Mr. NEWTON. Mr. Morrow, how long has that order been in effect? Mr. MORROW. I think since the 16th of July. The trouble is, there was a limited amount coming out. Now that the mines are running, and the coal is moving, and the empties are coming back, you will get a much better movement of coal. Now, if there will be 13,000,000 tons a week, the situation will take care of itself. And if for household purposes, to the retailers, or some other buyers, who must have coal-if there is danger that they are to be held up, your remedy is there, to put that in the hands of the agents of the Interstate Commerce Commission to say to these railroads that these men should get the priority order, the operator will take a steady running time as against broken time. It is better business; it gives him a better business organization, and it is preferable to do that every time. It is preferable in the coal industry. Now, that is the situation as we see it, briefly. This is the situation: Simply that there is in effect the necessary machinery to deal with this situation. It is now in effect, and, therefore, we do not see any necessity of jamning through panic legislation of this kind in a few hours' time. We feel that there ought to be very careful consideration before it is done, and we ought to see how these orders of the Interstate Commerce Commission work out when we have these mines all in operation. Let me say that I think the bituminous coal operators have given ample demonstration of their willingness to cooperate with the administration. They are doing it now, and they will continue to do it. They want this country supplied with coal. And while there will be speculative people-people who will speculate in coal, and there will be some few individuals who will profit by it, the industry as a whole will not profit by it. We believe that it will develop labor troubles, and these gentlemen all see it. But, gentlemen, they see also the change in governmental policy that it is proposed to embark upon. Mr. GRAHAM. Now, Mr. Morrow, what is that? Mr. MORROW. The fixing of prices and the enforcing of those prices, as proposed in this bill. Mr. GRAHAM. Where do you get that in this bill? Mr. MORROW. Various of the gentlemen who have appeared here before me have stated that, and have stated where they get it. Mr. GRAHAM. That may be, but where do you get it? Mr. MORROW. I get it from section 3. The Fuel Distributor shall state the prices normally charged for coal and other fuel and whether current prices, considering the cost of production and distribution, are just and reasonable. Now, we find further down here that the Interstate Commerce Commission is directed to receive and consider the recommendations of the Fuel Distributor, and in its discretion to issue such order for priorities in car service, embargoes, and other measures in favor of or against any carrier or region, or to take any necessary steps for priority to enforce that-if that is not intendedMr. SANDERS (interposing). Read on down; read line 7. Mr. MORROW. Yes; to prevent extortion in prices for coal and fuel. Mr. GRAHAM. To prevent extortion in prices charged for coal, and to promote the general welfare. Mr. MORROW. To shut down the mines of the men who won't sell. Mr. GRAHAM. Not necessarily. Mr. MORROW. What else would it be? Mr. GRAHAM. They could limit his cars, if the extortion is such as to limit interstate commerce. But what further is there? Mr. MORROW. That is enough. If we can't ship our coal, we can't store it. Mr. GRAHAM. If the extortion is a burden on interstate commerce, ought there not to be some way to control it? Mr. MORROW. The answer to that is this: The way to handle it is to see that the buyer gets the coal. That will end it immediately. The sufficiency of supply is the answer to that. Instead of embargo or the enforcement of a price in detail, the sufficiency of a supply is the answer. There are 20.000 dealers in coal now, but if this bill goes into effect there will be 120,000 bootloggers of coal, and you will have to regulate them, too. Mr. GRAHAM. Tell us how that will happen. Mr. MORROW. Why are they in business now under the Volstead Act? It will make it worth while for somebody to get it. Mr. GRAHAM. Are they doing it now? Mr. MORROW. Yes, sir. Mr. GRAHAM. Why are they, when order 23 is in effect? Mr. MORROW. Because we have not got the production yet. Mr. GRAHAM. And you think if we get production next week that will stop that; they will quit doing it? Mr. MORROW. No; I don't think they will next week. Mr. GRAHAM. When will they quit? Mr. MORROW. When order 7920, I believe, when it was enforced in 1920, the price of coal was somewhere around $8 or $9 a ton at the mines. About the 1st of December it went to about $4 and by the 1st of January it was down to $3. As soon as the buyer feels that he can get the coal, he will quit it. Mr. BARKLEY, Mr. Chairman, may I ask the witness a question? The CHAIRMAN. Are you through, Mr. Graham? Mr. GRAHAM. Yes; I yield to the gentleman. Mr. BARKLEY. Mr. Morrow, Secretary Hoover stated that in order to catch up with the normal supply of coal, on account of the shortage, it would require 12,000,000 or 13,000,000 tons a week for 20 weeks, and there was only transportation facilities now for 9,000,000 or 10,000,000 tons. Do you dispute that statement of his? Mr. MORROW. I do not wish to dispute any statement Secetary Hoover has made. Mr. BARKLEY. I do not mean to use the word "dispute" in an offensive sense. Do you disagree with him? Mr. MORROW. Yes; I think I would disagree with him. The fact remains that these roads have transportation service which is handling 850,000 cars of revenue freight. Mr. BARKLEY. I do not know that we deal so much in the number of cars as in the amount of coal hauled in a week. What are they hauling now in tons? Mr. MORROW. In tons-I will have to translate that into tons. Last week they handled from three to six million tons. Mr. BARKLEY. How much more can they handle with their present facilities? Mr. MORROW. No, sir; not in coal cars. Mr. Aitchison suggests that I refer to the situation on the coal-carrying roads. I have not all the statistics at hand that I would like to have to talk to the committee, as I have said. Some of those roads are in a difficult situation. The B. & O. is and the C. & O. also. That is a condition that we have to recognize, and the thing we have to do on those roads is to devote as much as possible on those roads to the job of carrying coal. How rapidly they can get out of their difficulties I do not know. But this committee ought to know before it enacts this legislation. That is precisely why I say it should not be rushed through. Mr. BARKLEY. Are you able to say that the statement is reasonably correct that it would take a production of 14 million or 15 million tons a week for four or five months to catch up with the normal supply, due to the strike? Mr. MORROW. That is a difficult question to answer because the answer will be quite different, depending on whether the anthracite mines will be in operation, or not. Mr. BARKLEY. I am assuming they will not be in operation. Mr. MORROW. If they are not in operation, Mr. Hoover's statement is exactly right. Mr. BARKLEY. I think he stated there had been a loss of 35,000,000 tons due to the anthracite mines shutdown which can not be recovered. Mr. MORROW. Yes; that is true; but if the anthracite mines start production, they will produce 2,000,000 tons a week, and that will greatly relieve the bituminous production. Now, I want to make this clear: One other thing would be necessary to avoid a panicy coal market, and that would be the assurance to the buyer of coal that the Administration would see to it that the coal was going to be moved throughout the winter. That is, they would keep their priority orders in effect, and additional priority orders during the winter. Mr. BARKLEY. You think that the only thing that is necessary is to carry out service order 22 and priority order 23-both service orders 22 and 23-without any additional legislation? Mr. MORROW. I don't think at the present time there is any need of additional legislation. Mr. BARKLEY. Do you take into consideration that transportation has considerably broken down? Mr. MORROW. Yes; and it was in 1920. Mr. BARKLEY. It was in 1920, but not for the same reason and not to the same extent. Mr. MORROW. That may be true. Mr. BARKLEY. Do you know what percentage of the coal shortage now is due to the shopmen's strike? Mr. MORROW. No; but not a great deal of the coal-carrying equipment is affected, because I think most of the difficulty there, Mr. Barkley, is a matter of locomotives. It is not a matter of cars. I don't think it is a shortage of cars. It is a question of motive power, and that is why I said a while ago we can produce if we can move the coal. And I think the committee ought to recognize that. If they undertake to move some other commodities, there will be some of them that will not be moved until this matter gets straightened out. Mr. BARKLEY. There is considerable interruption because of bad order cars. Mr. MORROW. Yes; I think that is true. Commissioner Aitchison can correct me if I am wrong, but I think. the limiting factor now is locomotives, rather than cars; is that true, Mr. Aitchison? Commissioner AITCHISON. I think that is true. I think that is the situation. Mr. BARKLEY. Suppose we take this situation: That this strike is not settled in time, and that this situation as to cars and engines becomes worse. And let us assume that by reason of that it is impossible to supply the country with its normal supply of coal, and by reason of that failure to supply that amount of coal which is needed there is a buyer's panic, and 30 per cent of the buyers are unwilling to enter into any agreement as to prices-I am putting the worst phase on it-do you assume that Congress is not justified in undertaking to enact any legislation? Mr. MORROW. Let me take that a little further. Let us assume that service order 23 is in effect, and let us take two buyers. Who will be the men that will be coming in? Will they be the hospitals and the utilities? None of them. They are all taken care of under order 23. The men who come in then are the men who are running the silk mills and the factories, and he can well afford to pay that price that the Underwood Typewriter paid in 1920. He doesn't need any protection from Congress. He can pay that price. But if that preference remains in effect the other users will be getting their coal at a reasonable level. On the other hand, that will not apply if there is a full supply of cars, because the man will say, There is no preference to me, and we will all get coal. If you have a full supply of cars, there will be such a production that it will not be necessary to enforce these orders. That is the long and short of it. As long as you have a car supply you will have sufficient production. If we have a car supply decrease to such an extent that you do not have the output of coal, then you will have such a demand that the price will go up. That is what happened in 1920. Mr. BARKLEY. Now, if any considerable portion of the coal production is sold at these speculative prices, will that not necessarily react on the prices paid by consumers to fill their private bins, and all these other consumers of coal? Mr. MORROW. Now, that would be a matter of the retail distribution of coal, and I can not speak of that, but at any rate I think we will have to reach that in some other way. Wouldn't that be under the State authorities? Mr. BARKLEY. Maybe. all sources. Mr. MORROW. You do? We get information from all sorts of directions and Mr. BARKLEY. I have received information from certain sources that specula tors who are not consumers of coal, buy it in order to sell it to the consumers of coal, and they rush in to the coal fields and are bidding there almost like they would at an auction for coal, one man outbidding another. My information may not be correct. Do you know whether that has been done? Mr. MORROW. I think probably that is true. Mr. BARKLEY. So in both cases it would not be the Underwood typewriter factory, or the Ford automobile factory, or a silk mill, but some middleman who comes in to inflate prices? Mr. MORROW. Just go a step further. Who is your speculator going to sell that to? Mr. BARKLEY. He is going to sell it to anybody that he can make a profit out of. Mr. MORROW. All right. Now, one step further. Put yourself in the shoes of the speculator. He goes to the public utility. Can he sell to those public utilities at a fancy price? Why, no; the public utility man can get his supply under this order. Mr. BARKLEY. But if the public utilities can not get it through this machinery, they will pay it. Mr. MORROW. Some of the public utilities will not. I think some of them did pay it, and Mr. Hoover and Mr. Spencer and the administration had to ask them to get out of the market and buy under this order, and in this manner. Mr. BARKLEY. The situation may have changed in the last week. Mr. MORROW. I think the situation you have there is representative of what goes on. If there is a short crop of cotton this fall, you will have a speculative price on cotton from men who hope to unload on somebody else. We can not help that. These men will sell, and men will buy. But if you priority orders are in effect, the distribution will be limited, and it will take care of prices. You do not need anybody to take care of it. But there were men who sent their buyers into the coal districts with a checkbook, and their only instructions were that they should keep them running, and they were fired the day they quit running. The public utilities, and the railways, and the private consumers Deed protection against these buyers. You have got it right there now, and it can be applied. Therefore, I feel that most of what this bill hopes to do is now being done. It is not being done by application to the particular operator, or particular mine, or particular consumer; it is being done generally. But it is being done just the same. Mr. COOPER. Mr. Morrow, I think I heard you say that the coal-carrying roads should devote their facilities to the carrying of coal. What about the industries Mr. MORROW. (interposing). If we do not have enough coal to supply households, they will have to shut down anyway. Mr. COOPER. And many industries in my district are out of coal and have shut down. Now, if they got coal, it would not do any good if they could not ship their products. Mr. MORROW. Well, that is true. But most of our industries would notwell, they would be affected by it, too; they would have to be affected. Mr. COOPER. Did I understand you a moment ago that some of these manufacturers could afford to pay $20 a ton for coal? Mr. MORROW. They did do it, and made contracts for a year. But that was not this year; that was in 1920. Mr. COOPER. What effect will that have on the household coal? Mr. MORROW. Mr. Cooper, the retail dealer, if he can get it under priority from the operator, the retail dealer is not going to have to bid against this typewriter concern, or these factories. He will get it direct, and at a very reasonable figure, and if the retail dealer undertakes to tell his customers that he had to pay $20 a ton for his coal and distribute it on that basis, the local authorities will have to deal with him. Mr. COOPER. One more question: The Secretary of Commerce stated that they were paying 20 per cent over the price of coal. What objection have you to checking those men? Mr. MORROW. Not a bit. Mr. COOPER. Don't you check them under this bill? Mr. MORROW. That is exactly what you do under the service order; not under this bill. Mr. COOPER. The representative of the Interstate Commerce Commission did not say that this morning. Mr. MORROW. Maybe he did not. That is a question then of constitutional authority, because the Interstate Commerce Commission has levied embargoes against shippers under the Esch-Cummings law. If they did it then legally, I do not see why they can not do it now legally. Mr. LEA. I do not understand your position, Mr. Morrow, with reference to priorities being a protection against excessive prices. Suppose that we have the operation of the priority that is now in effect, what is to prevent the coal producers from selling to the highest bidder and refusing to sell for priority purposes? Mr. MORROW. If he refuses to sell for the priority purposes, as long as you haven't a sufficient number of cars, he can't sell to anybody. He won't have the coal to ship. Do you get that? Mr. LEA. Yes. Mr. MORROW. That is the predicament he is put in. The priority buyer gets in with the first supply of cars. As long as there are not enough cars to go around the man will have to take his choice with the first priority orders. The necessity is to get enough orders to run at all. That is the way it worked before. Mr. LEA. The man who does get the priority can get the higher prices, if he waits for the priority? Mr. MORROW. You mean the buyer of the coal? Mr. LEA. The seller; if he simply refuses to sell at the lower price, he can get the higher price. Why should a man sacrifice at a lower price when by holding on he can get a higher price? Mr. MORROW. Mr. Lea, you will have to presuppose, before that condition can arise, an understanding between the operators that they will not Commissioner AITCHISON (interposing). That is exactly what happened in Alabama. Mr. MORROW. I believe the statement was that there the price of $2.50 a ton was not a fair price. Commissioner AITCHISON. Their statement was that they were not interested in the price, and stayed out. Mr. LEA. Your statement is that when there is a sufficient supply of cars the operators will run off the coal and sell at the low price? Mr. MORROW. When a man's mine has been shut down for four or five months and he has an overhead expense of $30,000 or $40,000 in his mine-and that is the situation in these union fields--and you increase your car supply, and there is a prospect of a steady increase in the car supply, and you will find plenty of individuals who will take priority orders. And they will probably take advantage of the situation to make long-term leases or contracts at those prices. That is the way they will work it Mr. NEWTON. Mr. Morrow, your statement is all based upon the premise that there is a sufficient car supply to fill all the wants that will be filed under these various priorities; that is correct, is it not? Mr. MORROW. I don't know just what you mean by that Mr. NEWTON. Well, if there is a sufficiently available car supply so that any person, who is entitled to a priority, may expect to get a car and place it at the mine and have the order filled? Mr. MORROW. Yes, sir. Mr. NEWTON. Well, it is my understanding that that is not the situation; that at least for some little time there is an insufficient car supply to even take care of those immediate needs of the industries and the utilities which are entitled to a priority. Mr. MORROW. Where did you get that impresson? Mr. NEWTON. I get that impression from the Interstate Commerce Commission and from my own knowledge of the facts of the people in Minnesota who want coal and who can not get it. Mr. MORROW. Now, let us differentiate a little. Is it the lack of car supply or the lack of Mr. NEWTON (interposing). Well, car supply or motive power. Mr. MORROW (continuing). Or is it congested yards and crippled motive power; which is it? Mr. NEWTON. Well, it is something pertaining to the movement of the freight-either insufficient locomotives or cars in a locality. Mr. MORROW. All right. Mr. NEWTON. Now, if that is the understanding and the situation and there is and will be for some time to come an insufficient supply of motive power or cars to move the coal, then there is going to be competition among the buyers for priority shipments, is there not? Mr. MORROW. Yes, sir. Mr. NEWTON. And the moment you have competition among the buyers for priority shipments then you are going to have the sellers boosting their prices, just as they have been doing in the past few years. Mr. MORROW. No, Mr. Newton; the difficulty with your reasoning is, the business that these priority orders cover, as Secretary Hoover told you this morning, does not begin to absorb all the classes of coal that must move. These priority classes, Mr. Hoover said, do not require more than 4,000,000 or 5,000,000 tons a week. Personally, I think it is about 6,000,000. Mr. NEWTON. You are not moving that much now. |