726,000 net gain to the country, or a difference of some 600,000 per year, those five years, as against the last five years. Senator Elkins : The testimony of the Westmoreland Coal Company showed a shortage of labor. Mr. Lesher : For instance, in West Virginia, in 1917, there were 88,422 men employed in the mining of bituminous coal; in 1918, 89,530. I will reiterate what I stated a minute ago. that there are less men in the mines on the first of July than on the first of January. For Doctor Garfield I made a canvass of the labor situation beginning at six month intervals, January 1, 1917, before the war, and six month intervals thereafter, and carried it through to January 1, 1919, which showed in every field, practically, as I remember it, less men in the same mines on July 1 than on January 1. But they got back up by January 1, somehow. I do not know how. But the men came back. As further showing what I have in mind, we will take the weekly production, week by week, through the period that we have the statistics for, commencing in October, 1917, when they were fairly complete, and divide the total production by the percent of operating time. In other words, you might say the number of hours per week worked by the men, will give you a figure that will represent what the}^ might have done, theoretically, if they had worked every hour of the week. Senator Elkins: What prevents them from working every hour of the week? Mr. Lesher : I will come to that in a minute. If you take this statement, we will have what you might call a theoretical potential capacity. In other words, if all the mines in the United States produced 10,000,000 tons in a week and v/orked 50 percent, of the time, three days a week, the theoretical figure for their total production if they worked six days a week would be 20,000,000. To obtain such a figure week by week — and it varies within limits — you will find it is as high now as it was in the fall of 1917. You could not have such a high figure if 3^ou did not have as many men working now as you had then. There is hardly a time when there is not a labor shortage at some mine in some dis- trict. They want more or they want different men. But considered nationally, I do not believe that we are in any danger whatsoever of a labor shortage this fall and winter, so far as coal is concerned. There is enough labor to produce the coal that is required if we can get it to the consumer. You asked me what prevented their working every hour of the week. If it has not already been introduced into the testimony. Senator, it is given in detail on the third page of this report, field by field, in percentages of losses by causes. We recognize four causes, car shortage, labor — which we have subdivided into labor shortage and strikes — mine disability, and no market. Senator Elkins: What is the cause at this time? Mr. Lesher : The last report showed 56 percent, of the full time operation averaged — that is a weighted average — 44 percent, lost. Of the 44 percent, loss, 146 257 car shortage, or, more exactly, railroad disability; 9.4 labor trouble from strikes; 2.3 mine disability; 4.8 no market, and 1.8 no cause given. Senator Elkins : Do you think the labor all shifted down to one locality? Mr. Leshcr : Not by any means. Senator Elkins: The testimony shows that they are very short of labor, and you say that it does not exist. Where have they gone? Mr. Lesher : I do not know where they have gone, but I have here figures that I would not like to put into the record, but that I can give to the com- mittee, since they are from our confidential records. The Chairman: Do you want the stenographer not to put it in the record? Mr. Lesher : I can use the figures but not the names. 1 will not read the names, but you may have them. The Chairman : Very well. Mr. Lesher : There are three coal companies, large companies, in the eastern territory. One of them reported in 1913, 4.529 men ; in 1914, 4,821 men ; in 1915, 4,186 men; in 1916, 3,618 men; in 1917, 3,638 men; in 1918, 2,823. That company is very much below the prewar labor supply. Senator Elkins: Those companies are in the same district? Mr. Lesher : Some of them are. They have mines in several districts. Another company reports 11,179 in 1913; 12,297 in 1914; 6,261 in 1915; 10,649 in 1916; 10,237 in 1917, and 8,663 in 1918. They have less by one-third than they had in 1913. Senator Elkins: The capacity gets greater each year, does it not? Usually a mine, when it starts off, cannot produce as much as it can later. Mr. Lesher : These companies are so situated and so managed that I imagine they can control that ^ Senator Elkins : A new mine, when it is first opened, cannot produce anything - like an old mine. Mr. Lesher: No. The third company reports that in 1913 it had 14,539 men; 15,322 in 1914; 13,056 in 1915; 16,381 in 1916; 15,148 in 1917, and 12,857 in 1918; each of them showing less than they had in 1916 and less than they had in 1917 and the preceding years. Those are large companies. Senator Elkins : That shows a labor shortage. Mr. Lesher :" It shows labor shortage in those companies, provided their development is the same Senator Elkins: Where has the labor gone? Mr. Lesher : To other mines in the same district, because the districts report- ing show those divergencies in totals. I have given you the total for the United States— more men in 1918 than in 1917, the smaller mines. Senator Elkins : But still a great many of the different districts show a labor shortage. Mr. Lesher: The individuals certainly do. Any one of these three companies is entitled to claim it is short of labor, because it is. Senator Elkins: It cannot be individuals. Mr. Lesher : But they are in the field, and the total number in the coal fields is not different. Senator Elkins: Which field has increased then? If certain fields have decreased, as the testimony shows, which field has increased? Mr. Lesher: As I understand it, figures have been presented for different companies. Senator Elkins: They are scattered over all the section that is complainino- about shortage of men. ° Mr. Lesher: And they have a shortage, according to these figures Senator Elkins: Where are the men? Mr. Lesher: In the districts. Senator Elkins: Which districts? Mr. Lesher: In the same districts. 147 Senator Elkins : I do not know about that. Certain districts are complaining about a shortage of men, and the testimony has shown it, so far, in certain districts. Mr. Lesher: The figures of potential capacity show that the total number of men is not affected. These bigger companies have less men, and they have gone to smaller mines. We have more mines and smaller mines. As I remember the figures — I will not take the time to hunt them up — whereas production increased in 1918 over 1916, 16 percent., the rating of the coal mines of the country increased about 40 percent. It required men scattered in more mines to bring about that condition, just as it required greater and more widespread distribution of cars by the railroads to supply those mines. The Chairman : If we had enough cars always, the supply of labor would be kept in employment, would it not? Mr. Lesher : The country would not absorb that much coal if the men worked five and a half days a week — not at the present time. The Chairman: If we had 96,000,000 tons less production than last year? Mr. Lesher : Yes. The Chairman : What the committee is very anxious about is not to run into a condition where there will be a coal famine and industries will have to close. I do not know anything about coal mining, but it seems to me that if we could produce a good deal more coal every week it would remove the chances of that situation arising in cold weather. Therefore, looking theoreti- cally at the whole situation, you may say there may be a number of miners at the present time to take care of it, but are there enough miners to take care of the whole production needed if the cars are there? Mr. Lesher: They can. What will happen a year from now I do not know. There may be a greater emigration from our shores of coal miners, or some- thing like that. I do not have any hesitancy in stating that there is enough labor available right now — the reports of the operators themselves show it— to produce more than the most desirous would ask in the way of production, if other conditions would permit. Senator Elkins: Then it is all up to the car supply and the car movement? Mr. Lesher: At the present time it is a transportation disability. If con- sumers had bought coal for next winter last spring, they would not face that condition. The transportation was there, then, but they did not take it. They are asking for it all in a bunch. The Chairman: Do you know anything about the distribution of coal at all? Mr. Lesher: Yes, sir. The Chairman: You have heard the testimony as to the mine costs. Take the coal used by an industry, we will say, in Philadelphia. What is the load that the coal has to carry after it leaves the mine, in costs? Mr. Lesher: It has to carry the freight rate. The Chairman: How much is that? Mr. Lesher: I do not know the freight rate; I do not recall it. ,u The Chairman: That is what I was trying to get at. I wanted to trace the load. Mr. Lesher : I have not those figures in mind. houIe^^e^dngT^" ' bituminous coal used to any great extent for Mr. Lesher: Yes. mealitis^uf'"'^"' ^^^^ ^^"^^^^^^ Purposes-that is what the term Mr. Lesher: Yes. purpos'es'^p\T"apltkpe7ye"r?' '° '''""''^ Seating The a^irm,n" WhT- '""""■y °' seventh-tenths of a ton. States? What is the present estimated population of the United 148 Mr. Lesher: I have taken 110,000,000. It is about 75,000,000 tons of bitu- minous coal. The Chairman: For domestic heating purposes? Mr. Lesher : Yes. The Chairman: Domestic and other purposes? Mr. Lesher: Yes; that includes the heating of office buildings and things of that nature. The Chairman: And you arrive at that by taking seven-tenths of a ton per capita? Mr. Lesher (interposing): No; I arrive at seven-tenths by dividmg by 110,000,000 population. The Chairman: Has your experience in distribution in the last three years indicated to you that that is a safe estimate? Mr. Lesher: It is a little high, I think, if anything. I have a map of this kind that would show that, byt I do not have it with me. This shows the industrial consumption per square mile of bituminous coal (indicating paper). The Chairman: Do you have a similai* map for domestic coal? Mr. Lesher: Yes, per capita of bituminous, but I have not it here. I can furnish it to you, however. The Chairman : I notice most of that is in the eastern country. Mr. Lesher: That is less than 100 tons per square mile (indicating). The Chairman: Oh, I see. That is the key. Mr. Lesher : Yes. The Chairman: If 75,000,000 tons moves to the retail dealers, do you think the domestic situation would be free from any danger of shortage? Mr. Lesher : As far as bituminous coal is concerned, yes. The Chairman : Would you consider that any coal produced prior to the first of April was available for house heating this year? Mr. Lesher: I know a good deal of it was. I do not know whether it is still available, but it was available on the first of April, because the retail dealers had a considerable stock on hand on the first of April. The Chairman : Would you consider coal produced between the first of January and the first of next April, next year, would be of any service in avoiding a coal famine this winter? Mr. Lesher : From January 1 to April 1 ? The Chairman: Yes. Mr. Lesher: It would be of considerable assistance in that period, if the weather demanded its use. The Chairman : What I mean is this : Must the coal that is to be used in the country next winter be produced by January 1st? Mr. Lesher : No, not by any means. The Chairman : And you think that after January 1 the demand could be taken care of to a large extent? Mr. Lesher : That would depend upon whether the industrials or consumers generally have any stock on hand on the first of January. It is practically necessary that consumers have coal on hand in the fall, or before very severe weather sets in, more than they will receive. The Chairman : Now, has not the committee been wrong in laying so much stress and emphasis on the calendar year? Is not the problem really between the first of April in one year and March 31 of the next year? Mr. Lesher: That is decidedly true of anthracite for domestic purposes, and of bituminous for domestic purposes. It is not entirely true for industrial purposes. The peak of the load on consumption is in the winter time. We had an opportunity last winter of measuring that difference in load, week by week; but, in one sense, we were unfortunate in having a very mild winter, so we did not get a good measure. It did not show such a rise as it might have. The Chairman : What has been the coal production since the first of last April? Have you got those figures? 149 Mr. Lesher: I do not believe I could give it to you exactly, I could, by adding it up here. The Chairman : Just tell me this : Did this shortage in production come between the first of January and the first of April, or between the first of April and the present time? Mr. Lesher: This curve — the production was lowest up until May. In May and June it struck a gait there that practically represented the consumption at that time, and then the demand took an increase, and we got out more coal. The Chairman: That was due to the missionary effort made, was it not? Mr. Lesher: I suspect it was. It happened to hit at the right time, anyway. The Chairman : Can you give me the coal production since the first of last April? Mr. Lesher: Yes, I can. Have you got it there, Mr. Gutheim? I gave it to you over the phone not long ago. I have it for every week. The Chairman: You have it by the week? Mr. Lesher: Yes. The first four months of the coal year, 149,000,000 tons. The Chairman: That is the first ^our months? Mr. Lesher: That is April, May, June, and July; 149,000,000 tons this year against 204,000,000 tons last year. The Chairman: 55,000,000 tons less? Mr. Lesher : Yes. That is approximately correct. The Chairman : Have you any information which shows how much of that bituminous coal has gone to the retail trade ? Mr. Lesher: Not a thing. The Chairman: Do you know from your figures whether the slowing down in demand has been on domestic sizes or steam sizes? Mr. Lesher : I do not. I cannot say, from the figures we have. The Chairman: As a matter of fact, have you not heard that the slowing down has been on steam sizes and railroad coal ? Mr. Lesher: Yes. The Chairman : And has not the domestic coal been practically the only market which the operators have had since the first of April? Mr. Lesher: No, I do not think so. You mean by "domestic," householders? The Chairman : Yes. Mr. Lesher: I have no idea that that is so. It may be, but I have no infor- mation to that effect. The Chairman : What percentage of coal do you figure is normally used by the railroads? Mr. Lesher: Of the total production of bituminous coal, 27 percent. It will average that over a period of years. The Chairman: About 150,000,000 tons? Mr. Lesher : Yes. The Chairman: Was that the case in 1918? Mr. Lesher: 154,000,000 tons in 1918: 153,000,000 tons in 1917; 136,000,000 tons in 1916; 122,000,000 tons in 1915. The Chairman: What was the total production of coal in 1918? Mr. Lesher: 579,000,000 tons. The Chairman : I asked you that. Mr. Lesher : Yes. That is, bituminous coal. The Chairman: Would you consider 1918 a normal year in respect to the consumption of railroad coal and general consumption? Mr. Lesher: No, I do not think 1918 was normal in any respect, in the coal business. The Chairman: It was abnormal? Mr. Lesher: Yes. The Chairman : The demand would certainly not be heavier this year, would it? Mr. Lesher : It was a forced demand last year. It was a demand that would take any kind of coal. 150 The Chairman: You have been studying this problem for some years. I would like to have you, before we call the next witness, give your general estimate of the situation. Do you believe that there is any grave danger of a coal shortage, whereby advantage could be taken of the situation, and whereby we would have a price condition that would cause a good deal of distress in the country? Mr. Lesher: There are possibilities in the situation that may be considered serious. The high percentages of car shortage that we are suffering under now may be temporary — at least, as to their extremeness— and may have been due to the shopmen's strike, which may be settled. We do not know. We had in the week of August 23 the highest production this year — 10,600,000 tons. We do not know yet what our percentage of car shortage for that week is. We will not know until the end of this week, but it would seem to me that the railroads, having had a year's experience — the Railroad Admin- istration — in handling a situation of this kind, can be expected to function better than they did in the beginning of 1918, if the management of the cars is afforded the same advantages that it had in that year. The seriousness of the situation in 1917 and 1918 was increased because the fields that supply the northeastern section of the United States — and I have a little map here, I think, that will illustrate that to you — are the fields in this territory, running from the Pittsburgh and Central Pennsylvania districts down through the Appalachians — the coal fields of Pennsylvania, Maryland, West Virginia, Virginia and Alabama. Now, those fields from West Virginia north supply New England and this densely populated industrially active section. In 1917 they had an increase of but 1 or 2 percent, over 1916. In other words, there was practically no more coal available for this eastern section in 1917 from those fields than there was in 1916. The production increased in the Middle West so that the country, as a whole, had an increase. We had a severe shortage in this section in the East in the fall of 1917 and the spring of 1918. In 1918 the production of these fields was increased to equal abc^ut the increase in the whole country, and that relieved the situation. Now, production has been decreasing all over the country since the first of April or the first of January, but the production has decreased less in this critical territory than it has in the Middle West territory; so you might say we are in a better position to face the situation today than we were in 1917. Whereas, we had a decrease this year of around 34 percent, in the Middle Western territory, it has decreased something like ten percent, in this Eastern section. There does not appear to be any serious trouble ahead in the Western territory, west of the Indiana-Ohio line. At least, it has not shown up in the figures yet. Those who are more used to judging the pulse of the trade by contact with the consumers may have different ideas, but the figures do not show any impending trouble in the Middle West. The trouble that we may have would be in the Eastern section of the country. It may be in New England, although I do not know. They claim to have plenty of coal up there. I have not been able to collect any figures on any of these things since April. The Chairman: Will you report to me or telephone me what the Secretary says regarding that? Mr. Lesher: Yes. The Chairman: Have you anything further to add, Mr. Lesher? Mr. Lesher : No. The Chairman : We are very grateful to you for coming before the committee. Mr. Lesher: Might I add, Senator, a point that I overlooked? Last year the market broke, even under government prices, when the lake season was over. Some 28,000,000 tons of bituminous coal were shipped up the lakes last year; that is the high record. That coal comes from the Pittsburgh field and some smaller quantities from neighboring Pennsylvania fields, but mostly from Pitts- burgh, Ohio and West Virginia; and Kentucky is now shipping some. When 151 the lake season is over this year we will have anywhere from half a million to a million tons a week of coal — and suitable coal — to supply the domestic con- sumers in Michigan, Ohio, Indiana, and Western Pennsylvania; and I may say that that is the normal course of events in those fields : during the summer the mines in those territories ship to the lakes-, and take care of their domestic consumers and other trade in the fall. The Chairman : You referred to the lake coal. Mr. Lesher : Yes. The Chairman : Will you explain to me its source and its destination and how it is transported, just briefly? Mr. Lesher : The lake coal originates, 20,000,000 tons a year and upwards for the last few years, in the Pittsburgh field on the northeast; Western Penn- sylvania ; through Virginia, West Virginia, and over into Eastern Kentucky, and includes Ohio, those fields centering, you might say, around Pittsburgh and down to southern West Virginia, and including the Pocahontas coal. The coal goes by rail to the lower Lake Erie ports — from Erie, Pennsylvania, to Toledo ; is shipped by boat either to Canadian destinations — Port Arthur or Port William — across the lake, or to the western bank of Lake Michigan. Some of it goes to Chicago, to the steel plants; to Milwaukee and north; and the bulk of it to Duluth and Superior ; possibly half of it to Duluth and Superior, for the supply of the railroads of the Northwest, the iron ranges, and copper mines, and industries generally, as well as domestic consumption. Anthracite coal also goes on the lakes, mainly taking ship at Buffalo, and going to those ports for domestic consumption in the Northwest. The Chairman: What is the tonnagee of the anthracite? Mr. Lesher: That goes up there? The Chairman : Yes. Mr. Lesher : Between two million and three million tons, as I remember it. A Voice : Four million tons. Mr. Lesher: That includes Canada? The Voice : Yes. The Chairman : Go ahead, Mr, Lesher. Mr. Lesher: That lake coal must move up from the time navigation opens in the spring until navigation closes and the lakes are frozen over in the winter. Last year it was scheduled by the Fuel Administration at so much per week and per month, beginning in April and finishing up November 1 ; and it was carried through. Ordinarily it runs until some time in the middle of December. At the beginning of this year the lake movement was considerably stronger than it was last year at the same time, presumably because many of the larger companies that ship up the lakes ship to themselves up there, and they had no market in this territory and they shipped it up there, knowing that they would have to ship it up later anyhow. The lake movement, however, has fallen off to about one-half what it was a month or six weeks ago. There was a strike on the docks, the docks are full, and there is car shortage at the head of the lakes. It has dropped off. The Chairman : You spoke of the increase in the Eastern field in 1918. Mr. Lesher : Yes. The Chairman: How was that obtained? Mr. Lesher: Well, from as careful study as I could make of the situation it seems to me it was due to the fact that the Pennsylvania Railroad delivered the service in 1918 and did not in 1917. They were the originating carrier and they had the most difficulty in 1917. They seemed to be pretty badly tied up at that time. They were straightened out in 1918 and got out the coal. Certain roads there did not get out a pound more in 1918 than they did in 1917, because they were better situated right straight through. There were a few more miners, but not many more, available in the State of Pennsylvania— in the State as a whole — and they produced more coal. The Chairman: Of course that was under war pressure and war conditions? Mr. Lesher : Exactly. I think it is well to bear in mind the effect of the war 152 stimulus on every one connected with coal from the time it left the mine until it sot to the consumer. One railroad man, connected with fuel during the war, expressed it to me in this way; that it was not until every nian on the railroads connected with the movement of trains or cars became imbued with the idea that coal was a necessary commodity and not a deferred freight that the rail- roads were able to move coal in the quantity that they wanted it Coal has been a deferred freight, of the lowest grade. It did not hurt it to stay out in the weather and it moved when it could, in normal times. The Chairman : Has it always been considered by the railroads the last thing to be considered in the way of priorities? Mr Lesher: I do not know whether they have ever attempted to set up officially such a priority, but it is certainly true that it did not matter, in normal times, whether it was moved promptly or not. It might move today, tomorrow or next week, and nobody was harmed if it did not move promptly. It required a war condition and a tremendous demand and orders of all descriptions from the top down to get coal moved in the way the occasion demanded. In the same way the miner was stimuated to produce more coal— just by appealing to them. . ^- , The Chairman: You were with the Garfield administration, were you not.'' Mr. Lesher: Yes, I was associated with the Peabody Committee, before that. The Chairman: What do you think of the Peabody Committee and their plan? Mr. Lesher: Well, I don't think they got far enough. Which plan do you mean ? The Chairman: I understand that Peabody had a plan which he formulated for that committee, and then finally the Fuel Administration Bureau was created, with Dr. Garfield at the head of it, and so forth. I am merely fishing for information now. Mr. Lesher: The Peabody Committee had no plan of distribution of coal, because they had no authority or right to distribute coal. They were a war service committee essentially to develop cooperation among the coal operators, and those concerned with coal, in an effort to increase production. Their efforts, as I met with them, were directed toward smoothing out labor troubles and helping the government principally to get its coal.* They had no authority to commandeer coal, take coal, move coal, or regulate the distribution or price. They did, through a cooperative effort with the operators, make, as near as I could, ascertain, the only voluntary price restriction made by any producers of commodities in the United States that was a down- ward reduction. Meeting with Mr. Peabody and Secretary Lane before the Federal Trade Commission, the operators producing bituminous coal entered into a voluntary agreement to reduce the price of their product, and I have here a report which is just out that has the diagrams which will give you a measure of the decrease which was effected. The Chairman: You do not believe there is any necessity of having any governmental agencies, now that the war is over, do you? Don't you think Uncle Sam will get better if we stop giving him medicine? Mr. Lesher : I hope there is nothing like that necessary, although I cannot see how we could have gotten along without the Fuel Administration under the conditions that prevailed. The Chairman : Yes, some organization on account of war times was neces- sary ; but now don't you believe that by having a definite understanding and complete cooperation between the different forces that control the situation, the problem can be solved by voluntary agreement, by voluntary understanding — I will not say agreement, because everybody is afraid of that word — but I mean some voluntary understanding that we are all going to do our best to meet the situation, and if there is good faith all along the line we can do it? Mr. Lesher : It would seem so. To answer that in several parts, in the first place there was a voluntary agreement in 1917, the so-called Peabody agree- ment, which was upset because it held it too high, although it inherently was 153 all right. The principle in that agreeement, as set forth, was right, inherently right, and not subject to the criticism that it received, in my opinion. There are many degrees of government regulation. I do not think the coal business needs any regulation now. I think it needs more information. The Chairman : I quite agree with you that there is a great lack of infor- mation. We ought to know exactly what we need and what we consume and what the reserve supplies are, and what we can produce. Mr. Lesher: We have it on other commodities of large interest, but we haven't it on coal. I think it is a government function to obtain that infor- mation. The Chairman: Do you think we could have through the Department of Interior a bureau having sufficient funds to carry on the research work to produce that information for the government and the government agencies? Mr. Lesher: It would not require an organization sufficiently large to be entitled a bureau to do it. The Chairman : But it is necessary so that a survey can be made of the situation and a remedy applied in case of an emergency; that is the idea, is it not? Mr. Lesher: Yes, sir. It is our experience that having had all these figures* week by week for about two years we are able to proceed because we know what the trouble is, that prior to that time wfe had no knowledge of, and if we did not have them now we would be in the dark. We lack additional information which we have not got. The Chairman : This committee was told yesterday by the Railroad Admin- istration that if we would say, which is entirely beyond our function, that we need 500,000,000 tons for this year, taking that as a basis, they would so arrange their car system that the mines would be furnished with the necessary cars ; but the committee could not assume that responsibility, although personally I would be willing to take, the chance. Mr. Lesher : I think the Railroad Administration would require more than that information. Perhaps they went into it in greater detail than I have been able to. I do not think it is enough for them to be told that they require 500,000,000 or any other^gure. I think they would have to know what proportion would be required in the Eastern territory and the Western territory, because we struck our hardest snags in getting our production in certain fields in the East, and if we said that we need so much from there, they may have to admit that they cannot do it, as they did during the war; they had to take it from other fields. It would require more than a simple statement of the aggregate total in the United States, because unless we have some system of controlling the distribution, which we have not — that would be a regulation which I previously said I did not believe in by the government at these times — producing a million more tons in the Rocky Mountain region will not help New Jersey. We helped New Jersey and New England last year with increased production in the West by sending the coal eastward and inducing the Western production to come East. We have no means of doing that now. The Chairman : And you do not believe it is practicable to do that at this time? Mr. Lesher: Why, it is practicable if you set up an organization to do it. It was done once and can be done again. The Chairman : But not necessary. Mr. Lesher : No. The thing that will govern it now is the demand, the price ; if the shortage is down in the East. Last year the Fuel Administration put the coal there. This year the producers will put it there because the consumers outbid the fellows some place else. That is just the normal operation of the industry. The Chairman: Of course they sought the best market. Mr. Lesher : Certainly. Last year they could not seek the best market because there was a price and they could not go above it. So they appealed to the 154 government and the government gave them the coal. It cannot do that this year, but the price will take care of it, if the production m the larger sections is equal to the demand. • t j- There are roughly three sections, you might say, from the Ohio-Indiana State line, north and south of that; east the Mississippi Valley territory, the Rocky Mountain territory; they are almost independent as far as the inter- change of supply is concerned. The amount that crosses those lines, although it is fairly large in millions, yet it is not in magnitude as compared with the movement within those zones, within those areas. The Chairman: Is there anything else? The committee thanks you for your testimony. Is there a representative of the Labor Department here that desires to be heard? , t i_ Mr. Wallace: I am prepared, but I do not represent the Labor Department. I represent the United Mine Workers. The Chairman: Would you like to be heard now? Mr. Wallace: If you please. STATEMENT OF MR. EDGAR WALLACE, REPRESENTING THE UNITED MINE WORKERS OF AMERICA Mr. Wallace: Mr. Senator, I have no prepared statement, but I will just give you in as clear language as I can what I have to say. The Chairman: Are you an official of the United Mine Workers? Mr. Wallace: Yes, sir; I am their official representative here in Washington. The Chairman: Are you permanently located here in Washington? Mr. Wallace: They send me around to other places a great deal, but I am here most of my time. The Chairman: Have you been a miner? Mr. Wallace: I have been a miner for twenty-five years. The Chairman: In what district? Mr. Wallace: We travel a good deal, but for the last twelve years I have been in Indiana. I have worked in Indiana, in the mines of Indiana. Now, in the matter of figures, the figures I aTn going to give you are based on the basic rates. What I am trying to state to this committee is the fact that the demands which are being made a matter of record are justified, the demands of the United Mine Workers are justified by our experiences in the last many years. At the beginning of the war, early in 1917, in 1916, at the beginning, we had a contract with the operators that called for 64 cents per ton in the basic regions ; that is, in the Danville district of Illinois, which is considered the basic region. Early in 1917, we found, the operators themselves found that there were so many other industries paying larger wages that the men were leaving the mines, and, in spite of the fact that we had made our contract for 64 cents a ton, we recognized the situation as it presented itself, and we decided to increase the cost of coal, the mining of coal, ten cents a ton, and the day wage scale, which was $2.98, up to $3.60. Later in the year the Fuel Administration was about to take charge and in the meantime the cost of living had risen, wages had risen in other places, and we again got together with the Fuel Administrator and agreed on another increase of wages, of ten cents per ton, making twenty cents per ton over and above 64 cents, and a larger increase on the day wage. The most enlightened of the operators recognized that the day wage rates were always out of line with the other classes of work. Altogether our raises of wages have been about 30 percent, for the miners, and far larger — that is, about 66 percent.— for the day hands, but the day hands in ratio to the miners are as about one to three, I should say. Now, this second raise we agreed should be our wage during the war, but . while we have been increased thirty percent, for the miner, and quite a raise 155 # of wages, about two dollars a day for the day hands, the cost of living has gone up, it is estimated, about 82 percent. During the war we were able to live, in spite of the discrepancy between the raise of our wages and the raise in the cost of all other commodities. We were able to live because we had work about every day. Some 77,000 of our men had gone to war, and the demand was so great — several new mines had opened up, and the men became scattered out, every man was able to do all he could, and we exhorted them and told them that the war depended on coal, and they worked and worked hard and were able to make pretty fair money until the Armistice, November 11. Then we found that with what labor we had, with what labor we now had we had been able to fill all those excessive demands of the war, and that right in the time when the greatest demand for domestic coal was had, and in spite of the fact that for two months of the year of 1917 there was such a bad state of weather that the coal miners were hampered, we found that we had not only filled all those demands, but that we had produced 30,000,000 of surplus that had been stored away in various places and was intended to carry on the necessary work, to be the necessary surplus at that time, but we immediately felt a slump. We have not been working much since. In spite of the fact that the claim is made that there was a labor shortage some way or other, the cars were standing on the side track for a long time, the miners were eating up their Liberty bonds and we were idle, in some instances fifty percent, or forty per- cent, of our time, in other instances sixty percent, up to the figure that some of our men only worked about one day a week. ■ The Chairman: Was this in the Indiana field? Mr. Wallace : Not only in Indiana. It is all over the country, sir. The Chairman : You spoke of the cars standing on the tracks. Mr. Wallace : Yes, sir. The Chairman : Would you mind stating, for the information of the com- mittee at what mines that came under your observation? Mr. Wallace : All over the country during this slump. I mean to say that the cars were standing and the men were idle. The Chairman : Do you mean to say the cars were standing at the mines ? Mr. Wallace : Not at the mines, but scattered along the country, on side- tracks everywhere. There was no use for them. There was no demand for the coal. The Chairman: That is what you mean by the slump? Mr. Wallace: The slump? The Chairman: In the market? Mr. Wallace: In the market? Senator Elkins : What months? Mr. Wallace : From November, from the Armistice time right up until very recently. Senator Elkins : Until recently ? Mr. Wallace : Until recently. Now, the men are still here, the men are back from the war. My experience with those men that are back is that it is not that thy do not want to get back to the mines, but they have not had the oppor- tunity for work in the mines. The work has been slack and we got together and we figured out, we were impressed with the fact that the cost of living had gone up away beyond our raise of wages; we were impressed by the fact that so many of our men, part of them, were working four and five days a week, others only one day a week, and this, gentlemen, is not an unusual con- dition. It is a little subnormal. Every year we are faced with that condition in the early summer. I might say from Christmas on, a slump in dernand, and then along in August a great big demand for more coal, and in the meantime the miners are suffering. They are leaving their homes. They are not getting enough work to keep them decently. They are in want, and therefore we have made this one demand that was made a matter of record here, the demand for a six-hour day. 156 I want to impress first that the miners' eight-hour day is not an eight-hour day as some people work an eight-hour day. Our contract calls for our eight hours to be at the face of the coal. You know what that means. As one witness was saying here, it is sometimes three miles away. Sometimes it means trans- portation to take us to our place of work, but the main reason for our demand for the six-hour day is not because we are dissatisfied with the number of hours we have to work, but because of the fact that we desire an equalization of the work, not only between mines, which is quite a subject of discontent, a reason of discontent, but the different times of the year. The Chairman: What was that which you say was the subject of discontent? Mr. Wallace: The fact that in slack times some of the mines work steadily while other mines are working one day a week, two days a week, and even some of them are shut down entirely. Nobody seems to take any interest in our troubles in that respect, and we have decided to take the matter in hand ourselves and remedy it as far as we can. To say that there is any parallel between the situation of the miners in this country and the miners in England is to stretch the matter. In England there is a demand for all the coal that the miners can get out. In this country we are idle part of the time every year, and this year it has been worse than in any other season. That is the cause of unrest among the miners, first because the raise of wages which appeared sufficient while they were getting all the work they could do, they could make good money, is not sufficient now to allow them to live under the present chances they have for working, and then the fact that the work is so ill divided. Some of them work five days in the week, others only one, and about four months of the year we are called upon to put out all of our efforts, and the rest of the time it is a matter of indifference what we do or what becomes of us. The Chairman: How much does the average miner make a day? Mr. Wallace : I should say the day wage scale is a pretty fair criterion ; that is, $5 a day when he works. The Chairman : When he works five days a week he makes $25 ? Mr. Wallace: Yes, sir. If he works five days a week. It strikes me. Senator, that there is another thing that is partly the cause of our trouble, and that is the public itself. I think the public has needed a jar, the consuming public. They have been used to having coal brought to their doors whenever they thought they needed it, and they have not been made to consider where the coal comes from and how it is produced. If the public could be educated to understand that it takes time to move coal, and it is necessary for transpor- tation lines to put everything else aside for a few months in the year, when they have made up their minds to get the coal, and that that is the cause of the trouble, they all would be benefited, and so would the entire country be benefited. The Chairman : You mean that the coal should be moved when the transpor- tation is available? Mr. Wallace : Is available, and I think the industries, especially, should be called upon to store more coal at a time when there is not such a great big domestic demand, and those who are able should be taught to lay in their coal so as to distribute the production and distribution of coal throughout the year more equally. There is a distinct loss that eventually the consumer has to pay for the mines standing idle. What we are concerned with, of course, is the distinct loss to the miners themselves, to have to do without work in slack times. The Chairman : Well, that would be overcome by a better system of distri- ,bution and storing, would it not? Mr. Wallace : It would be a matter of education of the public, in my opinion. The Chairman: What was the result last summer? There was a great campaign carried on to induce the consumers to buy early. Were conditions better last summer? Mr. Wallace: I was out of the country. I was in Europe last summer, but 157 then I have heard about it> since, and it did improve conditions to a great extent, and conditions could be improved that v^^ay. Now, about the labor shortage, I do not know ; I do not believe there is any labor shortage. I know there are hundreds, of thousands of our men laying idle half of the time, anxious to work, willing to work, and not getting an opportunity to work. We covered this country, we furnished this country with coal when the demand was greatest. We can do it again. We can make up this deficiency now. Give us an opportunity; give us the cars, give us the chance to load the cars. I am confident that there are enough miners in the country, and certainly enough mines, to fill all these demands. This 98,000,000 tons of deficit in the coal supply that has been talked about— really it was 98,000,000 tons that was never called for. I think we are in about the same relative position that we were this time last year; that is, we have very little coal. I do not think they had much then. The demand is large now. The demand was large then. We supplied it. And in regard to certain sections of the country, those regions where there is a shortage of men, there are parts of the country where they refuse to let men do any of their own thinking, where they are almost under the feudal system, where the companies are the high law and the low, where they tell men what they should do, and what they should not do, even in their living relations. Men resent such conditions as that. They are given everything but the right to think themselves, and men resent it, and you will see the percentage of men leaving such sections is larger than anywhere else. In fact, as soon as they get a little idea as to how the working man living under proper conditions in this country is treated, they leave that section of the country, and then those gentlemen want the door left open for more men from abroad, who have not got the American workman's point of view, to come in, so that they can handle them in the same way as they did the others. The Chairman: Do you do anything towards inducing these foreigners to naturalize ? Mr. Wallace : Yes, sir. In every one of our local unions we do our best to get those men to become naturalized citizens. By the way, in those sections of the country where we have our organization, we have a lot of Americans — English-speaking people of every kind that work in the mines, and their sons after them. I worked in the mines for twenty-five years, and I would do the same work that I did before in the mines, under the proper conditions; if I lose this job I will go back to the mines, but I will be very careful where I go. I will go where I can be a man and stand up myself. The Chairman: Is there anything further, Mr. Wallace? Mr. Wallace : Well, I will answer any questions you have to ask. . The Chairman : I should like to know what sections of the country these conditions you refer to exist in. Mr. Wallace : Which conditions ? The Chairman : You spoke of the treatment of the men. Mr. Wallace: Practically everywhere where the men are not organized. I want to make the statement here that practically all of the men working in mines want to organize, and where they are not organized they are restrained from organizing by force; that in those sections the companies go over the local government, they maintain their own private army and their own private police force, and they keep a close supervision over the men and refuse to permit them to meet among themselves or with any of their fellow men from other sections of the country with a view to organization. They refuse to recognize any system of collective bargaining by which the men could make a contract, and, after having made the contract, help in applying it, seeing that their men lived up to the contract, demanding the contract in full from the company. The difference between an organized miner's wages and an unorganized 158 miner's wages is not so much in the amount that is supposed to be paid, but m the fact that the organized miner gets his and the unorganized mmer sometimes does not, being subject to the graft of the petty bosses, some of them really incompetent, and who try to hide their incompetency by taking a little here and a little there from the men. The Chairman: You believe in the right of contract? Mr. Wallace: Certainly, and the right of collective bargaining, that a man may have the say-so as to what shall be the condition of employment under which he is required to work; nothing further, just the conditions of employ- ment, that peculiar condition which affects him. The Chairman: Is there anything more, Mr. Wallace? Mr. Wallace: Nothing more. The Chairman: The committee, of course, has nothing to do with this. We simply want the information and are very glad to have you appear and give it to us. STATEMENT OF MR. GEORGE H. GUSHING, MANAGING DIRECTOR OF THE AMERICAN WHOLESALE COAL ASSOCIATION, WASH- INGTON, D. C. The Chairman: Will you give your name to the reporter? Mr. Gushing : George H. Gushing, managing director of the American Wholesale Coal Association, headquarters Washington. The Chairman: What has been your previous experience in the coal trade? May I ask you, Mr. Wallace, do you represent only the bituminous workers? Mr. Wallace : No, I represent all the miners, including anthracite miners. Mr. Gushing: For twelve years prior to the first of last January I was editor of the Black Diamond, a coal-trade paper published in Chicago, and for eight years prior to that time I was connected, in an editorial capacity as the financial editor of the Cleveland Leader, with the lake iron ore and coal trade covering an experience all told of about twenty years in connection with the coal business. The Chairman: You represent the wholesalers at the present time? Mr. Gushing : Yes. The Chairman: Bituminous coal only? Mr. Gushing: The American Wholesale Coal Association is made up of roughly 550 merchants in coal who buy and sell about all of the different kinds of coal produced and distributed in the United States. As merchants some of them have enough productive capacity to assure a steady supply, or part of their supply, rather; as merchants they also have in some sections, or quite a number of them, their own retail yards for storage purposes, and distribution purposes, and they have principally to do, however, with the buying and selling of coal wholesale. The Chairman: Do they handle anthracite as well as bituminous? Mr. Gushing: Yes. The Chairman : Well, I may get at this thing only in a haphazard way, but what proportion of the bituminous output is handled through the wholesalers? Mr. Gushing: Last year, according to my estimate, the members of our association handled between 190 and 200 million tons of bituminous coal. The Chairman: Upon which they made a profit? Mr. Gushing : Upon which they had a merchaodising margin. The Chairman: Well, I will not ask for a definition of the distinction. I am going to ask you to trace a carload of coal from the Pittsburgh district to a consumer in Philadelphia. I presume that is the proper source and destination is It not? Mr. Gushing: I would be very glad. Senator, if you will give me a day or two in whjch to do that, to supply you with that information from ten or twelve or fifteen different producing districts to something like 20 or 25 big markets including all charges. 159 The Chairman: I would like to have that, and I will tell you what I want: I have here a large amount of correspondence from purchasers of bituminous coal, purchasers of anthracite coal, household consumers. I am not going to ask you specific questions today, but I should like to know how the charges are loaded on a ton of coal to the bin of the consumer, and the varying prices, and the conditions that surround those varying prices. The complaints that I get in these letters are that the price of coal is continually advancing and that they are paying more than they paid last year. It would seem as if there was a slight variation of prices at the mines. I have not gone into the development of the higher prices asked, but somewhere there is a cost added, a charge added, which shows increased cost, and I should like to know the reasons, and I should like to try and find out for this committee what the reasons are. I think that you realize what we are trying to get at, and that is to prevent any run-away market this year, and I want to know what conditions produce those advances in price. Mr. Gushing: I can give you that information by this time next week, but if you care to do so this al'ternoon, I compiled some figures yesterday and have been working on them for some time, which I believe will indicate that there is no real occasion for a run-away market, and I would like to give you that data at this time, unless there is something else which you would care to have. The Chairman : No, I will go on with it, but may I ask you in that connection where the retailers come in on this ? You represent the wholesalers. Mr. Cushing: I represent the wholesalers. The Chairman : A retailer, I suppose,' is a man that sells for limited distri- bution. Your association sells the retailers, does it not? Mr. Cushing : Yes, sir. The Chairman : You stop at the delivery to the retailer, do you not, in the information that you can give? Mr. Cushing: Except such as I can gather from the members of our own organization who also are retailers, but I would prefer to have the retailers produce their own data, and Mr. Gordon is here in town representing the retailers, and he can give us that information. The Chairman : Will you ask him to be here tomorrow, so we can get at that? Mr. Cushing: Yes, sir. The Chairman: All right; will you go on with the information you have? Mr. Cushing: I will say this, before I go ahead with my other matters, and to get the idea clearly in your mind : our association at its annual convention in Cleveland on the third day of June, adopted what we called a platform. It was the first effort, I believe, to divide the trade into its three normal functions. Our definition at that time was that the operating or producing functions included all acts and obligations and expenses incident to taking the coal from the veins and loading it on board the car under the tipple or re-screening plant; that the act of the wholesaler began with the loading of the coal on the car under the tipple or re-screening plant, and involved all acts and obligations from that point until it was delivered to the ultimate buyer. We went specifically on record as saying that how a wholesaler obtained his compensation for his services did not alter the fact that it was a wholesaling function, if he performed his duty. He might, for example, sell his services to an operator on a salary basis, but just the same he was a wholesaler if he distributed that coal ; that the retail function began with the coal delivered to him on the siding and then followed through to the ultimate consumer, whoever was the normal customer of a retail dealer. That is our definition of the three natural functions in coal. Now, coming to the matter of supply for this year and demand for this year, I do not know that this is in form to insert in the record. It can go in if you care for it, but it is really my field notes containing what I have to say this afternoon. I have taken the bituminous production from 1900 up to 1915, and have divided it into three natural five-year periods. In this bituminous produc- tion I took the figure of tjie Geological Survey for the year 1900 and then the 160 figure of production for the year 1905 and subtracted one from the other and obtained a total gain in that five-year period of 102,736,673 tons. The Chairman: Production? Mr. Gushing: Production. That is a gain in production. That shows an average gain per year of 20,547,334, and that shows an average gain per month of 1,712,278; that was a percentage gain of 9.67. Following through for the five years on the same basis from 1905 to 1910, we have a gain on a percentage basis of 6.47. For the five-year period from 1910 to 1915 on the same basis we have a percentage gain of 1.22. The Chairman : Now, may I ask you, does that mean that in the fifteen years up to 1915 you gained approximately 130,000,000 tons in production? Mr. Cushing: The fourth table there will show you that from 1900 to 1915 there was a gain of 130,308,314 tons, an average gain per year of 8,687,221, an average gain per month of 723,935, or a gained percent, of 5.47. The interesting thing to me in that showing of a gradual decrease in the percentage of gain is that that period is coincident with the period in the United States when every- body was studying the economical use of coal. It was not, according to my recollection, until 1896, that what we call the British Thermal unit basis, the unit value of coal, the heat value of coal, was applied. About the beginning of this century our people here began to find that if their coal contained a certain amount of heat they should begin to get a greater use of that heat in the creation of power. We had shortly after that the formation of the technological branch of the Geological Survey. That was followed by the organization of a separate bureau, the Bureau of Mines, to promote the study of the economical use of coal. That was followed almost immediately -by the adoption of a slogan by the coal merchants of the United States that their function in business was to fit the coal to the plant and to give a man a larger value for his rnoney by giving him a coal that he could burn economically. As a consequence, we have been doing a steadily increasing volume of business, as the total freight traffic of the United States will show, with a production of coal that showed a decreasing percentage of increase. That has gone so far that we are down to the point where in the last five- year period, from 1910 to 1915, the normal percentage of increase was only 1.22. Of course that may have been accounted for by the industrial depression which settled over the country about 1912 and continued until well on in 1914. The Chairman: That is a policy of conservation? Mr. Gushing : That is a policy of conservation. Now, to indicate what might have happened, if there had not been a war intervening between 1915 and today, I have simply taken the 1915 figure and increased it by the 5.47 percent, which was the average of the preceding fifteen years, to show what would have been the normal expectancy of business in this country for 1920. That gives us a total requirement for 1920 of 466,978,876 tons, or a gain over 1915 of 24,275,906, or a percentage of gain, of course, of 5.47, because that was the figure I used! The Chairman: I put those figures and your explanation in the record. (Statement referred to is here printed in full as follows:) Bituminous (Net Tons) Five years, 1900 to 1905 : Total gain 102,736,673 Average gam per year 20,547,334 Average gain per month 1,712,278 Gain percent ' 957 Five years, 1905 to 1910: Total gain 109,048,357 Average gam per year 20,409,671 Average gain per month 1700i806 Gain percent ' 5 47 161 Five years, 1910 to 1915: Total gain 25, 13,284 Average gam per year • ^'J^^'^rS- Average gain per month ^^^'^^^ Gain percent ^•^'^ Fifteen years, 1900 to 1915 : Total gain ^^li^f,^, Average gam per year So^oli Average gain per month. c^y Gain percent. ^'^^ Output in 1920, if average percent, of gain in fifteen years from 1900 to 1915 had applied : Total output 466,978,876 Gain over 1915 24,275,906 Gain percent 5.47 Mr. Gushing: On the actuarial basis, the law of average, that 466,000,000 tons is more coal than we could have expected to produce this year or demanded this year from the bituminous field, because we would not have reached that in all probability until next year. Of course we had a war intervening. I know you are going to take up the anthracite situation after a while. I presume you are, at least. The Chairman : Now, Mr. Gushing, I want this to go on the record when we are all feeling refreshed. These sessions are pretty strenuous and I am going to ask you to suspend until tomorrow morning, and then I will finish your examination, if you are willing. Mr. Gushing : Perfectly willing. The Ghairman: We will then adjourn until tomorrow morning at 10:15. (Whereupon at 4:45 the hearing was adjourned until Thursday morning at 10:15.) THURSDAY, SEPTEMBER 4, 1919. The Subcommittee met, at 10 :30 o'clock a.m.. Senator Frelinghuysen (chair- man) presiding. Present: Senators Walcott and Myers. The Chairman: Mr. Hines, as you know this Committee was directed to make an investigation into the coal situation and ascertain first whether anything could be done to insure a sufficient supply of coal to prevent any shortage of coal during the coming year, and secondly, to inquire as to why the prices were advancing. I think the feeling of Congress was that the conditions created by the backwash of this war might undoubtedly create a condition which would bring about a coal famine, and they were anxious to study the situation and see what could be done to improve it. I stated the policy of the Committee at the outset, and that was that we should try and find out what the actual conditions were, not tdy in any sen- sational way to pinion anybody or punish anyone, or have a lot of recriminations in the hearings. Now, I have, of course, communicated with you from time to time, realizing that the Railway Administration is a very important factor in solving the problem. I have tried in the hearings to ascertain in a practical way the facts relating to the situation. We have only taken up the question of bituminous production and prices. We have made no investigation into the anthracite situation, and you asked me to ascertain the amount of coal that would probably be needed for the coming year. I have made an effort in my examination to ascertain that figure, but I find that by reason of the fact that Congress failed to appropriate sufficient money to the Geological Survey, it is impossible for them to procure those figures. I am going to make a further effort and try, if possible, to have Congress appropriate the money, so that they 162 can go on with the work. The testimony shows that last year there were 585,000,- 000 tons of coal produced. This year I think I am correct in saying we are 91,000,000 tons below production, and the conditions which have brought this condition about the coal operators claim are due to two factors : First, a shortage of labor, which has been challenged ; second, a car shortage, which has not been challenged, but has been in a manner explained. I have had a great many telegrams, letters, and photographs showing idle cars on the tracks; also a telegram showing that the Railway Administration has not supplied the cars. I am not going into that problem in detail. My t effort is to try and bring about some co-operation between the Railway Admin- istration and the coal men, and to ask you to give us your views and advice as to how the situation can be remedied, how we can all get together to insure a sufficient supply and to pravenf a runaway market. The Committee is very grateful that you have consented to come here and assist, and I am going to ask you to go on and the Committee will not interrupt you with any questions while you are making your statement and giving us your views. STATEMENT OF WALKER D. HINES, DIRECTOR GENERAL OF RAILROADS. Mr. Hines : Mr. Chairman, I am glad to be here to render any assistance I can in dealing with this important matter. I will endeavor to be as brief as I can, and, on account of the exceptional complexity of the subject I am not going to undertake to go into the details of the matter. I have been, necessarily, occupied so largely with other problems which I had to handle personally, that in the nature of things the details of a transportation problem like this it has been necessarily proper for me to leave to my transportation experts. They will be available at all times to give any specific facts the Committee may wish, and I will undertake to deal with the matter only in a broad way, and endeavor in that way to be of some assistance to the Committee, and I will follow that up by seeing that the Railway Administration gives all the facts and all the assistance possible. I have had two controlling policies in my work as Director General. One has been to do everything possible to render the best public service that could be rendered under the difficult conditions following the war, and the other has been to give the public the facts, because the public is entitled to them, and the Railroad Administration is a public agency and ought not to have any secrets from the public on matters which affect the public interest. I would like to say broadly that, as I understand the situation the conditions in the. first half of this calendar year have been radically different from the conditions which are likely to prevail in the second half of the calendar year. For the first six months of this calendar year, ending with the month of June, 1 do not understand there is any serious contention on the part of anyone that a shortage of transportation interfered substantially with the production of coal. The fact was that during that period of six months the car supply and all transportation facilities were, generally speaking, very much in excess of the coal that was produced, while at a specific mine, or possibly in a specific district at some period there may have been a transportation disability, and they are likely to arise at any time and always have risen at any time, and while that transportation disability may have interfered temporarily with the production at that mine or in that district, I am satisfied it is a correct statement, broadly, that in the first six months of the year the transportation facilities were very much in excess of the coal produced, and that any shortage in production during that period was due to other causes, except in cases which, viewing the total situation, could be regarded as virtually negligible. I understand the principal reason for the smaller production- of coal in the first six months was the fact that the public was not willing to buy the coal. In other words, it was a condition of no market, and not a condition of trans- portation shortage. Now, as to the second six months, the public is getting to the point of buying 163 the coal, and that is bringing into operation to a much larger extent than was the case in the first half of the year the matter of production disabilities and also transportation disabilities. They will all play an important part in the second half of the year, but certainly transportation disabilities did not play an important part in the first half of the year. As I understand it, the purpose of this Committee's investigation is to promote the public interest with respect to coal, and, as I look at that interest it is that there shall be an adequate amount of coal produced and transported, and that the public shall be able to get their coal without having to pay an ex- cessive price for it. One of these objects with respect to which I have a re- sponsibility, is the object of transportation, and I wanted to explain to the Committee that the Railroad Administration is doing everything in its power to meet a transportation situation of unusual difficulty. We are not standing on any preconceived notion of what remedies are necessary, but we are re- viewing the matter constantly from day to day and adopting new methods as they appear desirable. In other words, we are not handling the matter in a routine way in any sense, but with the liveliest appreciation of the importance of the situation and with a constant purpose of utilizing every expedient that can be developed which will help to enable us to transport during the latter part of this year the coal which the public omitted to buy in the early part of the year and which it will want to buy in the latter part of the year. We welcome suggestions on the subject from every source. We profited greatly by the comments that have been made in the course of this investigation and we will review those matters and take advantage of every practical suggestion that they contain. We are not holding any of our efforts in abeyance, awaiting the obtaining of further information,, but we are proceeding upon the idea which was made clear in my reply to the Senate Resolution that it is going to be difficult to transport in the latter half of this year the coal that the public will want to buy in that period. So, it is desirable for us to resort to every practical expedient to transport that coal with the greatest degree of satisfaction to the public. We are not waiting to get additional information, nor are we concerning ourselves with excuses. We liave got a situation, and we have got a probability of an amount of coal to be transported which will tax the -railroad facilities, and we are dealing with that as a practical matter and endeavoring in every possible way to make that transportation come up to the maximum that is possible. I am not going to undertake to deal with the details of this situation, but there is one point I would like to emphasize, because I do not think it has been as clearly pointed out, at any rate, has been stressed as much as is desirable. It is a point that we find caused a great deal of confusion in other instances as well as this. The suggestion has been made that the Railroad Administration has been in- efficient in the handling of coal because the number of miles per car per day made in the first half of this year was less than was made last year, and that that indicates the cars were not moved at sufficient speed. That factor is ex- ceedingly misleading, and I think it is rarely, if ever, a useful factor. It is obtained by taking the total number of cars on the road, multiplying it by the total number of days in the period, say the six months period, and dividing that by the total number of miles, or rather, dividing that into the total nuitiber of miles. The result is this, that in a period where there is a reduced volume of transportation, so that a great many cars are stored and not being used at all, and on account of the absence of congestion the traffic that moves undoubtedly moves at an exceptionally good rate of speed, the average miles per car per day shows less than at any other time, and that is because you are figuring into your average a great many cars that are not moving at all. The situation was in the early half of this year that traffic of all sodts, gen- erally speaking, was below normal, in the early part of this year. The coal traffic, particularly, was very much below normal. The result was that the num- ber of cars actually being used and actually making mileage at all was excep- tionally small, and yet when you figure the average miles per car per day, you 164 take into consideration all these cars that are not moving at all, arc not in service at all, and that pulls down your average. Senator Walcott : May I interrupt you there? The Chairman : Mr. Hines has asked, and the Committee has granted him the privilege, to finish his statement without any questions. At the end of his statement we can question him. Mr. Hines : I do not like to interfere with anything that is important, though. Senator Walcott : 1 understand. I will ask you later. Mr. Hines: I just want to emphasize that point, that the inferences drawn from that average miles per car per day are wrong. As a matter of fact, the movement of traffic in the first half of this year was very satisfactory. There was no congestion to interfere with it, and yet because so many cars were out of s,ervice altogether the average miles per car per day for all the cars owned by the railroad was necessarily low. I wish to emphasize that the Railroad Administration stands ready to give the Committee all the facts within the possession of the Railroad Administration on this matter, that it Avill gladly receive and consider the suggestions of the Committee, and we are going to continue to do everything in our power to meet what admittedly is a difficult situation. My motive in this matter is twofold : In the first place I have the most lively sense of my obligation to do the very best I can under a difficult situation to give the public adequate service ; and, in the second place, I am exceedingly anxious to minimize as much as possible any transportation shortage with ref- erence to coal, because I am afraid that whatever transportation shortage exists is in danger of being made the pretext for an increase in price, of coal which will be an unjust and oppressive burden on the public. So, from both of those standpoints it is my desire and the desire of the entire Railroad Administration, to meet this situation in every possible way. My reply of August 14th to the Senate Resolution calling on the Director General for certain facts with respect to coal emphasized two points. One was the prospect of transportation difficulties for the rest of the year. The reply pointed out that if the estimates of the amount of coal to be consumed in the rest of the year were approximately correct, inevitably there would be very seri- ous difficulties in transporting the amount of coal required, because the amount to be transported would be very close to what was transported in the latter part of last year under war conditions, when there were in effect numerous provisions and restrictions which facilitated the transportation of coal, and which are not in effect this year. Among those conditions were the zoning of coal which prevailed last year and which accomplished a substantial economy in the use of transportation. With the signing of the armistice that was terminated, being regarded as a war measure, and undoubtedly an important economy in the transportation of coal was necessarily lost because now coal from practically any part of the country can go to any other part of the country where market conditions admit of its being transported, and the result is much coal is trans- ported a much longer distance than the corresponding amount of coal was trans- ported last year. This involves an additional use of all of the transportation facilities, not only the cars, but locomotives, tracks and terminals, and makes a substantial difference in what can be done. Other important factors are that last year under the war conditions there was less detention of equipment at destination, and through the establishment of certain car pools the number of cars of coal that had to be supplied at certain destinations was very much less than was the case in peace times. So that we have a situation that was clearly pointed out in my reply to the Senate, where the amount of coal to be transported may come close to what was actually trans- ported last year, and where we will not have the benefit of certain war arrange- ments which undoubtedly very greatly promoted the transportation of coal last year. I also emphasized in my reply to the Senate, the danger that these transpor- tation difficulties might be used as a pretext for increasing the prices of coal. I want to reiterate both of those propositions now : First, that these transporta- tion difficulties are really important, and second, that there is this natural 165 danger that the transportation difficulties will, in turn, become a basis for efforts to increase prices in such a way as to be oppressive to the public. My best judgment after constantly reviewing this matter is that we are going to be able to transport the necessary coal, and we propose to adopt whatever expedients are necessary to accomplish that purpose. Just how far we will have to go in the adoption of expedients depends on information which has not yet been developed, but it is a matter we are studying from day to day, and I repeat that my best judgment is that we will be able to meet the situation although undoubtedly there will be a continuance of these transportation diffi- culties. Now, we have to deal with this matter in a perfectly practical dispassionate way, and we must all recognize that these transportation difficulties are going to be played up to their full value, and probably beyond it. They always have been, and I take it they always will be. It is human nature for the coal operators when they find a reason for non-production for which they are not responsible to stress that reason. So we can rely on it that every transportation difficulty, either local or general, which will manifest itself between now and December 31st, or between now and the end of the coal year, is going to be kept before the public, emphasized, exploited and perhaps expanded. Now, that is a practical situation that we have to meet. I -mention that not because I object to it, but becausft that is part of the job of the Director General, to be made the target for complaints of shortages or defects in transportation wherever they occur in the country; it is perfectly natural. There could be no rational basis for objecting to it. It is just the fact that we have to accept, and I do accept it, I think, in a very reasonable spirit, but I mention it because of the danger that these transportation difficulties, which are inevitable, which will constantly recur throughout this year, will be so emphasized and stressed as to create a public state of mind of impending disaster which will furnish a very favorable medium in which an increase of prices can be made. And that is the part of jt that I am apprehensive about, that transportation difficulties which are inevitable will be. so stressed and so disproportionately stressed as to put the public in a state of mind where it will stand any increases in prices which it really should not have to stand for. Now, that being the situation, the specific suggestions I want to urge on this Committee are these. I should say that I have four specific suggestions that I want to submit for the Committee's consideration : First, I think it is highly desirable to get the most complete information possible as to the current production of coal, and as to the limitations on current production either through transportation difficulty or labor shortage or absence of market or any other cause. My judgment is that the best way to obtain that is to give the Geological Survey ample funds to enable it to get this information in a complete form, and also to pohce and check the information in such a way as to be sure that it is accurate. My understanding is that at present the Geological Survey does not get reports from all the mines, although, perhaps, it does get reports from the mines producing the great bulk of the traffic. I do not understand that the Geological Survey has any way to verify the reports which the- individual mine may make, nor has it any change, as I understand it, to compare the report as made by the mining operator with the report made by the railroad. The information is available as reported to the railroad, but there is very considerable clerical work involved in making any comparison of the matter, and I under- stand the Geological Survey is without clerks and without the funds to make a thorough check of that information. So I think one thing which would be of very great value to the public, both now and permanently, is the adoption of the definite and permanent policy that some proper agency of the government, and I should think the Geological Survey would be the best, shall have adequate funds to get complete informa- tion on all these mines, from all the mines and to check that information by comparing it with the information which the railroads have from their stand- point, and on the basis of that make a report which will be most complete and accurate. 166 We cannot get away from the fact that where a mine operator has any latitude at all, or if he has any doubt as to the cause to which he can properly attribute any failure of his mine to produce the proper amount of coal, it is human nature, if he has the chance, or if he has a doubt, for him to resolve the doubt by attributing the shortage of production to a cause for which he thinks he is in no sense responsible rather than attribute it to a cause for which he may be responsible. I think it is inevitable for the operator, where the matter is left to his own judgment, to resolve all doubts in charging up shortages of production to car shortages. I want to make it clear that I do not claim any operator would deliberately misrepresent facts, but it is a matter involving elements of doubt, and it would be against human nature for a man, when left entirely to his own judgment, to resolve doubts against himself, whereas, if the Geological Survey had the necessary equipment to make a comparison between the reports of the coal operator as to what the car shortage amounts to and the reports of the railroads as to what the car shortage amounts to, there would be an improvement in my opinion as to the accuracy of the reports, and that is without any reflection on the honesty of the coal operator, but simply the recognition of one of the fundamental principles of human nature. So that is one point I urge, the provision of ample funds for the Geological Survey to conduct this current inquiry and have a complete and accurate record. I believe that the dollars that are spent for that purpose will be returned many fold to the public in the saving in the price which eventually they will have to pay for coal. While referring to that report of the Geological Survey, I would like to point out this fact. The report is on a basis of potential production for the mines, and comparing one week with another it is very useful. It shows the trend from one week to another, but if it be assumed that the shortages in production indicated by that report correctly represent the actual loss in pro- duction, it is a very mistaken assumption, and one which may create widespread misconception. For example, these reports which the Geological Survey is now making for I think about 2,500 operations are based upon a potential capacity which aggregates close to 16,000,000 tons per week. I understand the highest production that has ever been made is only about 16,000,000 tons, and the highest that has been averaged for any considerable period of weeks, is only something over 11,000,000 tons. So ,that_ this potential production of 16,000,000 tons per week is entirely misleading, if we view it from the standpoint that any failure to realize that production in any week represents a loss to the public. If the mines had the facilities, labor, transportation and markets to operate up to the capacity of 16,000,000^ tons per week, they would supply the entire demand of the country for coal in a fraction of the year, and they could not run at all the rest of the year, and, of course, it would break the price. So that that table while it is very useful in studying the trend from week to week is very misleading if it is regarded as indicating the amount of loss in the production of coal. The second point that I wanted to ask the Committee to consider is the arrangement through some proper Government agency — and there again I should think the Geological Survey would be the best one — for the most accurate possible estimate as to what are the actual requirements for coal in the rest of the calendar year, and also between the end of this calendar year and March 31st, which is the end of the coal year ; and necessarily the situation is involved in considerable confusion, because the conditions have been abnormal in very important respects during this calendar year. As I understand it, we started in this calendar year with an abnormal amount of coal in storage. So, of course, that took the place of coal which would be produced this year to an important extent. We also started in this year with a suspension of activity on the part of a great many industries which were very active last year and which were consuming exceedingly large quantities of coal, exceptional quantities of coal. So that in the early part of this year especially it seems reasonable to assume that the actual consumption of coal was con- siderably below normal in many important lines of business. We also had a situ- ation where we had perhaps the mildest winter that has ever been known in 167 the history of the country, and the preceding winter was the most severe that the country has ever known. So presumptively the domestic consumption of coal in the early part of this year was very much less than the domestic consumption of coal in the early part of the preceding year, and in many parts of the country bituminous is the only sort of coal that is used for domestic purposes, as well as for in- dustrial purposes, or practically the only sort. Even now conditions are not normal. We are uncertain as to what the prospects are for the rest of the year as to coal consumption in this country, as to coal exports. So we have a situation where it is peculiarly difficult to make a satisfactory estimate of the coal which actually must be produced in order to meet the requirements of the country. Now, so long as that is a very uncertain element there is danger that the amount of coal that may be needed may be exaggerated and a shortage pressed on the public as inevitable, when a more accurate ascertainment of the probabilities would indicate that the. coal would not be needed and hence would tend to prevent a panicky state of mind on the part of the public as to where it would get its coal supply. So that my second suggestion is that the committee arrange through a proper governmental agency to get a prompt estimate, of course as accurate as practicable, as to what will be the actual total requirements for the rest of this year, taking into consideration, of course, the rather small production in the early part of this year. In that connection I want to call attention t9 a point in my reply to the Senate resolution. I stated in that resolution that in the first six months of this calendar year the railroads had consumed 26,000,000 tons less of coal than they did in the corresponding six months last year. I discovered a day or two ago that 26,000,000 tons was an estimate applying for the twelve months, and the actual extent to which the consumption of railroad coal in the first six months of this year fell below the consumption by the railroads of coal in the first six months of last year was 13,764,000 tons, instead of 26,000,000 tons, which I gave, which was an estimate for the entire year. Another point which I think would be very useful — and that is the third point I have in mind — would be for the Committee to get information as to the prices at the mines and to the consumers. It seems to me that we have not any satisfactory light on that subject, and I should think it would be very useful for us to know what the prices had been at the mines, what the costs of distri- bution are between the mines until the time that the coal gets to the consumer ; what has been the progress of those prices, how they have compared with the government maximum price which prevailed last year. My understanding was that those government maximum prices were fixed on the theory that they ought to be high enough to encourage production by many of the -high cost miners, because the total production during the war had to be at an abnormal figure, and it would be of interest to know how the prices actually charged this year have compared with those government maxi- mum prices which were fixed on a high basis and for the avowed purpose of en- couraging during the war an abnormal production of coal so as to enable all of the high cost mines to produce coal freely. I do not mean those prices were fixed on the basis that every high cost mine, no matter how high its cost, could produce at a profit, but they gave special consideration to an important part of the cost of production, so as to enable a large part of the high cost production to stay in the business and aid in producing the total which was abnormal and which was needed during the war. I think information on that matter is of great importance as to what the prices have been and how they compare with the government maximum prices. The fourth point I have in mind is with reference to further protection of the public in view of these factors that I do not think we can shut our eyes to. One is that undoubtedly there is going to be a continuation of transportation difficulties. My judgment is that we will overcome them to the extent of trans- porting the coal which the country needs, but they will be manifested over and over all through the year — car shortages and other difficulties in one part of 168 the country or another — and that therefore we will have that manifestation right along. That will afford a very valuahle opportunity for stressing those transporta- tion difficulties, creating the impression that there is going to be a serious short- age of coal, and therefore coal had better be bought at a higher price rather than take the chances of waiting. So I think we are in danger of having a state of mind created in which prices may be substantially and unjustifiably increased. We must be prepared for this situation, that a coal operator may have contracts to sell coal at a price fixed early in the year, and if this state of panic develops on the part of the public he will get bids for coal at a much higher price, and it will be a very strong temptation on his part to fill the orders at the higher price and omit to fill orders to which he is already corhmitted on the lower price. We may have a situation where people willing to pay the higher price can hoard coal and people who have contracts at the low price will not be able to get the coal they need. We may have a very disproportionate distribution of the coal total and have all sorts of hoarding of coal for which the operator himself will not be responsible in any way, but which' will tend to complicate the coal situation. My thought is that this is so much a war emergency after all that it needs attention. Hostilities have terminated, but the conditions through which we are going are undoubtedly conditions which are a product of the war. My thought is that there ought to be an extension during a period which would cover this winter of the emergency powers which the government had during the war under the Lever Act, to deal with problems of this sort. I believe it would be a perfectly justifiable exercise of the war power on the part of Congress, and it would be a reserve weapon which the government could use if it needed to use it in the public interest. The very fact that the weapon existed would go far toward making it un- necessary to use it ; but I feel that the prospects of the matter being handled so as to bring about these unfavorable results are so substantial that the Government ought to be fortified by having an adequate power to deal with them, I want to refer to one other matter which has been touched upon here, and that is as to the policy of the Railroad Administration with reference to the purchase of its own coal. Last January, I think it was, the question was raised as to whether the Rail- road Administration would not fix a uniform price for coal in various districts and buy coal at that price, apportioning its purchase among the various mines which were able to furnish the proper quality of coal. The disposition of the Railroad Administration was to ask for bids for its coal. That 'was the settled policy of the Government, to secure the benefit of competitive bids wherever it was possible. The Government had practically always been committed to that poHcy except so far as it w^as suspended during the war period. Our disposition was to return to that policy. The representatives of the National Coal Association urged very strongly that we adopt the other policy, that we fix a price and then apportion the coal. It was urged that if we did not do that it would concentrate our purchases on a few mines and contribute very seriously to the condition of labor unrest in the country. I gave the matter very careful consideration, and I felt it would not be justi- fiable for the Railroad Administration to assume that responsibility. The moment the Railroad Administration assumed the responsibility for fixing a price for coal, it would have been charged with any failure of that price to meet the expectations of the operators and the employees. It would have had to fix a price high enough to cover a good many high cost operations and a price so high as to give what would probably be a very excessive profit to many operators with low cost operations. I did not feel I was justified in adopting that course. I felt that 1 ought to resort to the settled government policy of asking for competitive bids for the coal; but I took extra precautions to avoid the difficulties which it was pointed out would arise if competitive bids were asked for. For one thing, it was argued that ifthe purchasing power of the Rail- 169 road Administration were concentrated and competitive bids were asked for, the combined concentrated purchasing power would be so great as to be destructive to the operators. Therefore we adopted the rule that the purchasing agent for each railroad would buy his own coal and that it would not be bought through a central agency of the government; each purchasing agent to ask for bids from mines in the part of the country supplying his railroad and deal with the matter separately, of course under supervision. But still there was no concentration; there was no effort to concentrate all the purchases in one locality. The effort, on the contrary, was to spread the purchases over the various railroads, and I am advised that the result has been, on the whole, that our purchases were actually spread out more than they were even in the pre-war period, although it would of course vary in different parts of the country. I am advised, however, that that is the general result. We also adopted the rule that we would not accept any bid unless the operator certified that the price was sufficient to maintain the present wage scale. We maintained that policy. In one instance an operator made a bid and said it was not sufficient for that purpose, and the bid was rejected. We also adopted the policy of making our contracts public. It was urged that unless that was done some operators might make unreasonably low bids to get a status in furnishing railroad coal which would be injurious to the employes and injurious to other operators. So we made the bids public. We endeavored throughout to adopt a most considerate policy to off- set the objections that were urged by the National Coal Association. We had a great many specific complaints, and undertook to adjust them and to go as far as possible in removing causes of complaints; but we did ad- here, and we felt we must adhere, to the general proposition that the Rail- road Administration would not take the responsibility of fixing the prices for railroad fuel, but, on the contrary, would ask for competitive bids and leave it to the operators to fix prices, subject to the limitations that I have mentioned. That is the plan we have carried out. The suggestion has been made that we beat down the price. We did not beat down the price except so far as operators felt they were justified in making a price for a traffic which was to a certain extent uniform throughout the year — much more so than many sorts of traffic; and we adopted and established governmental method, but with various qualifica- tions to protect this unusual situation. The intimation has been made that because operators made lower prices to the Railroad Administration on account of its asking for competi- tive bids, they had to make higher prices to other people. I do not think anyone has assumed responsibility for that statement, but I think that was rather an inference from some of the statements which were made. I would be very glad indeed to see an investigation on that point; I would be very glad indeed to see what profits the operators made last year and this year and just how that worked out. I do not believe there is a single instance where any operator made a price to the Railroad Administration so low that it could serve even as a plausible pretext for increasing the price to anybody else. I think it would be a very enlightening thing to the public to have exact information as to the profits which the coal operators made under the maximum prices which they charged last year and the profits which they made this year; and as to what if any relation the prices they charged the Railroad Administration had in regard to that matter. My own judgment is that what reductions we got in price were only such as would be perfectly natural for a customer which was purchasing throughout the year. There is another feature of this matter which, while it is perhaps only a matter of history, I think it is desirable for you gentlemen to have in mind, since it was commented on here. 170 Prior to the war the railroad companies used as a consideration in their coal contracts the factor that they would guarantee a 100 per cent car sup- ply for the railroad coal, and of course that was a very important consid- eration, because the operator furnishing the railroad coal could be assured that he could supply that coal even in times of acute car shortage. From the railroad standpoint there were very valid reasons, because, after all, the railroads had to run. A railroad had to have its coal or nothing else could be transported. But after that was thoroughly reviewed last year the conclusion reached was that the railroads ought not to use that as a factor in their coal contract, so that that guarantee was dropped out. As a result of that it was arranged that the Fuel Administration was to see to it that the rail- roads got the coal that they needed to run the railroads. I believe reference has been made here to the fact that there was a 10- cent reduction in the price of coal on account of that arrangement; but it was also on account of the arrangement that the railroads paid a consid- erably higher price for coal than they had been paying before, and it was roughly figured that the 10-cent reduction on all the coal produced would leave the coal operators getting about what they did on the other maxi- mum price, combined with the lower price which they were receiving from the railroad companies. So it was not regarded as a reduction in the price of the aggregate coal; it was regarded as an increase in the price of coal furnished the railroads and an offsetting decrease in the price of coal fur- nished the public. It was never my understanding that the coal operators as a whole suffered a loss on that account. On the contrary^ my inclination was to as- sume that it was to their advantage, because I believe that what they gained in charging more to the railroads more than offset what they lost in the 10-cent reduction to the public. Just one other point, with reference to the policy of the Railroad Adminis- tration, and that is as to the purchase of coal last spring. In many instances the railroads had quite a large stock of coal in storage at the beginning of the year, and of course there was a natural temptation to use that coal, but it was strongly represented to us that the mining labor situ- ation was very serious because there was such a sudden and serious cessation of the demand for coal that many mines had remained closed so much of the time that their employees could not get enough wages to live on. In considera- tion of that fact we adopted the definite policy of not consuming our storage coal as rapidly as we would normally have done, but held that coal in storage to a greater extent than ever before, and therefore bought more coal currently during this period of slack demand in the spring than we would have bought if we had used up our storage coal as the general public seemed to be using its storage coal. I am advised by our Division of Purchases, that at July 1st of this year we had about 12,500,000 tons of coal in storage, which was about 3,000,000 tons more than the coal in storage when the Government took over the railroads in January 1st, 1918. So we have not adopted an inconsiderate policy so far as railroad purchases of coal are concerned. On the contrary, we purchased more coal last spring to help out the situation than we would have had to purchase if we had used up our storage as much as we could have used it. I am also advised that the amount of coal we now have in storage is as much as ought to be carried or as can properly be carried, with due regard to economy. It is important to bear in mind this further consideration, and that is the present plan is for the railroads to be returned to private control on December 31. If the Railroad Administration buys coal and keeps it in storage and turns it back to the railroads on December 31, in excess of the coal which the Rail- road Administration got from the railroads at the beginning of Federal control, 171 the result will be that the Government will be tying its money up in coal for the benefit of the railroad companies. The theory of our contract is that we shall turn back the same amount of materials we received ; but if we are to turn back an excess amount, the result is that the Government is tying up its money in this excess amount of mate- rials, and then we will simply have the obligation of the railroad companies to repay it. The financial situation of the Railroad Administration has been such that I am satisfied it cannot afford to tie up any money in railroad materials and sup- plies in excess of what the contract calls for, because Congress has been reluc- tant to make appropriations necessary to meet the situation as it exists, and we certainly ought not to make the. situation more difficult by tying up Government money unnecessarily in materials or supplies to be used by the railroad com- panies after Federal control ends. So we will have to work, as we get toward the end of the year, to that end, that we will not have in storage a larger amount than we had in storage at the beginning of Federal control, unless the corporation itself wishes to buy the coal and pay for it. Mr. Chairman, in conclusion I want to emphasize again that as to the trans- portation aspect of this matter we are doing everything we can to meet the diffi- culties which necessarily arise on account of the fact that the purchase of coal has been so deferred — so much of it is going to come in the latter part of this year ; and we welcome suggestions and advice from all sources, and we stand prepared to give the committee any facts that it thinks it might need. Aside from that I urge on the committee the adoption of the specific recom- mendations I have made here as to putting the public in possession of the facts, which will be a protection to the public, and so as to give the Government a control which will enable it to protect the public if the need for such protection arises. I shall be glad to answer any questions, although I would like to say that as to the details of the matter I may have to turn that over to my associates to give more exact information than I could. The Chairman : I feel that the committe is very grateful to you, Mr. Hines, for making these practical suggestions and coming here. I think Senator Wal- cott has some questions to ask and I have also, but before that is done I would like to say that Mr. Sherburne is here, from Massachusetts, and intends to present the situation in regard to Massachusetts as to the shortage there. I wanted to ask you whether you would like to have Mr. Sherburne ask you these questions, or Mr. Gutheim? Mr. Hines : I probably could not answer the detailed questions which he would have to ask, and I think that he could get his facts better by getting them from Mr. Gutheim. The Chairman : I think that will be more practical. I wanted to ask, Mr. Hines, whether you thought it would be practical, in the event of an extreme shortage, to create priorities in coal cars. Mr. Hines: I think it ought to be done only as a last resort and in order to meet a very acute situation, because if we do that we at once slow down a lot of very important work. During the war road building, and, to a considerable extent, other sorts of construction were practically suspended because everything had to give way to the war. When the armistice was signed there developed an insistent demand that the facilities be provided for doing those things, and the Government en- couraged that. It wanted to encourage a return to normal conditions. There was an insistent demand, among other things, that we make reduced rates on road materials so as to get the road program started again. We did make a reduction in rates, and all branches of the Government have co-operated to en- courage the resumption of that work throughout the country. I think it would be exceedingly unfortunate to hamper the continuance of that work and I do not think it ought to be done except as a last resort. My 172 « judgment is you will find it will not be necessary, although, as a last resort, we must do whatever is necessary to move the coal which the public needs. The Chairman: I was curious to know how important the distribution of coal was to the general economic situation in regard to food and transportation and the like, everything of that character; how important you considered it; in what position it was placed in your own mind, Mr. Hines: In the last analysis it is of course the fundamental thing, and we must do whatever is, necessary to meet the requirements. But my judgment is that we can do that witho/it going to the extreme of cutting off these im- portant activities such as road building and other forms of construction . The Chairman : You spoke of the excuse that the operator was likely to give for advancing prices and an effort to procure a better market as being laid at the Railway Administration's door. We have been making an effort to sort of calm the irritation and try to bring results. It was shown here that the Na- tional Association from time to time reported specific instances of car shortage. They were definite statements — the number of cars short at the mine in specific cases. I was wondering how completely you were organized to clear away those difficulties and to meet the specific cases. You have a transportation division, have you not, a car service division? Mr. Hines: We have a division of operations, and in that we have a car service section which supervises the distribution of cars. Of course all these complaints as to car shortage go to that section and are handled by it. Some time ago I suggested to the President of the National Coal Associa- tion that while through our own agencies we were keeping in touch with this situation, it would be a valuable additional aid if, through his agency, he could give us the benefit of specific facts. From time to time since then specific facts have been submitted which we promptly consider, and I am hopeful we may be able to work out an even better method of utilizing those advices which the Coal Association may give. The Chairman : You spoke of the fact that a- charge was made that the Railway Administration had forced some of the operators to sell their coal be- low cost. That was intimated at the hearings, but the committee failed to elicit * any specific information upon that subject. I do not know that that was clearly brought out, although you mentioned it. I know of no evidence before the com- mittee which developed any specific' instances. There was a general statement that the Railway Administration had in certain cases forced a price which was at or very near or possibly below cost, but the Chair asked for specific instances and I think we failed to get any. I think the situation is this, that if we are going to proceed we have got to proceed on the theory of good faith, and that everyone will work together. I wanted to ask also in regard to a continuance of the Lever Act as a weapon. Do you mean the hoarding provision, or the penalties for increased prices ? Mr. Hines : My thought is that in this very abnormal period we are going through it would be of interest to the public to have the benefit of all the pro- visions of that act as a reserve weapon for the control of the situation. I would like to see all the provisions of that Act extended so they shall be available throughout this winter, if need be, to protect the public. Of course it would be difficult to forecast what would be necessary, and of course the very fact that the Act was in existence and capable of being called into action I think would be an important restraining influence. The Chairman: Of course these were very drastic war emergency measures, and the question has been in my mind, whether we will not overcome our diffi- culties if we avoid drastic legislation and trust to the general conditions and the good faith of people — whether we will not solve the problem without giving Uncle Sam any more medicine. I think Congress is reluctant to make these Acts permanent. Of course if there is any wrong doing or any profiteering, I think the attitude of Congress is that we want to lower those prices ; but can 173 we not accomplish the result through co-operation rather than through drastic legislation ? Mr. Hines : My suggestion is not that they be made permanent, but I feel that our conditions this winter are going to be, if anything, more difficult than the. conditions in the actual war period. I say they are an outgrowth of the war. Senator Walcott : You are speaking as to our coal conditions, I assume? Mr. Hines : That is what I had in mind at the moment, yes. Senator. Senator Walcott : I am at a loss to understand why you should feel any apprehension in that regard, Mr. Hines, when you seem to be quite positively of the opinion that the railroads can carry all the coal that the public will need. Where is there going to be any situation that is an occasion for any alarm as to extraordinary conditions ? Mr. Hines : The conditions, are going to be extraordinary, Senator, and while I believe we are going to meet the absolute necessities of the situation, it will be inevitable that there will be a great many instances of car shortage and transportation difficulties. There will be plenty of them to create a feeling of alarm on the part of the public. It will be a fertile field within which in- creased prices could be made Senator Walcott : Let me ask if it is not quite typical of the railroad busi- ness always that there are periods of car shortage from time to time? Is not the car shortage difficulty one that is constantly with the transportation business, not only during the war, but has it not been so prior to the war? Mr. Hines: That is a fact, Senator, that the car supply and the trans- portation facilities have never been sufficient to meet the maximum de- mand; in fact, they could not economically be made sufficient to do that. We have always had conditions of this character. Senator Walcott: Do you anticipate that this winter the condition with respect to car shortage will be abnormally bad as compared with the ordi- nary experiences of the railroads? Mr. Hines: My judgment is that we will be able to handle the matter so that it will measure fairly well up to the pre-war performances of the roalroads. Senator Walcott: W« got along prior to the war without any Lever Act. What is there in this situation now which you anticipate will be comparable with the pre-war conditions, that makes you feel we should have the extraordinary remedy of the Lever Act to take care of us? Mr. Hines: My judgement is. Senator, that the war itself has created some new conditions. For example, it fixed a government price for coal which, to a large extent, appears to be the starting point for the price after the war. It seemed to bring about a closer degree .of cooperation among the coal operators than ever before, a greater insistence on their part on maintaining this higher price for coal, and apparently it has brought about a greater disposition than ejsiisted before the war to concen- trate on transportation difficulties, as a thing to cause popular alarm. As I say, in the first six months of this year there were virtually no transportation difficulties of importance in the handling of coal, and yet the National Coal Association began then to emphasize the situation and it is going to keep on doing it, in my opinion. Briefly, I think the situation is that we have a very high Government price as a starting point; that you have a much closer cooperation among the coal people than ever before, and a disposition on their part to empha- size these transportation difficulties; and it is a question whether it is not to a large extent for the purpose of serving as a basis for the increasing of the price. So I think that the conditions are more difficult and disquiting from the standpoint of the public than they were before the war. Senator Walcott: If I catch your point it is that while the car short- age conditions will he no worse than in pre-war times, yet the psycholocrv, so to speak, surroundine: conditions now will be extraordinary, so that the 174 people will take more alarm at it; and, beinpr alarmed at that car shortage, which is not above normal, they will get panicky over the coal situation and boost prices and hoard and load up, and in order to counteract that tendency you think the Lever Act ought to be continued. Is that the line of argument that is running through your mind? Mr. Hines: That is a partial statement of it, Senator. We have not only a psychological condition, but, as I see it, we have a definite purpose on the part of the National Coal Association to emphasize this condition to an extent far more than was ever done before the war. We have this high Government price as a starting point and we have an unusual degree, as I understand it — I do not speak with authority on that — of cooperation among the coal people, which is one of the outcomes of the war period. Let me add this, Senator, that undoubtedly we have a situation where the year's purchase of coal is going to be concentrated in the latter part of the year to a greater degree than normally. What that year's purchase is going to be, what part of it is going to be purchased the latter part of the year we are in considerable doubt about, because there are a great many doubtful factors which I am hoping will be cleared up. But the transportation difficulties, I believe, as I indicated in my reply to the Senate, are going to be pronounced. For example, this strike which occurred in the early part of August has made a peculiarly pronounced situation just at that time, although a temporary one. Temporary conditions of that sort may recur from time to time. While I believe that if you average the situation through the rest of the year we will be able to handle it and we will not fall any farther short of meeting it than in the prewar period, yet I think it is entirely possible that there will be occasions when the situation will be more alarming and it will be more available as material for alarming the pubic, if that is the purpose. Senator Walcott : Of course, while it is material for us to see to it, if possible, that extortionate prices are not charged, it is further very material to see to it that the coal actually gets to the consumer. The Railroad Administration is not primarily concerned with the matter of price. Its job is to transport the coal and get it to the consumer. Do I understand you to say that no matter what the price might be, assuming there are people willing to pay it, the Railroad Administration will be able to supply the transportation necessary to get the coal to the public to satisfy all legitimate and necessary requirements? Mr. Hines: My judgment is that we will find ways to do that, and I hope we will find ways to do it without resorting to extreme measures which will intefere with other traffic. But if it becomes necessary to do it, we will do even that, as coal is one of the very fundamental things. Senator Walcott : I have been impressed with the fact which so far appears in the testimony, and which may be rebutted by someone who knows the industry better than I — but thus far it has not been rebutted — that at the bottom of the problem of supplying coal to the country is the matter, of course, of transporta- tion. That is perfectly apparent to everyone. The coal has got to be moved from where it is in the ground to the man that wants it, and that therefore car supply is the fundamental essential element in the situation which in turn reacts upon production, because if the cars are not there to take the coal away from the mine, the mine cannot produce and the production is shut off. It seems to be clearly demonstrated by the evidence so far that there is today, according to the last reports, a very material car shortage. Numerous instances are in evidence of cases where mines cannot operate up to their ordinary capacity, not to speak of their potential capacity, because they have not the cars. Cannot something be done now to supply those important demands for cars? We can turn over to you a vast pile of telegrams that have been filed here from particular mines, showing the actual shortage in the country. Can they not be turned over to you and you have your proper officials take up those particular instances with a view to supplying cars where they are short? Mr. Hines : Senator, that was what I suggested to the National Coal As- sociation, that they give us the benefit of any specific information they had. because we will welcome the opportunity to have that in addition to our own 175 reports. We do not need that, however, Senator, for the purpose of doing all we can to meet the situation. To a large extent I take it that those instances are instances which grew out of the peculiar difficulties arising from this. strike in the early part of August, which had double effect : It interfered with car repairs, on the one hand, and, to a very considerable extent, it niterf ered with the move- ment of the traffic and of course produced for the time being a serious inter- ference with the distribution of cars. The report of the Geological Survey for the week ending August 23 shows a beginning to recover from that situation, I just call attention to these figures: The carloads of bituminous coal originating on the principal coal carrying roads for the week ended June 19 were 177,000; July 19, 177,000; July 26, 178,000; August 2, 177,000; August 9, 166,000— showing the beginning of the effect of the strike. ' August 6, 161,000; August 23, 190,000 — showing a very substantial recovery. I have not had an opportunity to analyze these telegrams, but I believe it is ,a fair assumption that they emphasize to a large extent temporary conditions which were connected with the strike. Senator Walcott: I have understood from Mr. Callahan, who, I believe, is the traffic manager of the National Coal Association that looks after their traffic problems, that this condition of car shortage has been rather chronic since there got to be a real market for coal; that the complaints as to car shortage have been coming in in extraordinary numbers prior to the occurrence of the strike. The Chairman: May I interrupt you there, Senator? Senator Walcott : Certainly. . The Chairman: When did the strike begin? Mr. Hines : August 1st. The Chairman : In the week ending July 19, according to the Geological Survey the car shortage was 7.3 per cent. No market, 21.8 per cent. July 26, the car shortage had gone to 11.6 per cent; the market had dropped to 19.1 per cent. August 2, it had advanced to 15 per cent, whereas the "no market" had dropped to 17 per cent. That was prior to the strike and showed progressive increase of car shortage. Mr. Hines: Senator Walcott brought out just now that a condition of car shortage is not a new thing. It always has existed when there has been an active demand for coal and active business generally, and undoubtedly we will have car shortages right straight along in some sections. In the period you are speaking of, Senator, we had the additional condition of the marine strike which seriously disarranged transportation to a considerable extent and had a reflex action which was pretty far reaching ; but the condition undoubtedly existed, and we are going to have it right along. There are going to be car shortages and they will be substantial. Of course if those car shortages had not existed and the mines had produced up to their potential capacity, they would have supphed the demands of the country for the whole year early in the fall. Those things are inevitable, and yet I want to make clear that I do not adopt the attitude that it is a thing to be expected and therefore we do not propose to help it. What I am saying is that I and my associates are doing everything in our power to increase the amount of transportation available for the handHng of all business, including coal. My judgment is that we are going to be able to handle the situation, and I hope, without these extreme measures which would have to be taken as a last resort. As I said at the beginning, I have profited by the emphasis which has been laid on th^ matter during this hearing, and we are giving it the most vigilant attention and we are looking for any way to improve the situation. While un- doubtedly there are going to be shortages and undoubtedly they are going to be emphasized and advertised right up to the limit, I believe we will be able to meet the situation, although it is one of decided difficulty. Senator Walcott : When you speak of being able to meet the situation — and you speak with assurance of that— that statement necessarily involves a knowledge of what the situation is. It is made up of production and consump- tion. I take it from the testimony that has been given that the mine can un- 176 doubtedly produce if there is a market, if they have the labor and the trans- portation, not only enough coal for this country, but enough surplus to meet the deficiencies abroad. So there seems to be no difficulty in the production end unless labor or car shortage interfere, assuming there is a demand, and there seems undoubtedly now to be a demand. The other element of the situation is how much coal is needed — that is to say, the consumption. You do not reason- ably know how much will be needed, do you? Mr. Hines: I think that is the thing that needs to be ascertained. Senator Walcott : I understood that to be one of the questions that this Commitee should very helpfully try to ascertain that definite factor of the situ- ation, to wit, how much coal is needed from now on. Mr. Hines : Yes. \ Senator Walcott : Nobody seems to know. Do you not think, therefore, that you are speaking a bit optimistically when you say that the situation will be met, when you really do not know how much coal you have got to carry? Mr. Hines : I think, Senator, that we have got the opportunity, if it is necessary, to give preference to coal to whatever extent may be needed in order to meet the situation. So we have got an ultimate weapon there that we will use when necessary ; we have got an ultimate resource there that we will use to meet the situation if necessary. Senator Walcott: But in your judgment, notwithstanding the fact that there is a present demand for coal and apparently a present car shortage, it is not sufficiently serious yet to justify the inauguration of these extreme methods? Mr. Hines: Not of these extreme methods, no. Of course those conditions have confronted the country year after year. Right at the moment, they are quite pronounced on account of this interference by strikes which are now over, and of course are also influenced by the fact of the concentrated demand. But I do not see anything in the situation which impairs my belief that we will be able to meet it. Senator Walcott: Mr. Hines, in view of the fact that you regard what I shall call the panicky state of mind on the part of the pubHc as a very material factor in this whole coal problem, would you care to say here, so that the press may get it, that the public need not be alarmed for fear that the railroads will not get to the public a sufficient amount of coal the balance of this year, this coal year, to meet their necessary demands? Mr. Hines : Senator, I would not want to say anything to encourage the public in the postponement of the purchase of coal. I would not want to put that in any other way than I have already put it, that on account of the con- centrated demand in the latter part of this year the transportation difficulies are undoubtedly going to be serious, but my best judgment is that we will be able to adopt expedients which will enable us to transport the coal which the public requires, and I hope we can accomplish that purpose without going to the extreme of practically cutting off other sorts of traffic. That is the situation which we are studying from day to day and getting additional information on from day to day, and we are forming our views in the light of the new developments. I do not beheve I can put the matter any better than that. The Chairman : Mr. Hines, yesterday there was a statement made to the Committee by, I think, the sales manager of a certain mine that a price of $3.53 was asked for the coal at the mine owing to the fact that they had to take the chances of demurrage at the point of shipping. It was export coal shipped from Philadelphia, I beheve. The average price was somewhere around $2.50. The price charged was $3.53, and that price was loaded, because there was a hazard in the shipment. , The statement was made that the engagement of the tonnage from the Shipilmg Board caused a situation whereby demurrage might be charged by the Railway Adni^inistration. It struck me as being somewhat unfair for one governmental agency to penalize a shipper for the delinquency of another gov- ernmental agency. I wanted your views in regard to the demurrage matter. ' Do you not believe that some relief should be granted so that the purchaser of that coal should get it at a lower price? Mr. Hines: Senator, my judgment is that we ought not to make anv 177 modifications, any relaxation of our demurrage rules, but, on the contrary, if anything, we should strengthen them because, after all, the object of a demurrage rule is to force the car back into service. It is to help meet a critical situation. The moment we begin to encourage use of cars for storage — I do not care whether it is on the pretext that another governmental agency is not doing what it ought to do or not — that moment we begin ourselves to break down our car supply. So my judgment is that that is a situation which ought not to be met by taking off or reducing demurrage. Demurrage is there for a proper purpose, and it causes the shipper and the purchaser between them to be diligent in trying to get the car released. The minute we relieve them from that motive, we impair our car supply, and therefore hurt the general public interests. The Chairman: Do you use any anthracite in the Railway Administration? Do the railroads use any anthracite? Mr, Hines : Mr. Spencer, could you give that information to the Committee? Mr. Spencer: Yes, sir; certain of the anthracite roads use it. The Chairman: To what extent? Mr. Spencer: I can have the exact figures prepared, but my recollec- tion is that it is about 10,000,000 tons. The Chairman: If you will do that, please, because we are going to take up the anthracite matter next week. Mr. Hines, there is just one other question that I desire to ask you. Of course undoubtedly the coal operators can take advantage of the situa- tion. I have seen it over in New Jersey, but you speak of the fact that through greater cooperation they are enabled to do that. Cannot that greater cooperation be utilized for good rather than for evil? Do you not think that appealing to them will make them handle the situation and pre- vent a run-away market? Do you not think they can do a great deal in that way? Mr. Hines: I believe that coal operators are human beings like the rest of us, and that they will respond, like anybody else will, to a serious national emergency. So it seems to me you are entirely right in that view of it. They do not think the railroad people are human beings, but I think they are. The Chairman: I want them to think that the Director General is a human being, anyhow. Senator Walcott: You spoke of railroad coal in storage. It has been stated by someone here that the railroads use coal cars for storage pur- poses. If that is true on any extensive scale, it would mean that a great many cars, of course, were not rolling. Can you give us any information upon the extent of the use of cars for storage purposes? Mr. Hines: In the early part of the year when there was a great sur- plus of coal cars and when if they were unloaded they would simply be stored and not used, it was quite the general practice, and the very proper practice, to let coal stay in the cars, because it might afford the necessity for an unnecessary unloading of the coal and an unnecessary handling. As the situation began to tighten up we began to put restrictions on them, and there has been a progressive reduction in the number of cars unloaded of railroad fuel. Inevitably you have got to have an irreducible minimum of cars loaded with railroad coal, because you cannot take it out instantly. That is one of the points which we are following up very closely. The peak was reached on June 6th, when there were 51,770 cars of company fuel on hand in the cars. That has been dropping ever since, and on August 22 it was down to 33,790, and we are trying all the time to push it down to that irreducible minimum, whatever it is, of the cars that must be on hand. That is a point we are following up very actively and have been since the earlv part of the summer. Senator Walcott: Do you know what that irreducible minimum is? Mr. Hines: No, sir; I do not know that anybody could give a very sat- 178 isfactory opinion on that, although we can make estimates and give you that information. We are striving toward it all the time, trying to get those cars released. Senator W'alcott: I understood you to say you had, I think, twelve and a half million tons now in stock, so to speak. Where is that coal stored— in cars or at storage points Mr. Hines: That is mostly not in the cars. Mr. Spencer, can you give a general idea about that? Mr. Spencer: Practically none of it is in cars. It is coal on the ground or in the chutes, that has been unloaded, and from there will be either loaded out again to go to distant chutes or, by mechanical means, put into bins. Senator Walcott: So no cars are being wasted, so to speak, in order to keep that twelve and a half million tons? Mr. Spencer: No, sir; that is on the ground, as we express it. Senator Walcott: The four suggestions you made, Mr. Hines, were, first, the securing of reliable information as to the current production; second, securing reliable information as to the needs of the country; third, an inquiry as to prices at the mines and to the consumer; and, tourth, a possible extension of the war powers in the Lever Act. Those first two points, an inquiry into the production and the coun- try's demands, you suggested might be met by supplying funds to the Geological Survey. Of course that would necessitate Congressional action. Congressional legislation. Cannot the Railroad Administration, from its records, get data as to the current production, the rriatter involved in your first point? I understood you to say that the Geological Survey checks up its information secured from the mine operators by consulting the rail- road records, so that the railroads manifestly have available to them the in- formation which your first point covers. Am I wrong in that conclusion? Mr. Hines: The railroads, of course, have information as to the coal actually produced and loaded on cars. They have also information as to the extent to which they have met the requisitions of the mines for cars. Of course that information comes from what might be regarded as an in- terested source — that is, the railroad itself. I understand that the Geological Survey does get the benefit of cer- tain information which the Railroad Administration has, but I do not un- derstand that it has the force to check the representations which the oper- ators make as to what part of loss is due to car shortage, what part to labor shortage, what part to no market, against anything which the Rail- road Administration has; and in fact, at present, I do not understand the Railroad Administration has anything except the coal operators' statements as to car shortage. My thought was that there ought to be some agency of the govern- ment not interested as the railroad is in the matter, which would get all branches of this information and check it. It would get the benefit of a check from the railroads, but give the information in a more detached way than the Railroad Administration can do.. We of course can give in- formation as to the coal loaded on cars and available currently. We can also s1k)w the extent to which we furnished cars that are called for. At present our records on that are kept by railroads. Each railroad reports as a whole how many cars are called for, and how many cars are fur- nished, whether it is 100 per cent or more or less. My thought was that there ought to be a comprehensive and com- plete inquiry on that, and that that might best be done bv the Geological Survey than by any other instrumentality. Of course the Railroad Admin- istration will shortly go out of existence, so that anv expedient it might adopt, while useful perhaps for the time being, would not be a contribu- tion to any permanent record on this matter, and I think a permanent rec- 179 ord, that is, a permanent provision for a permanent record, is very desir- able so as to make sure that the information is complete and accurate. Senator Walcott: Is the Railroad Administration arranging its plans with any presumptive program that it is to carry out in respect to carrying coal? By that 1 mean has the Railroad Administration adopted the policy of assuming as a matter of safety that it will have to carry for the balance of the year so many million tons of coal and shaping its course upon the theory that that program of work is to be carried out by it, or is it simply drifting with the situation? Mr. Hines: It is not drifting with the situation. At present, of course, as the facts already disclosed show, our transportation is not up to the current demands. We are doing everything in our povv'er to get as close to that as possible. It is not a drifting policy. It is a policy of the most active and aggressive supervision to get the very best results we can and get just as close as we can to the coal that is offering for movement. In addition to that we have started an inquiry of our own to find out what coal will probably be required the rest of the year and where it will be required, so we can consider how far we ought to go in the adoption of extreme expedients to meet the situation. Senator Walcott: That inquiry is now in progress, is it? Mr. Hihes: It has been started, but I think it would be very desirable to have the benefit of what additional light the Geographical Survey could throw on it. But we are not waiting for that; we are going ahead and making our own program on the basis of our own information if other information is not available. ^, Senator Walcott:* Of course that sort of thine is highly desirable. You are doing the best you can to forecast the demands that are going to be made on you? Mr. Hines: Yes. Senator Walcott: I am just curious to know, Mr. Hines, that in esti- mating the mileage per day of cars you divide the sum total of miles being run each day by the total number of cars, whether they are actually run- ring or whether they are in the repair shop. Why is that method Of cal- culation adopted? Mr. Hines: I have asked the statistical people a great many times about that and they have never been able, so far, to work the thing out to get a factor of cars in active service, because the thing shows from active service to non-service in so many ways. Of course you could move cars that are actually out of service because of bad order, and awaiting repairs, but that would be only one factor. The principal factor is that we have got a great many cars ready for service when they are called for, but they are not called for, and they are simply on tracks awaiting use. It is ex- tremely difficult to draw a line and segregate those cars and transfer cars from the group not in service to the group in service. I think, myself, that that figure of average cars per mile per day has very little meaniner and has a great many possibilities of misleading the public, and I would be strongly inclined to drop it as c? figure in our sta- tistics except th?)t somebody might say we are trying to suppress some- thins:. It is a figure that has been used for a loner while, and, I think, probably misused, because it always complicates results. Senator Walcott: That is what I mean. I was under the impression, from the figures indicated, that it would indicate the relative efficiency in the transportation department over the various periods represented, but it does not necessarily do tliat at all. Mr. TTines: No T do not regard the fignre in my own consideration of ihese matters as havinp; anv significance. Tt does raise some questions in niv mind ns to what caused it. Tl^e r^nirmpn- H?ve von anvtliino- further to add Mr. Hines? Mr. Hines: Mr. Clmirman. in conclusion, T w')nld like to emphasize 180 one point. I want to bring out a little more clearly a point I referred to. Sometime ago in writing to the president of the coal association 1 ex- pressed the desire to get the benefit of the fullest cooperation with them in handling this transportation problem through getting from them help- ful information as to conditions as they got them from the operators. Since that time they have been giving us some information. Mr. Gutheim, who has bee;i in touch with that, has pointed out that their information, as it comes in, is not particularly helpful, and it has been arranged that in the early part of this month the various local representatives of the National Coal Association will come here for a conference with Mr. Gutheim with a view to working out through Mr. Callahan, one of the officers of the National Coal Association, a more satisfactory method by which we can get the benefit of the situation as the operators see it. I am hoping that that will be a useful aid. Of course, we do not de- pend on that. We have our own reports and our own records, and we are constantly pushing to get the best result we can. I am satisfied that we will get an aid by that sort of cooperation by the coal association, and the matter is being shaped up for conferences which I think will prove helpful in putting that information in a more useful form so that we can act on it to better advantage. I do not think that I have anything else to present, Mr. Chairman. The Chairman: Is Mr. Peabody here? Mr. Peabody: Yes, sir. The Chairman : Would you prefer to wait until after luncheon before presenting your statement? Mr. Peabody: Personally, I think I would prefer to have my luncheon first. The Chairman : The Committee will then take a recess until 3 o'clock this afternoon. (Whereupon, at 12:45 o'clock p. m., the Committee took a recess until 2 o'clock p. m.) AFTER RECESS. The Committee reconvened at 2 o'clock p. m. STATEMENT OF MR. FRANCIS S. PEABODY, Of Chicago, Illinois. The Chairman : Mr. Peabody, I am not going to keep you here waiting. I wish to say that the Committee is very grateful that in response to the invita- tion sent you you have appeared, and the Committee, in view of the fact that at the beginning of the war you headed the Committee on Coal Production of the Council of National Defense, and practically created a plan whereby the situation might be met, felt that you could give us some information on the present con- ditions, and also some suggestions as to how they could be relieved. Now, I am not going to ask you any questions at this time. I am going to ask you to make a general statement, and if you do not wish to be interrupted, no questions will be asked you until you conclude. Mr. Peabody: I have no objection to being interrupted. The Chairman : And if there are any questions which suggest themselves, of course I will ask them later. Mr. Peabody : In the first place, Mr. Chairman, I am very happy at the manner in which the investigation is being conducted. My experience usually has been before committees of this kind that there was more of an inquisitorial and hostile attitude manifested, and I am very happy at the position that you and the rest of your committee have occupied in making it an investigation, trying to get results without criticism. I was very happy to hear Mr. Hines' testimony with the exception of one or two statements that he made which I will refer to later on. I will say this, that I have not made as deep a study of the problems of transportation as Mr. Hines apparently has made, in regard to the prices at 181 which coal is and may be sold. Therefore I will have largely to confine myself to the question of coal production. My vision during the last year has been a narrrow one, as I have gone back into my own business and I have only had an opportunity of studying the situation locally from a western standpoint rather than the eastern standpoint. So I do not feel competent to give testimony in regard to the situation in the eastern section of the coal fields. I think a review of the present situation may be helpful. A year ago this January, after peace had been declared, there was a sudden cessation of almost all active industries, and almost all active industries began to draw in their lines and cut down their inventories, including the railroads. That brought about the use of very large quantities of stored coal that were in the hands of the con- suming public and the railroads, which I believe the Geological Survey has esti- mated had somewhere around 35,000,000 tons of coal. The railroads began using their storage coal until Mr. Hines gave orders to the contrary, and, as the rail- roads use approximately 33 1-3 per cent of all the coal used in the United States, until his instructions had been put into force that also checked our industry. The result of it was that in many sections of the United States stoppages of coal mines were prevalent. In many sections of the United in the east there was a large demand for coal, especially in Central Pennsylvania. In the west the prices went down and in many cases in the east in the smokeless coal fields and in the higher grade coals the prices went up. That was largely brought about by the fact that prior to the declaration of peace and during the war period the quality of coal was not taken into consideration. The prices of coal were fixed and prices for high grade coals were fixed on the same basis as low grade coals. The moment restriction was released, it was very natural that the consumer of coal should demand quality as well as price, and consequently the high grade coal fields were overrun with business and the low grade coal fields began to feel what was a very natural normal falling off in the demand for their coal. Our prices, in the West, especially in the districts that produce simply steam coal, as we call it, rather than the high grade domestic coal, went very much below the normal Government prices. That condition existed practically until the first of July, activity in certain fields and a very great lack of business in other fields. That is the history of the coal business from the first of January, 1919, up to July of this year. It is a very diiSicult problem, as you must realize, to make a prediction as to the next six months. The worst situation that could exist, or the worst culmina- tion of circumstances, would be a strike, which is very possible. September 25th the Union Coal Operators of the United States through their committees meet with the union miners' committees in Buffalo to discuss a new scale of wages to become effective when the present scale, which is the scale prepared by the Government, ceases. Under the arrangement made by the Government with the coal operators and the miners the present scale of wages shall cease to be operative upon formal declaration of peace by the President. The contention of the coal miners is that although there has been so far no public declaration by the President that peace exists, yet peace practically exists, and that therefore their present scale of wages has ceased, and they demand a readjustment upwards in the way of shortening the hours of their labor, and upwards in regard to the prices that shall be paid for their labor. They made a demand for a six-hour day, five days in a week, and practically a 40 per cent advance in their wages. That is the problem that the coal operators have to discuss with them in September. I saw a telegram to you today that you were good enough to show to me, which predicted that the men would cease work during the negotiations. That will be a very serious situation if it should exist. Strike is the most dangerous thing we have in the future, car shortage, which already exists ; weather con- ditions which may or may not come ; with strikes, car shortage and bad weather there is nothing in my opinion that can save the United States going through a very serious period of coal famine. On the other hand, if peaceful adjust- ments can be made with labor, and I feel personally that the officers of the 182 United States Mine Workers desire a peaceful adjustment, an amicable adjust- ment, if we should have as warm a winter as last winter, and if the car supply should be adequate to the demands, there is no reason why prices should go higher, and there is no reason why prices should go higher, and there is no reason why anyone should suffer for the want of coal. On the contrary, if we have the strikes, car shortages and bad weather, the price of coal will naturally go up, requiring no pretext, but a normal increase in prices as the demand ex- ceeds the supply. The earnings of the laborer and the cost of coal depend entirely upon con- tinuous work. Our costs will vary from month to month dependent upon the running time of our mines. There will be a variation of between 50 and 60 cents a ton from month to month, depending on the number of hours the mines are idle. So it is true of the miners' wages. Today the wages being paid the union miners of the United States for a ton of coal produced are amply adequate to supply all their necessities. That is, provided they are given five days' work during the week and four weeks in the month. The wages paid the miners are entirely inadequate if they are only going to get one or two or three days a week for four weeks in the month. The cost of coal, the earnings of the man him- self, depend entirely upon continuous work. I believe today that there is ample labor supply in the mining industry to produce all the coal that is necessary to meet all demands over the whole of the United States, provided sufficient hours' work are given to those men. I know that the physical capacity of the mines themselves throughout the United States is sufficient to produce 40 per cent more coal than the possible demands of the United States. Therefore it seems to me that the coal problem comes back to the question of car supply. The third question that the public are interested in, or the only question that the public is interested in is getting its coal in sufficient quantities and at reasonable prices. That depends upon three very necessary things, the supply of labor, the capacity of the machinery to take care of the labor supply, and the car supply itself. Believing, as I do, that there is ample labor, knowing, as I know, that there is ample capacity of equipment for loading, it resolves itself back again to the question of car supply and service by the railroads. The question of the past two or three years and the last six months as to wljo is responsible for this condition does not interest the public now. The public does not want me as a coal man to blame the railroads. They do not want me as a coal man to criti- cise the Lever Bill. They are not interested in that. The only thing they are interested in is, as far as I can see, whether they are going to get coal in suffi- cient quantities and at reasonable prices, and I think that the only thing that your committee, from what I have heard of your questions, are anxious to know is in regard to the future and to let the past take care of itself. I will say this, that in the western districts where the mines have been run- ning only two and three days a week for the last four or five or six months, there is not an operation that has shown a profit. Now, it is natural when the demand for coal increases that those men that have lost during the last six months will want to recover those losses. It will be very normal and very nat- ural for them to want more money, and they can get more money normally on account of the increased demand. Today, in Southern Illinois, Franklin County, which is our highest grade district, the highest grade quality of coal produced in the State is produced there, the larger operators in that district could sell their coal today at a dollar a ton above what they are selling it for. My own company, producing coal in that district, have orders on their books today for more coal than they can produce in the next three months and cannot take new orders. It would be a normal question to ask why we don't get that additional dol- lar. We are not going to claim that it is for any humane reason, or not want- ing the money, because we do want it, but we are afraid of the nationalization of coal mines. We are afraid if the public begins to clamor against the prices 183 that the Senators and Representatives here will try and pass some drastic laws that will take our properties away from us. That is why we are not getting the price we could get today. The Geological Survey reports, Mr. Lesher's reports, they are the only offi- cial figures that the United States has; they are the only figures that we can possibly go to for information. They have been going on now some three years, and I believe in great public questions like this it is tremendously im- portant that they be maintained. During my administration of the coal affairs of the United States Mr. Lesher submitted these figures which were most help- ful ; he submitted them to me continuously, giving the figures from one district, so that we could help remedy conditions in that district, and so forth, and they were comparative figures. We can see the results of the efforts We were making to help the situation. Congress failed to appropriate sufficient money to carry on Mr. Lesher's department in the Geological Survey, and I believe the National Coal Association for the last two months have been contributing sufficient money to continue these statistical figures. They are perfectly willing to do that but it does not seem to me that it is an appropriate thing for them to be compelled to do. I do not like Mr. Hines' statement, which he very continuously injected in the testimony, that the coal operators were practically waiting for a pretext to raise prices. There is no coal operator in the United States who would not be more than satisfied with the governmental prices, provided he could have con- tinuous operating conditions at his mines. But now that the demand begins, our situation is a very little bit improved over what it was before the demand began. Before we had no market. Today we can get no cars. Ten days last month practically the whole of Central Illinois, that is, the Sangamon, Christian, Macoupin, Montgomery, Madison and St. Clair counties, were shut down tight on account of strikes. The Alton, the Illinois Central, the Wabash, they are the roads that operate through that district. Most of those roads also operated in the southern part of the State where there were no strikes. The Chairman: What was the nature of those strikes? Mr. Peabody: Those strikes were brought about by the men refusing to obey the mandate of their union officials. They were revolutionary. They were brought about by the class called the I. W. W., that element. They re- belled against the instructions of their leaders to live up to their contract. It was a very serious situation. It has improved materially. But during that period one would have naturally thought that the coal fields in Illinois where there were no strikes would have had an ample supply of cars, on account of there being no cars going into this field, which has 30 per cent of the entire production of the State. But we were only able to run half time in Southern Illinois because we could not get cars. I have not the Geological Survey figures before me, but I think they will show that to be a fact. I cannot get out of my mind Mr. Hines' continuous referring to the coal operators wanting a pretext for advancing the price of coal. I do not think it is a fair statement to make. He also insinuated that if later on prices should go higher the coal man would make that a pretext for breaking contracts at lower figures. I love my business. Any man I think that is worthy of being in any business should think highly of his business, and I think it is as honorable a business as any man can pursue, and I do not like pubHc men to make statements that the business which I am in, and which I have been brought up in will use as a pretext any such suggestions as Mr. Hines makes to break their contracts. We did not show that attitude when the war started. We were the first great industry that voluntarily lowered its prices. The fact that we were rebuffed for doing so was not helpful to the industry, but it did not make them less desirous of being honorable and clean in their business dealings. What we need, Mr. Chairman, is more co-operation and less recrimination. I had made up my mind when I came down here, when you were good enough to ask me to come, and I was very happy to come, that I would not throw stones at anybody. I had seen rather uphappy statements that I thought were 184 unhappy, made by Mr. Hines to the Senate. I had seen the statements made by Mr. Taylor in regard to the Railroad Administration. I do not think these state- ments help at all either way. I think if we expect to solve this problem we have got to treat the Railroad Administration as if they were human beings, and decent and honest, and have faith in them, and expect them to treat us the same way. I prepared no statement, Mr. Frelinghuyscn, 1 just made notes. The Chairman : You are doing splendidly. 1 do not want to interrupt you. Mr. Peabody: 1 just made notes as I heard Mr. Hines' testimony. Prices will take care of themselves if production is ample. There is no difference between the coal business and the iron business or any other business. If you get your production up, your prices go down. If your production goes down and there is a demand the prices go up. You cannot go against the law of supply and demand. You cannot legislate against the law of supply and demand. Mr. Hines suggests that we put the Lever bill into effect. The Lever bill is in eft'ect. There has been no suspension of the Lever bill. You do not need any new legislation. If Mr. Hines thinks the Lever bill should be put in opera- tion, why doesn't he ask' the President to put it in operation again? It is in effect. It goes out only, from my recollection of the law, and I thought I knew it word by word, and my recollection is that it ceases only upon the declaration of peace by the President of the United States, the proclamation of peace. If he thinks conditions are such that we should be regulated again by the government, why doesn't he say so. I do not believe such conditions exist. I do not believe there was ever any necessity for the Lever bill. I believe that if the coal industry and the roalroad war board, whom my Committee were working with, and I was an honorary member of, had been allowed to function, and we had been allowed to do the drastic things that the Lever bill gave the President authority to do, the taking over by the gov- ernment of the railroads, we w^oiild have had none of those problems con- fronting us today. I wonder if Mr. Hines thought of the effect that the Lever bill would have upon the railroad costs, that it would automatically put up the railroad costs from 20 to 50 cents a ton, because they bought their coal from 20 to 50 cents per ton lower than the government prices, and a return to the Lever bill would naturally bring about that condition again, which condition in time would be reflected upon the public. I see most of my notes on the question of the pretext, which I did not like at all. I am not going to criticise Mr. Hines for his method of buying coah It was not a helpful method, however. Mr. Hines made a statement this morning, and I do not want my tes- timony to be testimony in rebuttal of Mr. Hines' testimony, because I feel most kindly to him, that the railroads would have to — well, he said he had given instructions that the railroads should have no more coal on hand on the 31st of December, 1919, than they had on hand when the gov- ernment took over the railroads, which was the first of January, 1918. I had been wondering how that would work out. The railroads had less coal on hand on December 1, 1918, I mean on the first of January, 1918, prob- ably than they ever had on hand in the history of the United States. There was a greater shortage of coal brought about by many causes on January 1, 1918, than there ever has been. That was the winter of our discontent when we had lightless nights. The Chairman: And heatless days. Mr. Peabody: And many places we were accustomed to go to were closed. Mr. Hines makes the statement that there wer^ 12,500,000 tons of coal in storage on the first of July, that since then that stock has been reduced to approximately 12,000,000 tons. Mr. Lesher was good enough to give me some figures here which I asked for, showing that on the first day of January, 1918, there was on hand in railroad yards, in storage yards, a little over 8,000,000 tons of coal. At the present moment there are 12,- 000,000 tons. It is Mr. Hines' suggestion, I judge so from his remarks this morning, that the railroads reduce their stock to 8,000,000 tons. The result 185 of that is going to be, in the first place, it will put the railroads in a very- precarious position. They use approximately 500,000 tons of coal a day, about 150,000,000 tons a year; that is my recollection. They would cut their supply down to 8,000,000 tons, which would be sixteen days' supply. No sound, well thinking, sound thinking business man would dare cut his supply of coal down to sixteen days at the beginning of a period that looks to me as if it might be the most threatening^ period and one that starts with the greatest shortage of coal that ever existed. If he does, however, and this shortage starts, and we have it in January, what is the result going to be? The railroads are going to begin confiscating the coal that should go to the public, to make up their necessities, and it is going to make the situation twice as critical. I realize that the government wants to turn over the railroads in practically the same condition that they got them, but is the general public going to be forced to suffer on account of a shortage of coal supply in the hands of the railroads on the first of Jan- uary, 1920, to help solve the great governmental railroad question? I think it is a suicidal position and one that will result in great injury. The railroads, instead of cutting down their supply, should now in- crease their supply, so that when this great demand comes in the middle of winter they can let up on their demands on the coal operators, and let the coal go to the public. The coal cannot go to the -Dublic unless the rail- roads have a sufficient supply of coal to furnish their locomotives with power to take the coal to the public. It is very easy to criticise, and I probably have suffered as much through criticism, especially in the coal business, as anyone, but criticism does not help the situation. A man has got to make suggestions that will be helpful. My only suggestion, and I have made it personally to Mr. Hines, is that the cooperation of the coal industry be asked for by the railroads, that Mr. Hines pick coal men — he surely can find some honest men in the industry — to act with his Regional Directors in all sections of the United States, and act with his administration here to advise and coun- sel him as to the necessities of the coal industry which coal men alone can be competent to judge, ask for their helpful advice and counsel. He will get it. and he will get it honestly, and that is the only way in which this situation in the future in my opinion can be handled for the good of the public, through the co-operation of the coal men with the railroad ad- ministration. He roubts or questions possibly the figures given by Mr. Lesher. Why? Because they are furnished by coal men. We doubt, and we cannot help doubting, the figures given by the Railroad Administration. Why? Because they are furnished by railroad men. We have no more faith really, Mr. Chairman, in the railroad men than they have in coal men, and I hope that cooperation can come, because without cooperation you cannot make laws that will produce coal, and you cannot make laws that will start prices going up. because if you do it is going to stop the pro- duction of coal. You cannot legislate, in my opinion, on this matter. It has got to be brought about in my opinion by friendly cooperation between those two great industries, the Railroad Administration and the coal oper- ators. I wish I had more concrete and definite suggestions to make. The Chairman: Of course, Mr. Peabody, I appreciate very much the statements you make, because they are made from the practical viewpiont of an experienced man. You say Congress cannot legislate. I do not think Congress wants to legislate, if it can be avoided. Congress can leg- islate, and sometimes they legislate in a very drastic way. There has been a suggestion that the Garfield system be restored. This was a war emer- gency. We cannot go on in this country under a paternalistic system gov- erning and controlling all of those utilities. That has not been our gov- ernmental system. Nor can we go half way, and it seems to me that while we are in a chaotic condition with half governmental control and half 186 what I may call going back to the Democratic policy of the old days, that those conflicts are apt to recur, because on one side you have men oper- ating under an individual system, and on the other side you have men con- trolling through a governmental agency. We have got to do the best we can and try to work out the problems until there is a complete democrati- zation of the whole thing. The thing that I want to get from you is this. Do you believe that the principal cause at the present time is the shortage of cars? Mr. Peabody: Absolutely. The Chairman: Do you believe that the situation will be entirely re- lieved if more cars are supplied, or the Railway Administration could sup- ply sufficient cars? Mr. Peabody: And move them, absolutely. The Chairman: I want to be perfectly just to Mr. Hines. He has had problems that none of us know about, and, in the first place, take the question of this strike. That undoubtedly contributed largely to the car shortage, the recent car shortage, did it not? Mr. Peabody: Oh, distinctly, he has had terrific problems confronting him. The Chairman: Then Congress failed to appropriate the necessary funds for administration early in the year and the funds were not available for car repairs, and that was another contributing cause, was it not? Mr. Peabody: I have no criticism to make about the Railroad Ad- ministration. I think to the best of my knowledge and belief they have done as well as any body of men could have done with the sit- uation they had to handle, their shortage of money, cutting down their car repairs, their purchases of cars at high prices which the railroad corporations do not want to take off their hands, the strikes, the labor question. It has been one continuous trouble after another. I do not believe that any body of men could have done better. I do not mean to impugn what they have done in any way. I do mean to resent the rather unhappy references of Mr. Hines to the honor and decency of the coal men. The Chairman: I was not making my statement in regard to con- ditions for that reason, but more to arrive at a conclusion as to what is best to be done now to accomplish results, and, as you stated, I felt that we ought to bury the past. Mr. Peabody: Yes, absolutely. The Chairman: I wanted to find out whether you believed that the lack of supply was due entirely to the car shortage. Mr. Peabody: Now, yes. The Chairman: And not to a shortage of labor? Mr. Peabody: Oh, no, but in the last six months, however, the lack of production has been lack of market absolutely. People would not buy coal. We tried. There was an advertising campaign instituted. The Na- tional Coal Association tried to get the people to buy coal, and the result of our campaign was an increase in production, tonnage, of approximately 6,000,000 tons. Now, the National Coal Association stopped that adver- tising, although I was very much in favor of maintaining it. We were simply advertising governmental figures and drawing the conclusions from those governmental figures, but it is too late now to do anything of that kind. The Chairman: What is the nature of your business, are you an oper- ator, do you own mines? Mr. Peabody: Yes, I am an operator, I own mines. The Chairman: What is the highest price that you have gotten for prepared coal? Mr. Peabody: During the last year? 187 The Chairman: No, during the last three months. Mr. Peabody: $3.15 at the mines. The Chairman: And for mine run? . Mr. Peabody: $2.45. The Chairman: And slack? Mr. Peabody: $2.10. The Chairman: Those are practically government prices, are they not? 'Mr. Peabody: I think that the prepared prices are higher than the government prices. They are all higher than the government prices. The Chairman: How much higher? Mr. Peabody: The government price on lump was $2.55; on mine run, $2.35; screenings, $2.05. The Chairman: Do you export any coal? Mr. Peabody: I do not. I wish you would ask me what was the low- est price I have gotten. The Chairman: I will ask you that. Mr. Peabody: I think that would be only fair. The Chairman : Why, certainly. Mr. Peabody : Screenings, $1.40, mine run — I do not like to tell my com- petitors this — $2.00 to the railroads, and lump coal, $2.20. So we have some redeeming features, you see, Mr. Chairman. The Chairman: The thing that I do not understand is this, that you can sell coal at two ranges. Why don't you get an average and strike it and give the public the benefit of it? Mr. Peabody: If the Attorney General and his associates would allow us to do that we could do it very easily. The Chairman: I cannot answer for the Attorney General (Laughter). Mr. Peabody : I beg your pardon. I had forgotten that there was some controversy. But the law will not allow us to. That is all I can say. The Chairman : I know, but you cannot undersell them, is that what you mean? Mr. Peabody : Yes, we can undersell, but we cannot agree to undersell or agree to oversell. The Chairman : But you have made two prices here, you have made the price of $2.20. Mr. Peabody: Yes, I have met the market conditions. When I can get more, I get more, and when I have to take less I take less, just like any other merchant would. The Chairman: Do you sell any coal to wholesalers and to retailers? Mr. Peabody: Yes, we sell a great deal of coal. That is our business, we sell a great deal of coal to railroads, to wholesalers and to retailers. The Chairman : Are the same market conditions reflected there that are re- flected in your prices? If there is a shortage, do they take advantage of it by increasing their prices? Mr. Peabody : I assume they would ; I assume they naturally would. I really know very little of the workings of the retail coal business. I think the wholesalers have been limiting themselves very largely to the diflference between the prices they paid and they sold to a 15-cent differential established by the Government, although I do not know that they are maintaining that entirely. The Chairman : That is the wholesalers. Mr. Peabody: That is the wholesalers or jobbers. The Chairman : For instance, a wholesaler buys coal from you at $3.15 at the mine. Mr. Peabody: Yes. The Chairman : Added to that is the freight. Mr. Peabody: Yes. The Chairman: We will say from your mine to Chicago, what is the freight? Mr. Peabody : From southern Illinois $1.60. 188 The Chairman : That is $4.75. Mr. Peabody : Yes. The Chairman: Delivered in Chicago? Mr. Peabody: Now, he adds as a rule 15 cents to that, v The Chairman : Then, there is the transfer of that to the ultimate con- sumer, he has to store that coal. Mr. Peabody: No, he does not store it; the jobber handles it directly through the cars. The Chairman : He gets 15 cents. Mr. Peabody : As a minimum. The Chairman : A ton. ^ Mr. Peabody: If he can get that much. Frequently he has to sell it at 5 cents. 1 The Chairman: What is the maximum? Mr. Peabody: Well, the Government fixed it at 15 cents. The Chairman: Is that being observed? Mr. Peabody: In normal times, when there was no Government control, he would get what he could get. Sometimes he would have to sell it at less than he paid for it, and at other times he would be able to find a market, a shortage some place where he could get 50 cents or a dollar a ton. The Chairman : But they are observing that rule of 15 cents. Mr. Peabody: I think they are doing it very thoroughly. There is no law to make them do it, understand, but I think they have been doing it very thor- oughly. The Chairman: Have any instances come under your observation where they have loaded 50 cents or a dollar a ton as they did previous to the war? Mr. Peabody : Oh, I think none have come to my personal knowledge, but I have no doubt there are many such cases. The Chairman: There is an opportunity there, is there not? Mr. Peabody : Yes, there is an opportunity of making money on the whole- sale end of it, and also that follows right down to the retailer. The Chairman : Suppose this carload of coal is sold to a retailer, consigned to a retailer. Mr. Peabody : He unloads it and puts it in his yard and distributes it by the ton and half ton. The Chairman : He unloads that coal. What does it cost him to unload and truck that coal? Mr. Peabody: That is such a broad question. It depends upon whether he is unloading it in a wagon, or into hoppers, or loads it by machinery. That is a question that is too involved for anyone to answer. The Chairman : The only way to do is to get somebody's bill and trace it, is that it? Mr. Peabody: Yes, you could do that. That could be done. The Chairman : It is very interesting to this committee to know, because the complaints we get are that somewhere through these various stages the prices are being raised. Now, I have not found such a grave difference in the prices, there is some at the mines, the freight rates are fixed, but somewhere along the line undoubtedly there is advantage talcen of the situation. This Committee wants to find out where it is. Mr. Peabody: What do you call advantage? What is profiteering? Can I ask you a question? The Chairman : Yes, I think profiteering is charging an unreasonable profit. Mr. Peabody : Wouldn't you think that profiteering would be charging an unreasonable profit over a gross year's business? Do you realize that during the summer time these retail coal men lose money every day and every week, and you have to apply the loss they make then over the year's business, it has to be the year's business, in my opinion. The Chairman : I think profiteering is where there is no risk taking in excess of a 6 percent profit. Mr. Peabody : Gross profit. 189 The Chairman : Net, and where there is a risk, I think taking an excess of 10 percent would be profiteering. Mr. Peabody : I think the coal men of the country would be very glad to have you draw a new law for them putting those two as the maximum. The Chairman : But the trouble is that there is no coal man in the country who covers all the stages of production, delivery, transfer and consumption. Mr. Peabody : But, Mr. Chairman, they are all three or four different industries, just as different as they can be. The Chairman : Somewhere along that line these men are making more than you probably are making on your capital. Mr. Peabody : I do not think you are quite right there. Senator. You take a ton of pig iron and follow it through to the needle, and you will find an enormous profit on the weight of that needle, if you figure out what the price of a needle is, what a needle is selling for, as compared to the original ore in the ground. So in our industry it goes through many, many phases. We take the coal, we sell it, we sell it to the wholesaler. In some cases he has large storage yards that he unloads it into, but in most cases he sells it directly to the retailer. The retailer will take that coal, he has to sell domestic coal out of it, and that has to be properly screened, the dirt taken out of it, he will have to deliver a half a ton of coal in bags, and take it up five flights of stairs into a tenement house. That is one of the various things that he has to do. That half a ton of coal taken up those five flights of stairs would probably cost the man burning it, and the one least able to pay it, $15 a ton, while the large utility company buying coal of the same character, it would cost them $5 a ton, but still that retailer delivering that half ton of coal up the five flights of stairs would not make any more money proportionately when the cost was figured in than the wholesaler. You have a very difficult problem there. The Chairman : He might make more ; he might be charging an unreasonable profit, he might be charging more than the labor was worth. Mr. Peabody: He might be. The Chairman: That is what I want to find out, whether it is being done. Mr. Peabody : Well, you can follow the coal up to the retailer very definitely and find out what the percentage of profit is. The Federal Trade Commission have had our cost sheets ever since the war began and we are still keeping them for the Federal Trade Commission, although we are not furnishing them to them, and it is very easy to find out what profit the coal operator is making. It is equally easy to find out what profit the jobber is making, because he sells so many tons of coal and makes so much money out of it. However, when you get into the retail coal business in the large cities, even in the country towns, you are going to have a tremendously difficult time to find out how much he is mak- ing. You take the ordinary country dealer. He will not handle any coal in the summer time. He handles building material and ice and grain and so forth. He might handle eight or ten carloads of coal in the summer time. Or he may not handle to exceed thirty or forty carloads of coal in the winter time. His profit comes as a rule from his own labor in loading and unloading the coal. You will -find -his profit will ht very much a ton, I mean his margin that he charges per ton, ^s a rule will be very much larger than the large city dealer who has a much larger tonnage to handle. There are so many different angles to it. The Chairman: I do not want to get into the anthracite question, but I am going to simply use one illustration. The letters that I get in regard to bituminous are that the prices are increasing, and as far as the mine prices are concerned there is a slight increase in a considerable number of them, but not as much as there is compared with last year. When it comes to the cost of coal, I bought thirty-five tons of coal last year. I paid $11. Mr. Peabody: That was anthracite. The Chairman: Anthracite. This year I paid $12.60, and it seems as if everybody that touched it or looked at it got something out of that coal before it got to my bin, 75 cents to store it ; the coal cost $6.05 at the mine ; the freight was $2.40 to Washington ; that is $8.45. Added there is $4.20 from the car to my bin, and I do not understand it. That is what Fwant to find out in regard 190 to bituminous coal, where the loaded charges are, and I propose to do it before I get through this hearing some way or some how. Mr. Peabody: I think you will have to get the information. Senator, from people who can testify more from their own knowledge than you can from me. The Chairman : I asked you the question before whether you had any experience with the wholesaler or the retailer. Mr. Peabody: I am interested in retail concerns very largely, but only as a stockholder and as an adviser. I cannot tell you in regard to the details. The Chairman: Well, I might be on uncertain ground, but I am going to try and get the information somewhere and somehow as to the retail charges and the wholesale charges. Mr. Peabody : I would send for Mr. Burns of New York. The Chairman: All right, that is for anthracite, isn't it, or both? Mr. Peabody: Well, that is for anthracite and bituminous in New York. I would send for Mr. Hamlin in Boston, the head of the Metropolitan Coal Com- pany. I would send for Mr. Richards, I think his name is, the head of the Newton Coal Company in Philadelphia. If you want information that ought to be valuable to you, I might suggest Mr. Frederick W. Upham of Chicago. He is the head of one of the large retail companies there. The Chairman: Aren't you ashamed to wish that on him? (Laughter.) Mr. Peabody: Well, he ought to be able to testify in regard to those par- ticular things. Mr. Chairman, my adviser thinks that I ought to bring out very clearly that although in some cases we are getting more money that the original govern- ment price, that our average per ton of mine run result is less, and we have a large series of figures here which shows that. The Chairman : I think you ought to clear that up. Give your average. Mr. Peabody : I have here a diagram which I will be very glad to present to you showing you the government price in Central Illinois. I am more largely interested in Central Illinois than in any other field, and that shows you the increase in the cost of coal continuously since the first of last January, and the decrease in the net results of its selling, and here in December last year I will say the spread between the cost and price was 60, and here it has gotten at one point where it crosses the line. So that now there is no profit. Now I think the average is about 8 cents. The Chairman: Profit? Mr. Peabody: I have that in the form of a graphic chart which I think if your Committee would look at it would perhaps speak more clearly. The Chairman : Have you it there ? Mr. Peabody: Yes, I have it here. I think it will speak more clearly than I can testify in regard to it. The Chairman: In what field are you principally interested, Mr. Peabody? Mr. Peabody: My largest production is in Central Illinois. I operate all over the United States, and we are operating also in Canada, so our field is a pretty large one. The green lines on that chart are the average cost .of pro- duction and the average selling price in 1917; the yellow lines in 1918, and the red lines in 1919. . - The Chairman: The upper line is the average selling price? Mr. Peabody: Yes. The Chairman: And the lower line is the cost? Mr. Peabody: Yes. (Illustrating on chart.) The Chairman: These are the costs? (Indicating.) Mr. Peabody: Yes, those are costs, and these are realizations. The Chairman: In 1918, it is yellow? Mr. Peabody: Yes. The Chairman: Under the Fuel Administration? Mr. Peabody: Yes. The Chairman: Nineteen-seventeen was previous to the Fuel Administra- tion? Mr. Peabody: The start of the Fuel Administration. That was the time when they fixed the price at $2, and afterwards raised it, as you see. 191 The Chairman : The operations in red are the operations since the Fuel Administration relinquished control? Mr. Peabody: Yes, exactly. I thought that might interest you. That is a very typical district of the cheaper grades of coal. Now, here is another chart of a district in which we put our prices some- what higher in the same period. (Handing chart to the Chairman.) The Chairman: You got quite busy there in March. To what was that due? Mr. Peabody: We lost money in March. Senator Walcott : That is a cross line, Senator. You have been losing money ever since March, on that chart? Mr. Peabody: Yes. The Chairman : Mr. Peabody, is there anything further you wish to add to your statement? Mr. Peabody: Nothing, except to thank you very much for your courteous treatment. The Chairman : We are very grateful to you, sir. I hope you will wait until I can have a further talk with you. Mr, Peabody: Yes. Thank you. STATEMENT OF MR. JOHN H. SHERBURNE, State House, Boston, Mass., Chairman, Massachusetts Committee to Investigate the High Cost of Living. The Chairman : General, you communicated with the Committee on the question of a shortage of barges at Boston, and also stated that there was a grave shortage of coal in Massachusetts. Have you made an investigation as to the causes of that? Mr. Sherburne: The communications, Mr. Chairman, were based on the anthracite coal rather than bituminous coal ; and, as I understand your investi- gation today is only in regard to bituminous coal, I wish to say that I am not supplied with all the facts in regard to that; but I have a good many statistics which I think might be of interest to the Board, on bituminous coal. The Chairman : We will be very glad to have any statement you care to offer. Mr. Sherburne : In the first place, the Fuel Administrator in Massachusetts, James J. Storrow, made a careful study of the supply of coal, both anthracite and bituminous, coming into the State. Storrow found no way of checking except to check by reports from the various consumers of coal, and also by putting practically a spy system on every dock in the commonwealth. He traced that through to the first of January of this year ; and, in order to start, I will say that we had in Massachusetts on his yard stick of about 300 large consumers of bituminous coal — three hundred out of about seven hundred or eight hundred altogether — a balance of 1,070,085 tons of bituminous coal. Since that time the coal shipments to Massachusetts, of which I am speaking spe- cifically, have fallen off very materially and the balance of coal in these same hands on the 15th of August was reduced to 747,000 tons. The railroad statistics show, taking it by the calendar year rather than the coal year, for a comparison of six months, as I will show in a moment, in 1917, that there were delivered by railroad into Massachusetts, 5,855,000 tons of bituminous coal; in 1918, 6,660,000 tons. This gives a fair estimate as to the needs of the future. The Chairman : Read those figures again, will you please. Mr. Sherburne: In 1917, 5,855,000 tons; in 1918, 6,660,000 tons. The Chairman: Is that in Massachusetts alone? Mr. Sherburne : That is in Massachusetts. Senator Walcott: Shipped into Massachusetts? Mr. Sherburne: Yes. Senator Walcott : Within what period ? Mr. Sherburne: By the three coal railroads — the New Haven, the Boston and Albany and the Boston. & Maine. 192 Senator Walcott : Those are for the yearr' Mr. Sherburne: Yes; those are for the years 1917 and 1918. Now, going back and compariii}; with the first six months of this year, we f^nd that the shipments in 1917, for the first six months, were 2,978,000—1 am not reading odd hundreds— tons. In 1918, :{,207,000 tons. Nineteen-ninetcen. to August 1, it -was 1,746,000 tons. In other words, we have received approximately half, only, of the bituminous coal that was shipped by rail last year into Massa- chusetts, and about a little over half of what was shipped in 1917. The Chairman : Up to this time ? Mr. Sherburne : That is the first six months of the year. A comparative showing of six months' shipments. Now, carrying the comparison through July, making an estimate only, because one railroad has not yet compiled its figures accurately, we find a fairly substantial gain of coal from about — we find about 650,000 tons delivered in July, as against .570,000 tons in June. The Chairman: To reduce this to the practical situation today, what per- centage are you short in your biturninous coal supply, over last year? Mr, Sherburne: At least one-third. The Chairman: Thirty-three per cent? Mr. Sherburne: Thirty-three per cent. That is a moderate estimate. The Chairman: Of what was shipped to Massachusetts last year? Mr. Sherburne: Yes; because 1 was going on to state that our water shipment from where we get about one-quarter of our coal has fallen off very materially. I have not the statistics on the bituminous today, but the marine strike tied up the water coal, and, from more hearsay information I am told that we have less than half of the normal water supply of coal. The Chairman : Now, this is all or principally steam coal and domestic coal, of course? " Mr, Sherburne : Not domestic very much ; it is steam coal. The Chairman : For your industries ? Mr. Sherburne: Yes, sir; it is bituminous coal. We burn almost no bi- tuminous coal in Massachusetts in our domestic uses. The Chairman: Then, what do you burn? Anthracite? Mr. Sherburne : Anthracite is the coal with the average man for home use, yes. The Chairman : About what is the situation with regard to your industries? Is there as great a demand? Will they consume as much coal? Have you made any estimate of that? Mr. Sherburne : The demand is approximately the same. The estimates from these three hundred comparative consumers that Mr. Storrow picked out is that they will need comparatively the same amount. They start with a slight, balance, because of a slight over supply last year. The balance, in terms of tons, as I have stated, figures about 1,000,000 tons, of which it is variously estimated from 400,000 to 600,000 tons are in excess of ordinary needs. That would reduce the amount needed, on the basis of last year, to six million — putting it at the highest estimate — to approximately six million tons in Massachusetts, of which we have, in the first six months of the year, received 1,700,000 tons. The Chairman: You are 30 per cent behind; is that the situation? Mr. Sherburne: At least 30 per cent behind, and this takes into account, Mr. , Chairman, practically an unrecognizable factor — the number of factories which are changing to oil. There is a certain number changing to oil as fuel ; so that 33]/2 per cent of shortage is made low purposely, because of the other factors that enter in. There is only one bright light in the affair, and that is the accumulation by the railroads. The railroads in New England — and I am speaking of all eight railroads ; not these three alone — have accumulated a total of approximately a million tons of steam coal in New England. About 400,000 tons of that is in Massachusetts, and will release, to a certain extent, coal cars for bringing it into Massachusetts. I have a little information on the question of the railroad situation, if you would care to have it. The Chairman : Yes ; .1 should like to have it. But, first, I should like to 193 ask this question? What is the local situation in regard to prices? Are prices advancing, by reason of the demand? ivir. Sherburne: No; not materially. There is threat of advancing the anthracite, but that is being held pretty closely in check. Inhere is no occasion, except piohteermg or taknig advantage of the shortage, to demand an increase; and tnis Commission of which i liappen to be Cnairman, has pretty wide powers, and, heretofore, publicity has been enough. Ihe Chairman: Do you burn anthracite coal in your house? Mr. Sherburne : Oh, yes. i he^ v^iiairman: hlave you put in any this winter, or this summer, rather? Mr. Sherburne: Yes, sir. The Chairman: What did you pay for it? Mr. Sherburne: $12.50 a ton. Tne Chairman: You were nearly as bad off as I wils, were yotl not? Air. Sherijurne: That is the hignest — if you want to gd into the ques- tion of anthracite, I have a lot of information here. The Chairman: No; I wanted you to finish with bituminous. 1. did not wish to digress. Mr. Sherburne: Yes. Now, on the question of the rail situation in New England — and this comes from the Regional Federal Director's Office — the statistics in May and June — there were approximately 30,000 idle coal cars in the six New England states. That record runs a little up and- a little down from that, l)ut it was approximately that all the time. At the present time there are hardly any coal cars in New England except such as are there with loads of coal. There are 9 per cent of coal cars in New England under repair in the repair shops. This is aft excess of 4 per cent over the normal, I am told. The railroads appreciate the situation and they are taking the coal cars, as soon as they are empty, and running them out by special train; not putting them up in empty trains, in the ordinary way, but, all cars included, of which perhaps from one-third to one-half are nor- mally coal cars at this season of the year, we have in New England today .15,000 less cars than usual. In addition, we have a situation that is most unusual, in a record move- ment of freight. Since a week or ten days ago the freight has been at the peak of all records; and, of course, some coal is coming in with that; but it is grain and very many other things largely that are coming' through; so the New England Administration, while they are doing their best, are faced with these other difficulties. Now, for two weeks. Senator, all coal — the first two weeks in August —there was an embargo on coal into New England, and no coal what- ever came in by rail, and relatively little by water. The Chairman: An embargo on coal, did you say? Mr. Sherburne: Yes. You see. the shopmen's strike was felt more heavily in New England than anywhere else, and they shipped practically no coal 3t all. The Chairman: There was no embar^ro? Mr. Sherburne: No; but the railroads simply said they could not acccDt the freight. All our limited trains were taken off, and The Chairman (Interposing) : Then, the situation is worse, instead of imp^ovino^? Mr. Sherburne: Yes, the situation, from the first of August to date, is worse The Chairman: You may continue, Mr. Sherburne. Mr. Sherburne: I do not know that I have anything more to add, on bituminous. The Chairman: I am not goine^ to ask you to take up the anthracite situation today, because we are going into that next week, after we get through with the wholesale prices. I would suggest that you see the Rail- 194 road Administration and find out what the situation is. The car service men are here and you ought to take that up with them and see what you can do to relieve the situation. Possibly they can give you some relief. That is the whole problem. Mr. Gutheim, have you anything to say re- garding that? Mr. Gutheim: I would like to suggest, Mr. Chairman, if it be in order, that it might be helpful if Mr. Sherburne would advise you why New Eng- land is not buying coal this year, as has been customary in New England in past years. My understanding^ of the New England situation is that the New Englander is pretty keen, when the mines begin to get on slack time, in the spring, to get out and buy his coal. I gathered from what Mr. Sherburne said that that was not done this year. Perhaps he can tell us why. Then, in the correspondence you had, I believe there was brought up the question of the extent to which New England preferred to buy all rail coal this year, as against ocean coal. Mr. Sherburne also made the state- ment, as I got it, that in May and June there were about 30,00(3 idle coal cars in New England? Mr. Sherburne: That is quite correct: Mr, Gutheim: Now, the gondola cars, which you can take as being coal cars, of New England line ownership, according^ to the latest report, number 19,837.- On May 1st cars of that kind in New England amounted to 120 per cent of the ownership; on June 1st, to 125 per cent of the own- ership. Senator Walcott: What do you mean by that? Mr. Gutheim: I mean that if they owned 100 cars, when they had 125 per cent of ownership, they had 125 cars on the rails in New England. Senator Walcott: Cars belonging to other lines? Mr. Gutheim: Yes. I am rather curious as to the source of the in- formation that they had 30,000 cars idle up there. Senator Walcott: What about that, Mr. Sherburne? Mr. Sherburne: The infprmation was from, a subordinate Federal Board. Mr. Gutheim: Mr. Todd's office? Mr, Sherburne: Yes. Mr. Gutheim: Well, there is something radically wrong about the fig- ures, because there is no ownership in New England to justify them. The Chairman: There is nothing radically wrong about the fact that there is a shortage of coal in New England, is there? Mr. Gutheim: No; we have heard about that very regularly for the past two years, and we have got to learn about it now, I should say. Mr. Sherburne: The statement as to the number of cars. Mr. Chair- man, was furnished by the Federal Railroad Administration, for what it may be worth, and, of course, I have no knowledge of the number of cars, personally. It was given to you, in a way, to explain the question that was asked about why New England did not buy the coal. I think it is a fact that the country, as a whole, did not buy coal in the spring, and we have tried to analyze that ourselves, and, for what it may be worth, if you are interested, 1 would like to go into the question. We had, of course, an over-supply almost all over the country, and had had durinjy a part of 1917 at least, which I know by hearsay only — and they had gotten all the coal they could for 1918, which turned out to be a very warm winter, and they had, therefore, on hand, a certain orersupply. As a result, in our local situation the price of coal broke between the 15th of February and the first of March, about $1 a ton, and there was talk and an understanding on the part of the buyers that the company coal at the mines was to go down. As a matter of fact, they made contracts, and we have record of contracts made by a number of our large retail 195 coal dealers with independent dealers — not the companies' — at a consid- erable reduction from the market price. It was that general fluctuation and upset of price which kept the deal- ers out of the market until around the first of April; and then when they tried to get the thing started, they could not get the coal; it was all going West and they could not get their contracts filled either by the company or by the independents. That is what, at least, two or three responsible dealers have given me as an explanation. I pass it on for what it may be worth. The Chairman: Mr. Gutheim, you stated to the committee that this was a complaint that you heard every year. Now, is it not true that the situation this year is much worse than it was last year? Mr. Gutheim: It is much worse than last year. Senator; but I do not believe that the New England situation, as it is portrayed here, is as seri- ous as it was in 1917. It was serious then for a far different reason. They took off all boats that carried ocean coal to New England at that time, and I believe that was the occasion for Mr. Storrow's statement that they tore up a four-track railroad to New England; and they simply could not get the coal in there all rail. It was well known here. Then, toward the close of that summer, when there was priority given to the Lake ship- ments, in order to save the upper Northwestern country, that tended to deplete somewhat the car supply for railroads taking coal to New England, and New England again suffered. ' , We have not had that this year, and. we will not have that Lake sit- uation, because that is very well in hand. Now, I am still somewhat in doubt with respect to the informa.tion that New England could not get her coal because it was going West. Some of New England's coal is pur- chased in the territory that ships West, but. as a general proposition, I un- derstand that is not so. and the demand for cars for coal going West was certainly not such as to deplete the supply of cars: so I cannot quite see that there is verv much in the reason that was given to Mr. Sherburne. Mr. Sherburne: T think, Mr. Chairman, if you will look at the Geological Survey charts you will find that the production of coal — and when we speak of coal we have turned now to anthracite. It is difficult to keep the two separated ; but. of course, our supply of anthracite is our important supply in New England. The production of coal at the mines on both anthracite and bituminous, during the months of April, May and June, was very much below normal. Mr, Lesher, I think, is here. Mr. Gutheim : That is correct, Mr. Sherburne. Mr. Sherburne : So that may be the explanation as to why the orders could not be filled. The Chairman : General, we are very anxious to have the Railroad Admin- istration, or anyone who can relieve the situation, do it. What suggestions have you to make to the committee? Mr. Sherburne : The thing, of course, of prominent importance is that we shall get our 100 per cent of gondola cars, which apparently, we have not in New England at the present time. If the Railroad Administration would so organize their general supervision, that we could get an adequate number of freight cars, I am quite sure that the New England end of the railroads would do their job in keeping them moving. That would help materially. The water situation is in process of mending. We understand that the Reading barges, which have been tied up for approximately six weeks, and which have cost Massachusetts 150,000 tons of coal — Massachusetts alone — which never can be made up — are now starting to move. Perhaps you can give us some information on the matter of the Reading barges ? Mr, Gutheim : Frank C. Wright, who is Assistant Director of the Division of Operations, in charge of the Water Transportation Lines, is here, and he can perhaps best answer that question. Mr. Wright : I cannot account for the 150,000 tons at all. I would like to 196 understaiui the question fully. How do you arrive at- 150,000 tons of coal lost? Mr. Sherburne: There were TZ barges, which averaged a round trip a month, and the contents of each barge, I believe, is approximately 1,400 tons. Mr. Wright: Well, do you know what that fleet has been moving |)er annum for some years? About 1,150,000 to 1,250,000 tons. Now, about half the capacity of that fleet this year, Senator, is employed in the mr)vement of bituminous coal for the railroads of New l{ngland and possibly 55 per cent of it in moving household anthracite, which is, 1 take it, the item the gentleman is vitally interested in. I think the total loss of time will approximate three weeks on account of that strike, which ended yesterday, and 1 estimate that 50,000 tons of anthracite moving capacity was lost by the strike. That is equivalent to 1,000 cars, which could be easily made uj) all rail, if they will order them. The inci- dent is too small, in the New luigland coal movement, to be emphasized here ; although we are glad to explain it in detail. New England takes over ten million tons of anthracite a year, and the strike in Philadelphia has delayed the move- ment of only 50,000 tons of that amount. The Chairman: A day? Mr. Wright: No sir; 50,000 tons. The Chairman : Altogether? Mr. Wright: Yes. Senator Walcott : That is water coal ? Mr. Wright : Yes. The Chairman : How much water coal does New England take, all together ? Mr. Wright : It has been taking about 40 per cent of its supply — about 4,000,000 tons out of 10,000,000 tons. The Chairman : I am going to ask General Sherburne to give the committee information regarding the anthracite situation. Mr. Gutheim : Mr. Chairman, before General Sherburne leaves this ques- tion of the bituminous, I think it would 1)e well if we could get a definite under- standing as to the exact extent to which New England is sufi^ering because of this depletion of cars. I gathered the impression from what he «aicl that wtten New England gets the 100 per cent of cars to which alie is entitled, they will be better off. Now, you will recall th^it there has been testimony here about this marine strike; I do not mean the Reading barge strike — the strike which Mr. Wright just testified to — but the strike of the marine workers, I think, practi- cally throughout the month of July, and into August. Now, it has been stated here that one result of that was to divert the movement of bituminous coal that was going from the mines to the North Atlantic piers, for movement by ocean to New England, into an all-rail movement, with the result that the cars were tied up longer in that service. The truth of that will be shown if we follow through these figures. I mentioned the fact that the number of gondola cars in New England on the first of June was the equivalent of 125 per cent of what those railroads owned. On the first of JuW, it was 144 per cent ; July 15th, it was 14:3.9 per cent, and Atigust 1st it was 153.3 per cent. That is indicative of the fact that this all-rail movement, which began after the advertising campaign of the National Coal Association, has carried these cars into New England, and New England has been getting her bituminous coal all' rail, instead of by water, during that period ; and the cars, you will see. amply testify to that; so that if there is anything in the way of a mistake in the situ- ation we ought to get it cleared up, if possible. The Chairman : Mr. Wright, 40 per cent of the anthracite coal is shipped by ocean? Mr. Wright : That is an average. That is fairly safe for three years back. The Chairman : Did 1 understand you to state that the shortage of anthra- iie, due to the strike, was 50,000 tons only? Mr. Wright : No sir ; I was answering a specific complaint filed here with ou. through Senator Lodge, from General Sherburne. T^he Chairman: In regard to the Reading barges only? Mr. -vVv,-eht: Yes. 197 The Chairman : What shortage has been created by reason of the marine strike, in your opinion? Mr. Wright : Very little, sir. May I answer for anthracite and bituminous both, separately? The Chairman : Yes. Mr. Wright: In anthracite, very little. The marine strike affected trans- atlantic and off-shore and coastwise service more than it did inland service, like from New Jersey ports up along Long Island Sound, which is a big factor in the New England supply. Their men went out, as did the Reading firemen. Later on, I presume they were all affected about in the same way for about three weeks; but the marine strike proper in July and early in August did not affect anthracite coal, because anthracite moves up Long Island Sound in a different type of vessel, and moves by tug boats. This marine strike affected steamships. Now, that did reach Hampton Roads, and tied it up and cut off the bitumi- nous movement ; also Baltimore, but it did not reach the household anthracite. The Chairman: And it aff.ected the coal going into New England, as far as bituminous was concerned? ' Mr. Wright: 1 should say considerably, sir, yes; but there has been a shrinkage in that Hampton Roads — that Chesapeake Bay movement to New England ever since the first of the year — a very great shrinkage. The rates, for the first time in many years, are much higher than the rail rates — those marine rates. U is possible to get coal, even to the ports of New England, $2 per ton cheaper from Pennsylvania all rail than by way of Chesapeake Bay and the boats ; and that has had its effect. Then, there has been labor trouble all through the spring and summer — a scarcity of labor in the operation of that fleet. 1 am speaking of the outside fleet; not the Railroad Administration owned vessels. We have nothing in the Chesapeake Bay. But there has been a reduc- tion. Whether it will bring about real industrial trouble in New England, I think, is a question which cannot be very well solved for another motith, because we have the factor of Mexican oil there, which is displacing an immense ton- nage of coal. The Chairman : But you really believe that, otherwise, the condition is serious in Massachusetts? Mr. Wright: No sir, I do not. I do not think there is much in that story, with all respect to General Sherburne. Mr. Sherburne : Mr. Chairman, if it becomes important, 1 have in front of me the figures from which I have read, which were prepared by the three several railroads themselves of New England. They show the items of delivery which I have read. I will leave a summary of them for the record. I have no desire to complain of or to dispute with or get into any controversy with the Rail- road Administration. The Chairman: General, the Chair understands that the object of your visit here and of the invitation extended to you is to investigate the situation as it exists in Massachusetts. Mr. Sherburne : Precisely. The Chairman : And I understand that you are on this commission study- ing the question, and your only desire is, in the public interest, to try to relieve the situation, if it exists. I think Mr. Wright and Mr. Gutheim have only ex- pressed their opinions, and I do not want any controversy to exist, because we are here with only one object, and that is to try to relieve the situation. Mr. Sherburne: Mr. Chairman, that is my only object. However, if it becomes necessary to prove any of my points. I would be very glad to take up some of the specific statements of Mr. Wright in regard to the Reading fleet, as to how many tons of coal we have been deprived of during this lay-off, and to produce such evidence as you will have no doubt about. The Chairman : I am not going to be an umpire any longer between these two contending forces. I want you to get together. Mr. Wright : I do not understand that the Railroad Administration ha? been called into question or that it is on the defensive at all; but we have made a study of that New England coal situation for two years. 198 Mr. Peabody started (^ut with us when he was i luiirman of the Coal Commit- tee, before the Fuel Administration was formed ; and we m.ade a very extended and deep study from iioston ; and last year we made that the second item of importance in the Railroad Administration. The first was winning the war and the second was supplying New England with coal. Senator Walcott : New England got some coal that should have gone to Delaware. Mr. Wright : 1 think so, Senator. The Chairman : That is like the story of the Sc(jtchman who was a shej)- herd and he was asked, "Sandy, how is it, when you have a flock of sheep going throught a narrow place with high walls on each side, and you have another flock of sheep and you are trying to get them through? How do you separate the sheep?" "Well," he says, "the mon that has the best dog gets the most sheep." (Laughter.) Mr. Sherburne : 1 feel a little reluctant to read into the record these figures of the railroad shipments, but nevertheless I will go ahead and put in the anthra- cite hgures, if you choose, that we have received from the railroads. Using the year, first, of 1917, we received by rail 4',.'^46,0()() tons. In 1918, we received 5,508,000 tons. Taking the first six months, for comparison, of 1917, 1918 and 1919, we find the following figures: In 1917, 1,903,000 tons; in 1918, 2,800,000 tons; and in 1919 we have 1,778.000 tons, to July 1st. Senator Walcott : July or August ? Mr. Sherburne: To July 1st; the first six months of the years. Now, as I say, the figures for July, I have not finally, because one railroad has been unable to get in all its data to date ; but they show a slight gain over June — not a very tremendous gain. Now, looking at it from the other point of view, which is perhaps a verifica- tion of the figures of the railroads, we fnid that lookitig at it from the reports of approximately :>00 coal dealers in various parts of the state, that the same con- dition holds true. As this is only a c()m])arative average, because we have not been able to get every coal dealer and every ton of coal, I am going to read you some of the figures. For example, three coal dealers in Melrose report a shortage of 972 tons. Three coal dealers in Attleboro report a shortage of 2,679 tons. Lynn has a surplus of 198 tons. Newburyport is short 2.0o9 tons. Quincy is short 708 tons; and Worcester is short 17,199 tons. Boston we have not complete figures upon.* but the net shortage in Boston appears to be about 10,000 tons. That means, if you carry that through on an average throughout the state, as nearly as our statisticians can figure it, a short- age of about twenty per cent in anthracite. So that I would say that our condi- tions in New England, as of the first of September, were, roughly, not tied down to 1 or 2 per cent, but were approxiuately 20 per cent short in anthracite and 331/3 per cent short in bituminous. The Chairman : Improvement in that car shortage situation would probably help you a good deal from now to the end of the >ear? Mr. Sherburne: If the Railroad Administration show that they have 150 per cent of gondola cars in New England. T wonder if they could state how many gondola cars they had in August or July of last year? And that was when they delivered substantially nearly double the amount of coal. In June of last year the deliveries on the three roads ran approximately double June of this year. The Chairman: What answer have you to make to that. Mr. Gutheim? Mr. Gutheim: 1 stated' a few minutes ago that on August 1, 1919. there were in New England 153 per cent of the ownership of gondola cars ; on .\ugust 1. 1918. there were 167 per cent. On September 1. 157 per cent ; slightly in excess. Mr, Sherburne: Have you the month of June? Mr. Gutheim: Of this year? Mr. Sherburne : Last year, this year and the year before. Mr. Gutheim : I have this year. 199 Mr. Sherburne: How many gondola cars did you have? Mr. Gutheim : 125 per cent of the ownership. That, in round figures, is 35,000 cars. Mr. Sherburne : May I recite the amount of tons that the raih'oads deliv- ered for that month? The Chairman : Yes. Mr. Sherburne: The Maine, 194,000; the Albany, 75,000; the New Haven, 343,000. Now, for 1918 what was the percentage of cars? Mr. Gutheim : 1918, August 1st, 167 per cent. Mr. Sherburne: As against June 1st? Mr. Gutheim: I have not the month of June here. Mr. Sherburne: It would probably be as large as this year? Mr. Gutheim : I do not think it would be quite as large. It would not be as large as August 1st, 1918. It would be larger than June 1st, this year, be- cause June 1st, this year, New England was not buying all-rail coal. Mr. Sherburne : I am trying to analyze why we have more cars and less coal. The Chairman: What good are cars in New England? I should think that if they were at the mines it would be a great deal better. It seems to me that cars in New England cannot produce any coal. Mr. Gutheim: That is just one of our problems, Senator. If I could just tell this to you again and see if I can make it clear. To go back to March, as I said a couple of days ago, in March they had almost 200,000 coal cars in excess of what the mines were asking for. On the first of March there were only 109 per cent of the ownership of gondola cars on the rails of New England lines. On April 1st there were only 110 per cent. On May 1. 120 per cent; on June 1, 135 per cent. We began to increase the production of bituminous coal in June, and the big increase came in July, and simultaneously we got tied up on our coast- wise movement because of the ship strike; and then this coal that began to come out of the ground in response to the educational campaign of the National Coal Association began to get into cars and be shipped. Instead of going down to Baltimore to go to New England by boat, or to Philadelphia, it began to go to New England all rail. The result is that the next month we have 144 per cent of gondola cars in New England, and the next month 143.9 per cent. On the first of August, 153.3. That merely indicates that the cars are turning around between the mines in New England, or New England is buying more coal and that she has got to have more cars. The Chairman: I presume that shows cars en route, but it seems to me that if there is 144 per cent of cars in New England that shows that coal is being shipped to New England, unloaded, and the cars are being held. Mr. Gutheim: No, not necessarily, because when you consider these figures you have to consider now the fundamental principle -of them, which is this, that a line that originates bituminous coal makes it is business to own a large number of cars in which to transport that coal. The line that dojes not originate bituminous coal will not make it iis business to own such cars. In other words, putting it briefly, the originatine Hue recognizes the obligation to furnish the equipment. The result of that is that the line that originates equipment will have many more cars than it needs if the coal is not beinsf shipped. If it is being shipped, it will have considerably less than ow?iership; and that deficiency of ownership will be in excess on lines in New England where they might want coal. Mr. Sherburne: Mr. Chairman, I have been trying to grasp and have been gropinp- as you did to find the reason why we have in New England one-third more cars and approximately one-third less coal each month, and 200 I think your reason is the real one — it must be that the cars are not mov- ing. The Chairman: You have not sot the coal, have you.'' Mr. Sherburne: No, sir. We have the delivery records on the coal. The Chairman: I would rather estimate it in coal than in cars. Mr. Gutheim: Mr. Chairman, we are ^ettinp: figures together in the Administration now on this subject, and Mr. Wright tells me he expects they will be done by next Tuesday and we will put them in the record at that time. The Chairman: I will tell you what we want in the record. We want information that the situation is being relieved and that there is more coal going into New England. . , Mr. Wright: Senator, we do not control much of the water-borne coal into New England, but if it will assist the Committee we will endeavor to take a census at the New England ports from Bangor south, showing you just what is going in both by water and 1)y rail, and we can get the rail gateway records definitely. The Chairman: I do not think it is necessary, unless General Sher- burne wants it. We are trying to deal with the situation as a whole in the country. All we want the Railroad Administration to do is to get the cars to the mines. I do not think that it is necessary. Do you want that information, Senator Walcott. on the record? Senator Walcott: I would not want it just for this year, unless it were a comparatiye study between this year and last. I think it would then be valuable. Mr. Wright. It would show a very great reduction from last year, be- cause the carry-over was enormous. New England was so full of coal last winter that you could not give them any coal. Then the factor of Mexi- can oil displacing coal is involved, and there has been some industrial in- activity on account of plants making munitions. Senator Walcott: That is an unknown factor: that is, the extent to which that influences the situation is unknown. You have got to specu- late about that. Mr. Wright: That is the only reason we question in the slightest General Sherburne's figures. Unless he can definitely locate some of those prime factors and apply them to this case. I think the statement that there is a heavy shortage is subject to further analysis. Mr. Sherburne: Mr. Chairman, I do not think that anyone in Massa- chusetts certainly is worried about the coal situation as long as it begins to come now, because we did have a certain oversupply, as I explained to you. But if it does not come, if it stops now, we are in very serious straits. That is the only point I want to make about that. The Chairman: The Committee has determined, Mr. Wright, to ask you to furnish those comparative figures for the record regarding the water transportation. Mr. Wright: As well as through all rail gateways? The Chairman: Yes. Mr. Wright: Will a comparison with 19IS be sufficient? T think we have 1917 and 1918 here in Washington. Tt will take us perhaps all of next week to get all of the water gatewaN-'s for this year, but if 1918 against 1919 is sufficient, we can provide it. Senator Walcott: What is that last statement? Mr. Wright: I can get you this year compared with last year. Senator Walcott: That is, you mean expeditiously? Mr. Wright: Probably by Wednesday or Thursday next we could. Mr. Sherburne: 1917 ought to go in, too. Senator, because it was a more normal year. In 1918 there was an oversupply of coal. Senator Walcott: Let us have it for 1917, too. 201 Mr. Wright: We will give you all we can get as quickly as possible. The Chairman: Is there anything further, General? Mr. Sherburne: I have a lot of stuff here if you want it. The Chairman: Nothing further today? Mr. Sherburne: No, sir. Mr. Wright: One word, Senator, on this water movement. The costs of moving freight all water for some time has been consid- erably higher than moving it by rail. That is a reversal of all experience both in this country and in Europe. It has affected the coal movement to New England greatly. At a time when there was an unknown surplus in New England coming over from last year, which had cost a lot of money, that was sufficient reason for not buying coal actively in the spring; but when the freight on the water route usually patronized was $2 higher than all rail, that was a controlling reason. There is no doubt about that. That took the coal off the ocean, and it is ofif today. The Chairman: Who makes those water rates? Mr. Wright: They were made, the first controlled rates by the Ship- ping Board. They cut them doAvn from a peak of $5 to $6 a ton and an average of perhaps $4.50 from Norfolk to Boston, to $3.50 to $3.25 by steamer. They are now about $2.25. When the Shipping Board released all coal vessels under requisition charter and relaxed its control of the rate and £rot entirely out of the sit- uation, then the private owners had to meet this private competition, and they have gone down to $2.25. which is about as low as they can go if they are to cover their cost of operation. The Chairman: Are the rates equalized now? Mr. Wright: Nothing like it. They are about an average, mn anthra- cite, of probably 60 cents a ton higher by water than by rail, and bitu- minous is probably $1.25 to $1.40 higher than by rail. The Chairman: What was it prior to the war? What was the situa- tion ? Mr. Wright: Lots of contracts for modern self-trimming coal vessels at 75 cents a ton, and there were some at 65 cents. The Chairman: What is to due to — the tremendous rates that are now in effect and the shortage of tonnage? Mr. Wrighf: The shortage of tonnage was the factor in 1918 when all these modern coal steamers that were more regular than trains in their operations were all taken for duty overseas, and they never have come back. Few of them are in service. But the situation this year is that the business is being done by barges and tugs under tremendous labor difficulties. Sailing vessels are all out; they have gone into overseas service. The big steamers are still in the coal business, but Mediterranean and South American service. The Chairman: Will these vessels come back to this trade? Mr. Wright: I do not think so. I do not think thoy can live against the railroad rate. It is impossible for them to do so. Marine c©sts have gone to the sky; but then there is more attraction in hauling coal to Genoa at $22 a ton in some cases, or to South America, at similar figures. The Chairman: That rate is fixed by the Shipping Board, is it not? Mr. Wright: I imagine that the Shipping Board and the English ves- sels acting independently have made that market. The Chairman: There is a tremendous profit in it? Mr. Wright: It will be a factor in this New England coal movement. It draws the big vessels out of this New England movement. The Chairman: The Government is making money out of that ship- ping at those rates, is it not? Mr. Wright: I should think there would be a margin ia that. The Chairman: That is all. Mr. Wright. Thank you very much. 202 Mr. Wright: If the movement is to be all rail exclusively, the gate- ways will not stand it. They cannot get it that way. They can do a great deal more than they have ever done before. They are in good shape now, but if the water movement is cut off New England will be short. Mr. Sherburne: That is why we are so insistent to have this Reading fleet released. The Chairman: I think that question will need further investigation. Senator Walcott: That fleet is released, is it not? Mr. Sherburne: They say it is on the way. I have a telegram stating that two tugs and eight barges started today. Mr. Wright: I wired Mr. Sherburne with regard to it. We have got- ten out twelve tugs and four barges today, and about the same tomorrow, and the fleet ought to be in action "by Sunday. Mr. Sherburne: Nevertheless, we are short about 150,000 tons which we will never get bkck. Mr. Wright: I could not work out on paper with a pencil 150,000 tons shortage if you would give me a year's time. The Chairman: I am going to let you gentlemen settle that after we adjourn. 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