COAL-FEDERAL FUEL DISTRIBUTOR.

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Monday, August 28, 1922. The committee this day met, Hon. Samuel E. Winslow (chairman) presiding. STATEMENT OF MR. CLYDE B. AITCHISON, COMMISSIONER, INTERSTATE COMMERCE COMMISSION.

Mr. AITCHISON. I may say, Mr. Chairman, that I am not here as a representative of the Interstate Commerce Commission, because the Interstate Commerce Commission has not had an opportunity to consider the bill which is before you, but I am here because, by direction of the President, a committee was appointed, consisting of the heads of the Department of Justice, Interior and Commerce, and a member of the Interstate Commerce Commission, with a fifth member chosen from the outside, for the purpose of coordinating the work of the various governmental departments, and all of them, during the existing coal emergency.

I am not going to take any of the short amount of time allotted to me in a recital of the emergency condition. I may say that at the present time, looking to the week which is to come and assuming the most roseate view of the situation, that possibly there will be produced 8,000,000 tons of bituminous coal. That is a figure which we have not reached since probably some time in March before the strike. In order that the country may be comfortable, feel safe and begin to build up that fluid reserve of working capital in coal which is necessary, we should be producing at the present time, and continue to produce until the end of Lake navigation, probably as much as 13,000,000 tons of coal a week, so that we are running from four to six million tons short, bearing in mind the fact that anthracite is not being produced in any quantity whatsoever. That is a condition which naturally lends itself to speculation and profiteering. The presidential committee was created at a time when Congress was not in session and we have undertaken by cooperattion to do two things: To take the limited amount of coal produced-4,000,000 tons a week at the time the committee was created-and put it where it was needed for the most urgent purposes in keeping the country going and, secondly, to prevent skyrocketing prices, which naturally follow both upon such shortage and upon any governmental interference in the natural flow of traffic.

At the present time production is increasing, and it seems possible that there will have to be some relaxation or should be some relaxation in the grip which has been maintained upon priorities, and the matter be thrown more open to the general public for obtaining the coal necessary. Nothing at the present is being produced which can go to industry in general as distinguished from highly essential industry, such as public utilities, railroads, governmental purposes, the manufacture of foodstuffs, and the like. To control that situation and if prices are to be kept within limits, obviously some legislation along the line of the existing bill, or that which is contemplated by the President's recent message to Congress, is, in the judgment of the presidential committee, essential. The bill drafted has had the general examination of the presidential committee and in its essential outlines has been approved by the members thereof. consisting of the representatives of the Attorney General, of the Secretary of the Interior, the Secretary of Commerce, myself, and the lay member, Mr. Spencer, who at the present time is acting as Federal Fuel Distributor.

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Mr. HUDDLESTON. Do you refer to the bill we have before us or to the other bill, because, as you know, two bills were sent down by the President.

Mr. AITCHISON. Both have been considered, but I understand we are now addressing ourselves to the committee bill, and I was doing so.

The essential outlines of the bill are not difficult to grasp. There is, first, the general declaration of an emergency, and, secondly, a provision that the President shall appoint a fuel distributor; third, a provision for the Fuel Distributor getting information as to the sources of supply, the places where the coal is, and, naturally, the important question of a fair price, the just and reasonable price which should be necessary for the fuel. I may say that the bill covers not only coal but fuel generally.

Mr. SANDERS. What would that include?

Mr. AITCHISON. It would include fuel oil, gasoline, kerosene, as well as all forms of coal, and also include coke. I presume it would include or be broad enough to include cordwood, although there is little of that necessarily involved. It is highly important that he shall ascertain what is a just and reasonable price, and he is authorized to make appropriate recommendations pertaining thereto to the Interstate Commerce Commission, either on his own motion or when the commission requests it. There is a provision making the records and data of the Federal Fuel Distributor accessible at all times to the Interstate Commerce Commission.

The broad powers which are conferred upon the Interstate Commerce Commission by the Esch car service bill of 1907, as amended by section 402 of the transportation act, I take it the committee is familiar with. Those powers, the commission has held in the past, are not broad enough to permit us to lay down car service rules solely with respect to the question of price. We take it that price is one element which fits in with other elements and may affect transportation and can be considered in that regard, but if legislation for the future is to address itself through the medium of the extraordinary car service powers of the Interstate Commerce Commission and reach price most all of us frankly recognize that that power must be so broad in its terms that we can reach the case of 100 per cent car supply where there is no transportation disability and say to the prospective shipper that "because the price which you are demanding for your product is extortionate you should not participate in interstate commerce." We have got to come flatly

to that situation or the control does not exist.

The inent of section 5 of the act is to permit the Interstate Commerce Commission-indeed the section requires it-to take into consideration recommendations made by the Federal Fuel Distributor and give voice to them by appropriate directions both for priorities and embargoes.

The legislation proposed is not in any way to be taken as impairing the existing obligations and duties of the Interstate Commerce Commission but is supplemental thereto, and the commission is authorized to use all the powers it has under existing law in carrying out the provisions of this emergency legislation.

There is the usual and the necessary rule in section 7 giving the Federal Fuel Distributor authority to make the necessary rules and regulations with respect to the carrying on of his administrative work, the appointment of the necessary agencies he may have to have, etc., and also for the interchange of data between the Federal Fuel Distributor and the other departments of the Government.

This is legislation which is proposed to be enacted in time of emergency. Manifestly the emergency may come again and it may come at a time when Congress is not in session. It came this time when both Houses of Congress were not in session and when legislation was impossible. In the draft of the bill, therefore, it is provided that the President may suspend the operation of the statute when, in his judgment, the existing emergency is over-and that covers all the matters I have mentioned-and when a subsequent emergency arises he may again revive the operation of the statute by similar proclamation. Quite important, in the judgment of those of us who have had to do with car service matters in the past, is section 9 of the act which, in terms, makes applicable to violations of the car service rules the rule in the Elkins Act prohibiting discrimination in rates. It is possible that the Elkins Act is broad enough to cover other discriminations, but we feel it is well to make it absolutey clear that it covers an attempt to procure a discrimination, obtaining it and misusing it in violation of any of the orders of the commission.

Under the car service section there is also carried a provision that anyone who shall by willful misrepresentation, or by any fraudulent device or means whatsoever, procure or cause to be issued any order or direction for priority, or who shall knowingly or willfully use or cause to be used any fuel for purposes other than those for which any order or direction for priority is issued, shall be deemed guilty of a misdemeanor, and shall be subject to a penalty.

A jurisdictional clause based on that and the Elkins Act is provided. The appropriation covered is $250,000, available until expended, including payment for personal services in the District of Columbia and elsewhere. It is also provided that expenses which have already been incurred in this work under the direction of the President-which have been borne, as I understand it, largely out of the private pockets of public-spirited citizens—not to exceed $50,000 may be reimbursed upon the certificate of the President.

I believe, Mr. Chairman, that sufficiently covers the outline of the bill.
The CHAIRMAN. Is it now your pleasure to answer questions?

Mr. AITCHISON. Yes.

Mr. SANDERS. Mr. Commissioner, the real emergency for which you deem legislation necessary is the danger of high prices?

Mr. AITCHISON. For which we need this legislation, yes.

Mr. SANDERS. You now have very broad powers in the interstate commerce act, as amended, with reference to distribution?

Mr. AITCHISON. I think so.

Mr. SANDERS. Really, this act, so far as it deals with distribution, does not enlarge the powers of the commission.

Mr. AITCHISON. Well, it undoubtedly does by authorizing us to receive the recommendations of the Federal Fuel Distributer as to where coal ought to go and supply it there. However, we are not organized for such work. It never has been the concept of the duties imposed upon the Interstate Commerce Commission that it is to create commerce or to forbid it. Our duty is to expedite it. Mr. SANDERS. I understand that. That is a matter of making a survey and getting information but I am talking about the powers of the commission. So far as your powers over priorities and over the question of sending coal into a certain region where they need it at once-so far as your powers of action are concerned they are not increased by this act.

Mr. AITCHISON. I think they are.

Mr. SANDERS. In what respect?

Mr. AITCHISON. At the present time I do not believe the Interstate Commerce Commission has or should exercise coercive power to create the relation of buyer and seller.

Mr. SANDERS. What do you mean by that?

Mr. AITCHISON. I conceive that we have the power to say that coal going into a given district should receive a priority but that assumes that the one who asks the priority is willing to use it. However, in the past we have found, and within the last two weeks, cases of districts which have said, "We are not interested in priorities; we do not care to receive any priorities; we do not wish to ship under your priority orders and we will wait until cars are distributed in the usual course, and then we will ship where and as we please."

Mr. SANDERS. This would not give you power to compel them to ship? Mr. AITCHISON. Yes; I think it would. I think in a case of that sort the fuel distributor would ask us and we could levy an embargo on that district.

Mr. SANDERS. But if you levy an embargo that does not compel him to ship. Mr. AITCHISON. No: but is shuts him off. At the present time, after the priorities are given, he has the right to ship under a fair distribution of the

cars.

Mr. SANDERS. Then you think this gives you an additional power with reference to an embargo?

Mr. AITCHISON. Yes.

Mr. SANDERS. You stated in your summary of the provisions of the act that they provided-I am not using your exact languege-that the Federal distributor should fix the schedule of fair prices. The wording of the act is, subdivision C, that he shall ascertain "the prices normally and usually charged for such coal and other fuel and whether current prices, considering the costs of production and distribution, are just and reasonable." That is a negative power with reference to what are unreasonable prices rather than a positive power to adjudge what are reasonable prices, is it not?

Mr. AITCHISON. Yes. Personally, I would have no objection to broadening that to include the positive direction or authority for him to fix the just and reasonable charge.

Mr. SANDERS. In the different conferences that have led up to the suggestion of this legislation to meet this emergency have you reached the conclusion that the Federal Fuel Distributor should fix the fair and reasonable prices of coal throughout the country generally not for the purpose of saying to anyone, "You can not sell coal at any higher price," but for the purpose of determining car service have you determined that the Federal Fuel Distributor should fix the prices of coal throughout the country?

Mr. AITCHISON. I think the car-service feature is a means to the end and is not the end. As to whether the Federal Fuel Distributor, or some similar agency, should fix the maximum, I myself entertain no question, because I believe if all limits are removed we can not tell where the skyrocketing will end, if we may julge by the past.

Mr. SANDERS. So far as your understanding of the situation is concerned, then, you think the Federal Fuel Distributor should fix the maximum prices to be charged for the coal?

Mr. AITCHISON. A just and reasonable charge; yes.

Mr. SANDERS. And. then, that he should make

Mr. AITCHISON (interposing). Pardon me. That, of course, is at the mine. Mr. SANDERS. That is at the mine?

Mr. AITCHISON. Yes.

Mr. SANDERS. And no other place?

Mr. AITCHISON. No.

Mr. SANDERS. And the reason you think he should fix it at the mine and no other place is because you do not think the constitutional powers of the Federal Government are sufficient to authorize him to fix them any place else?

Mr. AITCHISON. I think undoubtedly that Congress has the right to prescribe the conditions under which this highly vital commodity shall move in interstate commerce, but after the commodity has reached a State and become mingled with the corpus of the property in the State, then I believe it is a matter for State regulation and that the responsibility should be placed upon the States. Mr. SANDERS. Then you think our power is limited to permitting the Federal Distributor to fix what he regards as a just and reasonable price of the coal at the mine and to use the powers under the commerce clause by permitting the commission to refuse car service to a shipper who does not make his contracts in accordance with those prices?

Mr. AITCHISON. That is the case, but, of course, you must bear in mind that the recommendation in section 3 covers not only the price but the equitable distribution of coal.

Mr. SANDERS. I understand that, but I am just talking about this question of the price. Now, then, when the Interstate Commerce Commission gets a recommendation, of course, the Interstate Commerce Commission may make the recommendation or may not make the recommendation.

Mr. AITCHISON, That is the case.

Mr. SANDERS. If the Interstate Commerce Commission, for instance, should think that the charge of a shipper was just and reasonable, notwithstanding the fact that the Fuel Distributor thought it was not just and reasonable, the Interstate Commerce Commission could disregard the suggestion of the Fuel Distributor and refuse to put an embargo on the shipper?

Mr. AITCHISON. Yes.

Mr. SANDERS. In the examination of the question have you found any real emergency so far as furnishing fuel to the Government departments is concerned?

Mr. AITCHISON. At the present time?

Mr. SANDERS. Yes.

Mr. AITCHISON. They have been obliged to concentrate all of their purchases in a single hand. However, we are fortunate at the moment because the Navy was forehanded enough to lay in a large amount of coal just before the emergency, but my understanding is that the other governmental departments, all working through Commander Cobey, are on rather thin ice.

Mr. SANDERS, How do they buy their coal?

Mr. AITCHISON, All purchases, I believe at the present time, are cleared through Commander Cobey.

Mr. SANDERS. There is no trouble about buying coal; the only question is whether they are going to have to pay too high a price.

Mr. AITCHISON. It is a question of paying too high a price and getting the

cars.

Mr. SANDERS. You can furnish the cars.

Mr. AITCHISON. But when we do that, of course, we deprive others of their use of cars.

Mr. SANDERS. But so far as the Navy is concerned and so far as the Government departments are concerned, the difficulty is whether the price is going to be higher than Government officials want to pay.

Mr. AITCHISON. At the present time?

Mr. SANDERS. Yes.

Mr. AITCHISON. Yes.

Mr. SANDERS. That is the only emergency that needs new legislation.
Mr. AITCHISON. Yes.

Mr. NEWTON. Mr. Aitchison, we have a situation with reference to the shipment and storage of coal on the Great Lakes. At the great docks on Lake Erie, at Superior, Wis., and Duluth, Minn., they are storing not only hundreds of thousands of tons but I imagine they have a capacity for several million tons. Now, I understand that under the bill there is no question but what the Fuel Distributor can fix the maximum price at the mines, but there is no thought on the part of anyone, so far as I have been able to ascertain, that the fuel distributer, or any Federal agency, would attempt to fix the maximum price to the consumer in the States, but at the same time it was my thought that if the dock companies, either at the Lake Erie docks, at the Superior docks, or at the Duluth docks, attempted to charge an exorbitant price for the coal that was in their possession and of which they had obtained possession by reason of priorities, that the Federal Fuel Distributor would have jurisdiction to set a maximum price and prevent extortion. Now, information has come to me over Sunday that at Duluth and Superior some of the dock companies have already set a very heavy price upon bituminous coal on priority shipments. Is it not your understanding that the bill as written would confer jurisdiction?

Mr. AITCHISON. When I answered Mr. Sanders a minute ago with respect to control of prices at the mines I had in mind the great general situation and not the particular one that Mr. Newton mentions of what might be called a sort of submine, where the production of the mines is collected, because clearly the provisions of the act are broad enough to cover a case, such as Mr. Newton has mentioned, where the commodity moves in interstate commerce from the docks.

Mr. NEWTON. But it was the thought of everyone I have come in contact with that there is something to be left to the States, to see that there is a proper agency within the States for proper distribution, and so on, and to see that extortionate prices are not charged and, as I understand, we are not assuming to handle that phase of the situation.

Mr. AITCHISON. No.

Mr. BARKLEY. You suggested awhile ago, in answer to Mr. Sanders, that this price fixing was to apply only at the mine on the theory that after the coal had ceased to be an object of interstate commerce and has become mingled with local distribution it is impossible for Congress to fix prices. Is not that also true at the mine? How can you separate that coal which is to enter interstate commerce from that which is to stay in the State so as to be able to fix the price at the mine of that which goes into interstate commerce and not fix that which remains in the State?

Mr. AITCHISON. Well, I take it, Mr. Barkley, that while the question of car distribution has never been passed on as between the powers of the State and the Federal Government that whatever scheme is hit upon by Congress must necessarily control interstate commerce as well as intrastate commerce in its general scope.

Mr. BARKLEY. I am not speaking about car service, but I am speaking about the power of this Fuel Distributor to fix a reasonable price of coal at the mine. Mr. AITCHISON. Take a specific case, we will say, of a mine in Kentucky. If the coal is for use at a point in Kentucky I do not understand it is the intent of the bill that the Fuel Distributor should there fix the price of that coal. Mr. BARKLEY. So this will not apply to people who buy coal that is mined within their State?

Mr. AITCHISON. No.

Mr. BARKLEY. Either at the mine or at the point of distribution?