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Mr. FARRELL, I would not make a statement of that kind, but if by reason of that extortionate charge, interstate commerce is made impossible, then they go to the root of the evil and apply it to the thing over which Congress has control.
Mr. DENISON. Suppose the price of wheat was so high that it would interfere with the free flow of commerce; then would they have the right?
Mr. FARRELL. It depends upon whether it is a burden upon interstate commerce. Congress, in the first instance, has the right to exercise its judgment in determining the facts.
STATEMENT OF HON. WELLS GOODYKOONTZ, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF WEST VIRGINIA.
Mr. GOODYKOONTZ. Mr. Chairman, I shall only require a few minutes of your time. I appear to express an opinion to the effect that if the proposed measure should be enacted into law it would constitute a clear invasion of the Constitution. I am aware of the fact that no provision of the Constitution has been treated as more elastic than the commerce clause. It has been the subject of judicial construction and interpretation perhaps in 5,000 cases, from the case of Ogden 1. Gibbons down through the Covington Bridge case, and the very late case relating to child labor. I am aware of the fact that that provision of the Constitution has been interpreted liberally and the court went so far as to hold in the case of the Reed amendment to the agricultural bill that if a man should go across a bridge spanning a river which was a boundary between two States, with half a pint of liquor in his pocket. he was engaging in interstate commerce. The court went so far as to hold that in the case of a man and a woman crossing that bridge for an immoral purpose that they were guilty of an infraction of the law regarding commerce between the States. In other words, I presume the court thought that they were polluting the channels of interstate commerce. But the court has never gone so far as to hold that Congress, under the guise of regulation, might fix the price. If Congress passes this bill it will constitute a new departure in legislation. No decision of the Supreme court can be cited as a precedent to sustain any such legislation.
It seems to me you are going at the wrong end of the business. The mines are ready to produce coal and are producing it. They are equipped with every facility to turn loose a flood of coal and rather had you direct your attention to opening up the channels of commerce so that the coal may be carried to market instead of wasting time abusing the coal people. Instead of doing that, we should direct our attention to the method of transporting the coal and finding a remedy for the strike troubles that exist in the country.
Before I leave the question of the validity of the proposed bill I want to direct your attention to the word “extortion." You say that a bureau or a department of the Government shall have the right to decide what is a fair price or what is extortion. Are you not aware of the fact that the Supreme Court overthrew the penal provisions of the Lever Act upon the ground and for the reason that that act did not particularly define the facts upon which a charge of agreement might be predicated. In my judgment, the bill before you is perfectly useless and utterly worthless. It will accomplish nothing, and I, for one, will be the last to repose any more power in the Interstate Commerce Commission. Had that commission acted promptly in the reduction of freight rates the strikes would never have come. They are the authors of the misfortune of the American people and of this administration. Had they reduced those rates as they should have done, labor would not have been discontented, the cost of living would not have been continually climbing, instead of going down. They were unable to agree upon anything except a mere pittance of a reduction, 10 per cent.
I merely come here now to protest against this bill and to offer, as I have offered, my views for whatever they may be worth.
(Thereupon a recess was taken until 12.30 o'clock p. m.)
The committee resumed its session at 12.30 p. m., pursuant to the taking of
The CHAIRMAN. The committee will come to order. We will ask Mr. Morrow to give his name and connections and then proceed as he will.
STATEMENT OF MR. JOHN D. A. MORROW, VICE PRESIDENT OF
THE NATIONAL COAL ASSOCIATION, WASHINGTON, D. C. Mr. MORROW. Mr. Chairman and gentlemen, I am J. D. A. Morrow, vice president of the National Coal Association.
I find myself in rather a difficult and enbarrassing situation here before this committee, because of the fact that the time which we have had to consider this bill since knowing about it has been so short that it has not been possible to get an opportunity to go over it with many of our directors and committees and representative operators as we would like to have done. So that I have to say to the committee what I will say with the understanding that it may not exactly express the views of our members, because we have not had the opportunity to find out precisely what those views are, but I think we know them fairly well, and what I shall say will, I think, meet with the approval of our members.
Let me say, first, that I think we can all agree with Commissioner Aitchison, and Secretary Hoover that this is not a question of coal production; it is a question of coal movement. While the bituminous mines are not all in operation, many of them are. And of the mines that are in operation-and I speak only for the bituminous mines—those mines have a capacity to produce in excess of 60,000,000 tons a year, more than 5,000,000 tons a month. That ability to produce, however, is predicated upon the ability to move the coal away from the mines. So that practically the difficulty, or problem, or whatever you call it, of the coal situation in the United States in the next few months is essentially a transportation question. It has to be approached, in our view, from that standpoint. It has been approached from that standpoint by the Secretary of Commerce and the administration.
Before this bill is enacted, I think the committee ought to understand clearly what is now being done. There are now in effect certain priority orders of the Interstate Commerce Commission directing the railways to give preference and priority first to the placing of coal cars to the mines, and the movement of the loaded cars away from the mines.
Coal is preferred over all other commodities, under those orders, except foodstuffs for human beings, foodstuffs for live stock, live stock itself, and perishable commodities.
Now, concretely, what does it mean, gentlemen, if those orders are enforced? In 1920 we had a similar situation in transportation, through the instrumentality of the switchmen's strike. The Interstate Commerce Commission made an order under this same priority authority newly given in the Esch-Cummins law. At that time they issued priority orders in favor of coal. Those orders were not strictly enforced when the priority was given, in the summer, and it was not until October that the orders were rigorously enforced ; and when they were enforced the production of bituminous coal arose to 13,000,000 tons a Week—they had been 500.000 tons a week, but for sometime we ran better than 13,000,000 tons a week, under those priority orders.
Now, gentlemen, under priority orders 22 and 23 in effect, and with the Interstate Commerce Commission having had the experience of 1920 in dealing with this subject, we have already in effect the necessary governmental regulations to move coal, so far as it can be moved by the transportation machine.
Now, before this bill is enacted into law, it seems to me a little consideration ought to be given to the shape transportation is in. What shape is the transportation machine in? I have not had time to look into it in detail, but I have seen the reports of the American Railway Association—the last report, I think of the last week in August, and that report shows that the freight cars loaded and moved in that week were 850,000. In 1920, a boom time, they were 930,000. In other words, these railways now are hauling about 92 per cent as much freight as they did in 1920.
Now, how about coal? In 1920 they were moving 220,000 tons a week. I said a week, I meant a day, in those figures I have given. In this same report they were moving 265,000 cars of coal.
In other words, gentlemen, this transportation machine is now moving about 75.000 cars of freight other than coal in excess of what they did in 1920.
Now, as a practical proposition, to supply this country with coal, we feel the thing to do is to quit moving some of the other freight for a while, and move some more coal. The mining capacity is there. The men are now back at work. The coal is being produced. The operators are anxious to ship the coal, and the country wants it. We have a chance to make up our minds whether we will haul coal or the other things. We have been hauling the other things. The necessary regulations are in effect to see that the coal is loaded and moved.
Now, I take it that the Interstate Commerce Commission can enforce the orders, and if the Interstate Commerce Commission rigorously enforces orders 22 and 23, other things will not move. Perhaps some of them might as well not move; if this is an emergency, perhaps they might wait awhile.
Now, in the view of these coal men who are on the job and trying to do their job, that is the situation.
Now, the administration tells you it is a price emergency.
Mr. Hoch. In a general way, what commodities are being moved in cars that are suitable for coal?
Mr. MORROW. A good deal of building material is being moved in cars of that kind. They are taking most of the open top cars. It is not so much a matter of cars, however; it is the motive puwer. Instead of using it for other stuff, and to move other materials, we think it ought to move coal.
Mr. Hoch. The statement was that there were 75,000 cars of freight being used for materials other than coal.
Mr. MORROW. The answer is that we do not have the locomotives to move the other materials and the coal. The question is what transportation is to be used for the transportation of coal. Our answer to the problam is to use it for coal for a while and the country will get all the coal that it will need.
And the feeling that needs to be allayed is the feeling of any panic on the part of the consumers. If the consumers, and paritcularly the larger consumers, the larger buyers of coal are to feel that the movement of coal will be interferred with, a lot of them will go out into the market and pay any price for a sufficient quantity of coal to stock up for the winter. On the other hand, if they are reasonably sure that they can get current shipments of coal, sufficient for their current needs, and that they can have shipments of coal when they need it, they will not pay fancy prices for coal. The manufacturer, and the buyers of coal are sane and conservative business men.
But when the manufacturers of typewriters, for instance, are willing to go out into the market and pay $20 per ton for coal, as they have done, it will create a panicy condition. And when the coal men remonstrated with the buyer, he said, “It doesn't make any difference to me; it is only a few cents more per machine, and I will put a price on the coal so that I can keep running.” If he had been assured that he could get coal at $5 a ton, he would not have bid more than $5 a ton.
And if the orders are to be enforced, I think coal will move, and the panic is going to go to pieces. The price is already down.
Now, to come back to this matter of price control. Our industry is necessarily disturbed. If any such far-reaching legislation is enacted as the control over prices, it is a radical departure, as we see it. If any such departure is to be entered upon, I think our people will feel that it should be done only after full consideration. It is not a matter that should be entered upon hastily.
Let us take the bill itself. Here is created a fuel agency. Through that agency some declaration is to be made as to what prices are fair and reasonable. and then through priority orders the Interstate Commerce Commission is to enforce those decisions.
Now, note what you are doing. Your enforcement provision, upon which you rely in this bill is the identical one that the Interstate Commerce Commission has now in effect, service order 23. To be sure, you apply it a little differently, but essentially it is the same thing.
Now, gentlemen, if that authority, if that administrative agency is competent to enforce that price control through its orders and embargoes, and so on, then it is competent to enforce service order No. 23. If it does enforce service order 23, you will get your coal.
Mr. MAPES. Order 23 can be enforced if there is a 100 per cent car supply.
Mr. MORROW. If there is a 100 per cent car supply it does not need to be enforced.
Mr. MAPES. Was it enforced in 1920?
Commissioner AITCHISON. Several times you said" if they enforce order 23.” Do you mean to leave the impression with the committee that the order has not been enforced?
Mr. MORROW. No; if I have given any such impression, I have not meant to do it. The word “enforce," perhaps. should not have been used. I meant if it was applied rigorously ; if it was rigorously applied and carried out.
Commissioner AITCHISON. Do you mean to say that it was not rigorous..y applied ?
Mr. MORROW. No, sir; there is no criticism of the commission intended.
Mr. MORROW. No, sir. The situation is this, that the mines were shut down. and the coal was not coming out. Most of the mines were shut down. But now, when we have the opportunity to ship more than 2,000 cars a week, if the commission goes ahead and lets these orders work out there will be a leveling program, and that is what will happen if they enforce it. That is what I mean. It isn't any criticism of what has been done. But, looking ahead, with the possible production of coal what you can make it, it is a question whether you can move it or not. But if you let the orders work out, then you will move coal.
Now. Mr. Chairman and gentlemen, a further word about
Mr. GRAHAM (interposing). Mr. Chairman, the record, I believe, does not contain the service order 23, and I would like to have that order inserted in the record.
Mr. MAPES. And order 22 also.
The CHAIRMAN. You understand, Mr: Graham, the committee desires to have this hearing printed by to-morrow, and in order to accomplish that it will be necessary to have it at the printing office before 7 o'clock, and the shorter it is the better,
Mr. GRAHAM. The trouble in getting it out is in the typewriting, and if he already has it in typewritten form it can be inserted.
The CHAIRMAN. No; it is a question of getting it into the hands of the printer, and getting it set up.
Mr. MORROW. Mr. Aitchison is here, and he could probably state it better than I can. The difficulty is that the service order I have here now has been somewhat modified, and Mr. Aitchison could tell you briefly what it covers.
Mr. GRAHAM. I think, in view of that statement, that if it is not desired to put it in the record, one of these gentlemen should state the substance of it.
The CHAIRMAN. Mr. Morrow has suggested that Mr. Aitchison could state the substance of it, and without objection we will permit Mr. Aitchison to state the substance of the orders.
STATEMENT OF HON. CLYDE B. AITCHISON, INTERSTATE COM
MERCE COMMISSIONER, WASHINGTON, D. C.
Mr. AITCHISON. Mr. Chairman, I will cut off as much as possible, although the order itself is very succinct.
We require carriers, when currently unable to transport all freight which is offered to them, to give preference and priority to the movement of food for human consumption, feed for live stock, live stock, perishable products, coal, coke, and fuel oil.
Now, this order applies east of the Mississippi River.
Secondly, there is a provision for the return of empty cars, and preference and priority in the movement of empty cars intended to be used for the transportation of the commodities mentioned in paragraph 1 are to be given to that class of equipment in preference to other kinds of equipment.
And, third, we provide that coal-carrying roads, when they are unable to supply cars in full for all uses, shall give preferential handling to cars for coal loading, and the return of coal cars.
Fourth, a provision is made for the delivery of coal cars, as defined, by the noncoal-carrying road to the coal-carrying road, up to the ability of the one to deliver and the other to receive cars for that purpose.
Fifth, that all common carriers are directed to discontinue the use of cars suitable for the loading and transportation of coal for other commodities, so long as it is necessary to use such cars for coal use.
Sixth, there are certain embargo conditions against consignees who do not proniptly unload.
Seventh, that is a direction for the priority and placement as between mives. That, as has been stated by Mr. Morrow, has been modified by an amendment, and I will give it simply as it now stands.
Class 1 is reserved for the use of the commission from time to time, and that is what Mr. Secretary Hoover referred to this morning as class 1 priorities.
Class 2 covers (a) fuel for railroad and other common carriers and for bunkering ships and vessels; (b) for public utilities which directly serve the general public under a franchise therefor, with street and interurban railways, electric power and light, gas, water, and sewer works, ice plants which directly serve the public generally with ice, or supply refrigeration for use in foodstuffs; hospitals; (c) for the United States, State, county, or municipal governments, and for their hospitals, schools, and for their other public institutions-all to the end that such common carriers, public utilities, quasi-public utilities, and governments may be kept supplied with coal for current use for such purposes, but not for storage, exchange, or sale; (d) bituminous coal which has passed over screen 4 inches or larger openings, coke, and anthracite coal to be shipped to retail dealers for household use.
It is not intended to give any priority as between a, b, c, and d.
Mr. BARKLEY. Will you explain again what class 1 is? I did not get it clearly.
Mr. AITCHISON. That is what is reserved for the special designation by the commission.
Mr. BARKLEY. Class 1 leaves them open for control by the commission?
Mr. AITCHISON. To leave a number open so that we can put a priority above others we are specifically abolishing.
Mr. MAPES. Allocate them to class 1?
Mr. AITCHISON. The class will be there, and, as to allocating, the allocat. ing will be done to districts under our direction.
And then class 3 applies to coal-carrying roads which reach mines in Pennsylvania, Ohio, West Virginia, Kentucky, Tennessee, and Alabama, for bituminous coal consigned to any Lake Erie port for transshipment by water to ports upon Lake Superior.
And class 4 is coal for the production and manufacture of foodstuffs and medicines and for the manufacture of containers therefor, for daily use but not for storage, exchange, or sale.
And class 5 is for all other purposes,
The remainder of the order is formal, simply suspends all existing practices and rules of the carriers in effect, and provides the time when the order shall go into effect.
Mr. Hoch. Are there any priorities west of the Mississippi River?
Mr. AITCHISON. No; by service order 22 the carriers were empowered and directed, whenever necessary to avoid congestion and expedite shipment, to disregard the routing specified by the shipper and forward by direct route, protecting the shipper in the matter of rates. That applies all over the country and is intended to prevent congestions at terminals.
STATEMENT OF MR. JOHN D. A. MORROW-Resumed.
Mr. MORROW. Gentleman, you appreciate from what ('ommissioner Aitchison has said, that the necessary basis has been laid for the shipment of the necessary supply of coal to the consumers. And I want you to notice especially that in the priority order, under class 2, your railways, your public utilities, your hospitals, your ice plants, and your domestic consumers have been provided for, so far as coal passes over a 4-inch screen will satisfy the need, and whenever coal for the clomestie consumer is necessary, it ought to be included in that priority class.
Now, the effect on the consumer should be also noted. So long as there is a limited car supply, these orders operate very effectively in fixing the price of coal. If you gentlemen were all mine operators, and there were not enough cars distributed among your mines, and the Interstate Commerce Commission agreed to furnish coal cars to those who would ship it to the domestic users, or to some other of the priority users enumerated here, you would have the privilege of running. The buyer understands that too. The buyer will not offer you the top price. The buyers in 1920 did not offer the top price. They paid several dollars below the top price, knowing that the operators would take it in order to run their mines.