Mr. SANDERS. But the section under which they get their car service powers expressly provides that they may issue their orders without any hearing.

Mr. BARKLEY. Mr. Secretary, I would like to get your views about certain phases of this matter, if you care to express them. My attention has been called to the fact, or the statement has been made in various parts of the country, that public utilities, like street cars, lighting companies, water companies, etc., that serve the public in a municipal way, and also other industries, have been compelled to pay as high as $10 or $12 per ton for run-of-themine coal. My attention has been called to a particular location in which it is claimed that public utilities have had to pay that price, and the defense has been made by the operators that they have not charged any such price as that, but that speculators who have been on the ground in the meantime, and who have been filling the hotels to overflowing, have purchased the coal and that they have been responsible for those enormous prices. I would like to have information from you as to the merits of that controversy, as to where the real fault lies with reference to those enormous prices charged for coal.

Secretary HoOVER. I must confess that it is almost impossible to make any quantitative statement as to the relative responsibility. Our calculation is that the amount of coal moved from the nonunion districts under the volunary agreement which we established indicates that there has been approximately 70 per cent at the price fixed in that arrangement. Certain districts never would comply. Other districts refused for some time to accept the agreement until public pressure became so great that they did so. Still other districts withdrew from or repudiated the agreement. In the main fields of production and among the most responsible operators they held. There is the case of some small percentage of operators, even in the best disciplined districts, who would not comply, and it is very difficult to arrive at a quantitative responsibility. The districts have been infested by coal speculators, and especially the smaller coal operator who had worked his mine intermittently for years at a loss, has felt a great deal of justification for taking what he could get under these circumstances, the favorite justification being that the public showed no concern for the coal operator when he was losing money, and that they did not feel that they were obligated to be concerned for the public when the time came when they could make something over the average. I only mention that as being their view.

One thing certain, and that is that some of the fair-priced coal has gone into the hands of speculators who have misrepresented the price at which they obtained the coal. For instance, in the smokeless fields, the figures will show that less than 5 per cent of the coal out of that field has moved at over the fair price. The average price of coal in the smokeless field has been less than $3.50 per ton right straight through until the agreement was dissolved by the end of the strike. We have had a great many cases reported of smokeless coal being quoted at from $7 to $9 per ton at the mines. That certainly represents considerable misdoing on the part of the persons in possession of the coal, because in very few cases were such prices ever paid. It is very difficult to locate with whom the fault lies.

Mr. BARKLEY. What has been the average price obtained for the 30 per cent of the production that would not enter into the voluntary agreement, or what price have they received over the fair price fixed, or the price received for 70 per cent of the production?

Secretary HOOVER. I do not quite understand that.

Mr. BARKLEY. What has been the excess price charged at the mine for the 30per cent of the production that would not enter into the agreement over that charged for the 70 per cent sold under the agreement?

Secretary HOOVER. I think it will be very difficult to state. For instance, western Kentucky refused to agree to limits that I felt were fair and, that many of their own operators thought were fair. As a district they stood out for a matter of six weeks. During that t'me the price of coal at the mines advanced to from $6 to $8 per ton at the mine. Then public pressure and the ascendency of the more decent mined operators, the district agreed on the price of $3.75 per ton. They held to that for a certain lengh of time, and then some of the minor operators began to break away, and the prices went as high as $9 or $10 per ton. At that time the governor, at my request, intervened and recommended the price of $4.50 per ton, and that was adopted and has held for a matter of two weeks. In noncooperating districts and among operators who refused to cooperate prices have ranged lately from $7 to $12 per ton.

Mr. BARKLEY. I do not want to go into the constitutional question, but your view is that under this bill nothing whatever can be done toward the regulation of the price of coal which is mined and consumed wholly within the same State?

Secretary HOOVER. Of course, I do not want to make any pretense at constitutional knowledge, but that is the advice I have received.

Mr. HOCH. Mr. Secretary, the Presidential committee in immediate touch with this question, had under consideration various proposals for legislative action covering the subject of production, supply, distribution, and price: Now, speaking either for yourself, or for that committee, this is the only legislation that you think is necessary or wise to be undertaken in the immediate future? Secretary HoOVER. I do not want to hesitate to give you a perfectly plain answer one way or the other, but we are faced with a shifting situation of unknown degree of famine. It is impossible to say whether or not these powers will be sufficient. Our idea was this, that the various proposals brought forward, this was the most expeditious and the easiest of application. It looks like it would have success, but if in two months time we found that it was not effective, Congress might wish to consider other measures. From anything I can see it should be effective within the area of Federal action. It creates no interference with decent business and it requires but little executive machinery.

Mr. HOCH. You have spoken of the difficulties, and it certainly would be apparent to anyone, even though he might not have given any considerable thought to it, that the difficulties in building up an organization for buying and for the selling agency that is proposed would be very great. There has also been considerable discussion in the press about the practicability of legislation providing for taking over the mines by the Government direct. Now, you think after all that consideration, that the thing to be immediately done is the enactment of this legislation that is being pressed as affording the most practicable solution of the trouble?

Secretary HOOVER. That is my view.

Mr. HUDDLESTON. Mr. Secretary, is this bill intended to apply to extortion by sales agents and speculators or middlemen?

Secretary HoOVER. Upon the technical question of how far it will apply I would suggest that you should ask the legal advisers. It is my understanding that if a sales agent ships coal in interstate commerce at an extortionate price, he will come within the purview of the bill.

Mr. HUDDLESTON. I have some knowledge of the coal industry, and it is quite common to make a contract for the purchase of the entire output of a mine, or of a certain number of cars. Then it is sold to a sales agent who will make whatever profit he can. Right now the men who made contracts of that kind are making large amounts.

Secretary HOOVER. Yes.

Mr. HUDDLESTON. Do you think that this bill would prevent that kind of extortion?

Secretary HoOVER. The bill was intended to cover such transactions in interstate commerce. As I understand it, it would not cover it if they operated within the domestic limits of the State.

Mr. HUDDLESTON. This measure is not intended to affect mines which are not now producing coal?

Secretary HOOVER. If they should go into production, I presume it would affect them.

Mr. HUDDLESTON. But it is not intended by this measure to put them into production?

Secretary HOOVER. NO.

Mr. HUDDLESTON. It does not pretend to affect anthracite production? Secretary HoOVER. Yes, it would cover anthracite coal just as much as bituminous coal.

Mr. HUDDLESTON. That is, if they should begin operations?

Secretary HOOVER. Yes.

Mr. HUDDLESTON, But, unless there should be some resumption of operations or voluntary resumption of operations, this bill would not cause the production of any anthracite coal?

Secretary HOOVER. NO.

Mr. HUDDLESTON. That also applies to the fields or mines in which the strike continues?

Secretary HOOVER. Yes.

Mr. HUDDLESTON. We have seen a good deal in the press about taking over the mines, and I am left in some doubt as to whether such legislation is contemplated. It seems to me that the Senate has some such measure under consideration.

Secretary HOOVER. Such a method of dealing with the strike or distribution has never been recommended by the presidential coal committee or my myself. Mr. MAPES. Mr. Secretary, I am not quite clear as to whether the voluntary fair price still holds good since the resumption of production by the union miners.

Secretary HOOVER. No; it expires this week. That agreement was entered into for the period of the strike, and after resumption of production by the nonunion mines, it falls of its own weight. In the meantime, the governors of many States have enunciated prices that they consider fair. There is no enforcement machinery of any importance in the States, but the greater percentage of the operators stick to those prices as maximums.

Mr. MAPES. Can you tell us offhand what percentage of the entire coal production is represented by the production of the nonunion mines?

Secretary HOOVER. The nonunion mines at one moment before the railroad strike were producing about 5,500,000 tons per week. Latterly, or for the last four weeks, they have produced in the neighborhood of 4,000,000 tons per week. The limitation on transportation in the southern districts are about the same now as they were before the resumption of production began in the Northern States in the union mines, so I should assume that the southern mines can not be expected to produce much more than 4,000,000 tons per week out of the total of about 7,000,000 tons that we are expecting this week. Production in the Southern States is likely to decrease because the shorter haul in the northern mines may attract cars from them.

Mr. MAPES. The nonunion mines are producing

Secretary HOOVER (interposing). I did not quite understand. The nonunion mines are producing everything they can with the railroad transportation available.

Mr. MAPES. And if the union mines were producing on the same basis—— Secretary HOOVER (interposing). The total theoretical capacity of the bituminous mines is, perhaps, 14,000,000 tons per week.

Mr. MAPES. That relates solely to the bituminous fields?

Secretary HOOVER. Yes.

Mr. LEA. Can you tell us about what proportion or volume of the coal supply passes through interstate commerce?

Secretary HoOVER. No; I regret that we have not been able to get any conprehensive figures on that question. The whole statistics as to coal movements are very feeble.

Mr. LEA. I understood you to say that the maximum price fixed under this bill would become the minimum price.

Secretary HOOVER. I do not think there is any doubt about that-until there is a surplus of coal.

Mr. LEA. Do you think that would be so if the time should come when the supply would exceed the demand?

Secretary HOOVER. The very minute that there is a surplus supply the price will fall immediately below the maximum, If a fair price were made, it would undoubtedly become the minimum price except in the minor particular of possible truck haulage.

The CHAIRMAN. We have consumed 3 hours and 15 minutes of the 3 hours and 30 minutes allotted to those in favor of the bill. If there are any witnesses present who are cpposed to the passage of this bill, they will let it be known by raising their hands. [There was no response.] Will it be agreeable to the committee to permit the chairman to assign some of the time that might have been used by persons in opposition to some persons who would like to be heard in favor of it? Is there any objection to having some of the time given to the negative side consumed by those in favor of the bill? The Chair hears none.

Mr. RAYBURN. There may be some people present who would not want to say that they were opposed to the bill, but who would like to make some suggestions in regard to it.

The CHAIRMAN. We will give them a chance to be heard. Are there any persons present who would like to speak on this bill, and who, perhaps, are not necessarily opposed to it, but who would like to suggest some modification of it?

(There was no response.)

Mr. GRAHAM. What has become of the suggestion to have some representative of the operators here?

The CHAIRMAN. He is here waiting to be heard.

ADDITIONAL STATEMENT OF MR. PATRICK J. FARRELL, CHIEF COUNSEL OF THE INTERSTATE COMMERCE COMMISSION.

Mr. BARKLEY. Mr. Farrell, there are probably more constitutional questions involved in this bill than in any similar bill that has been before this committee in a good while. From reading the bill it seems to be based not only upon the power granted to regulate interstate commerce, but upon the power to provide for the general welfare, to support and maintain an Army and Navy, and upon several others. You, in your testimony, and the other witnesses, seem to have expressed the view that this bill is largely based upon the commerce clause of the Constitution, and the suggestion has been made that the so-called welfare clause is not a grant of any power to Congress. I do not know that you made that statement, but I would like to call your attention to this situation, which bothers me considerably: Under the child-labor decision of the Supreme Court of the United States, or in the two decisions on that subject, the Supreme Court declared the child-labor legislation unconstitutional, one of the grounds being that under the guise of taxation, commerce can not be regulated, and upon the other ground that it was not interstate commerce, and that Congress could not fix the conditions under which the products of a factory or the products of child labor should enter interstate commerce, the production being wholly within one State, the court holding that the fact that such products afterwards went into interstate commerce did not give Congress power to regulate the conditions under which they were produced.

Under those decisions, it may be doubtful whether Congress, under the commerce clause, would have power to fix the price of coal at the mines, although it afterwards enters into interstate commerce. Now, if this legislation is to rely wholly upon the commerce clause, and, following the child-labor decision, the Supreme Court should hold that the sale of coal at the mine is wholly an intrastate transaction, and that the fact that it may enter interstae commerce later will not give Congress or the Federal Government the power to fix the price, then it would follow that this price-fixing provision of the bill, based upon the same clause of the Constitution, would fall. What is your view-assuming it to be correct that the Supreme Court has never defined the welfare clause of the Constitution-of the power of Congress in an emergency of this sort, or in any other nation-wide emergency, to exercise the powers conferred in section 8 of the Constitution, which are to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States, to borrow money, regulate commerce, etc., and then gives Congress the power to enact all laws necessary to carry into effect the grant of power contained in section 8?

Mr. FARRELL. The line of demarcation between the things which Congress may and those which it may not control stands right there upon the determination of whether the thing itself affects the subject over which Congress has been given control by the Constitution. Away back in the Knight case, Chief Justice Fuller, delivering the opinion of the Supreme Court, said that the manufacture of sugar, even though the sugar was afterwards shipped in interstate commerce, is not interstate commerce itself, and for that reason can not be controlled under the commerce clause, at least, by the Congress of the United States; but where the thing itself, such as the production of coal, becomes material as an interstate commerce matter, because if it is not produced, interstate commerce can no be moved, and because if it is not produced, the States, other than those in which the production takes place, can not obtain such interstate commerce, the situation is different. It seems to me that under the ruling of the Supreme Court to which reference was made awhile ago, the situation would be different. Now, if Congress legislates, and if the Supreme Court later says that the. thing it is endeavoring to regulate does in fact affect either interstate or foreign commerce, it can make all proper rules and regulations regarding it.

Before I finish, however, let me call attention to one thing, which I think is a matter of considerable importance: The Supreme Court of the United States, according to my understanding of its decisions, and I have studied them a good many years, makes a material distinction between the power of Congress to obtain information concerning matters which may not be regulated by

Congress for the purpose of properly regulating those matters with the power of Congress, and the regulation of the things themselves. The court has said that the production of coal as such is not within the power of Congress, because it is in and of itself simply an intrastate matter over which the State in which the coal is produced has exclusive control; but, notwithstanding the fact that Congress may not control the production itself, if I understand correctly the decisions of the Supreme Court, the Congress may authorize an agency to obtain full and complete information concerning the cost of that production and everything else which, under a reasonable construction, would be useful in properly regulating interstate commerce itself.

Mr. BARKLEY. But if Congress can not prevent the flow in interstate commerce of goods that have been made under conditions that Congress has attempted to outlaw, to wit, by the use of child labor, how can Congress prevent the shipment of products of that sort, or any other products, in interstate commerce, because it is claimed that the price is too high?

Mr. FARRELL. I think the distinction that the court makes there is this, that the question of whether a child under a certain age shall be permitted to work is not a matter within the power of Congress. If the Congress should have shown, even at long distance range, so to speak, that if that thing were done— that is to say, if the things were produced in that way, it would be embarrassing to interstate commerce, then, of course, it would have control of it. There are several decisions to the effect that anything which materially affects interstate commerce itself may be controlled by Congress, although taken by itself it would be purely an intrastate matter.

Mr. BARKLEY. What I am getting at is this: If the Supreme Court should take that view of this proposition, or the view that they took in the child labor case, which, I will say. I regret their taking, then this law would have to fall back on the general welfare clause of the Constitution, would it not?

Mr. FARRELL. So far as the general welfare clause of the Constitution is concerned, I do not wish to be understood as expressing any opinion as to the effect it would have on any legislation enacted by Congress, because I am unable to give any opinion. I do not know of any case where any attempt has been made to apply the general welfare clause. I simply contend as a lawyer that in my humble opinion the welfare clause tends to show the purposes that the framers of the Constitution had in view in prescribing certain powers to be exercised by Congress.

Mr. BARKLEY. As has been suggested, the welfare clause is not limited to the preamble, but it is an integral part of a section of the Constitution that confers power. In the absence of any decision holding that the powers under that clause are limited, would you say, as a lawyer, that Congress has power to determine that question and to enact such legislation as will promote the general welfare?

Mr. FARRELL. I would not wish to say that in and of itself it expresses any power, except as it may be used in connection with the power that is in effect definitely granted to show the purpose in granting it. The other powers are specific, and this is a general power.

Mr. BARKLEY. We must assume that it was put in there for some purpose. Mr. FARRELL. It was put in there to indicate or to serve as a guide in the interpretation of the powers which had been specifically granted.

Mr. BARKLEY. I do not think there is any such limitation upon it.

Mr. FARRELL. That may be. It is a general grant of power.

Mr. GRAHAM. Mr. Farrell, if I am not mistaken in my reading of the stockyards case, the case of Stafford r. Wallace, the court in that case comments upon extortionate charges in the stockyards, and the case, to some extent, rests upon the statement that extortionate charges in the stockyards constitute a burden upon interstate commerce and therefore can not be collected. Mr. FARRELL. I believe that is the real meat in the cocoanut.

Mr. GRAHAM. And in that case the Supreme Court recognizes the right of Congress in certain cases of extortion to have something to say about it?

Mr. FARRELL. Yes, sir; and another distinction you should remember is the distinction between an interference with interstate commerse which benefits one and which burdens the other.

Mr. GRAHAM. That affects the general welfare of the people.
Mr. FARRELL. That would be the same thing in other words.

Mr. DENISON. Then, Mr. Farrell, this official at any time he thought the price charged for wheat was extortionate, could fix the price charged for wheat?