the time the coal is mined and goes to the consumer the large producer gets his coal to his consumer at from 12 to 15 cents a ton cheaper than the small consumer can possibly do it, and that has been going on for the last three or four years. In addition to that the large company has a tremendous advantage in the markets, because they can go to the large power plants, like those in Chicago and the larger cities and the large fuel consumers-the extensive railroad systems which consume from 800,000 to 1,000,000 tons of coal-and they can take those contracts and deliver the coal because they have the ability to produce it. The poor man can not. He has to peddle his coal wherever he can get a customer, or rather his selling agents have. The small man has been trying to live, and he has lived in a way, but he has been losing money constantly. During the last year the coal of West Virginia brought only 95 cents a ton-that is, it sold for that on the average

Senator NEWLANDS. Do you mean at the mine?

Mr. VINSON. Yes, sir. Now little producers can not and do not produce that coal for 95 cents a ton. They have got to pay 10 cents a ton royalty. They are operating under leases. They have certain interest charges to pay, and their organization to pay, and they have 10 cents a ton sales commission to pay. Now, they do not and can not produce their coal for that sum, and have not been doing it. They are simply put in a position where ruin and bankruptcy is simply in front of them. They have gone to their counsel and said, “Here, we can arrange with this larger company that has its own selling agency selling the same coal; we can arrange with those people to take our coal and sell it that now costs us 10 cents a ton. We can get them to sell it for 4 or 5 cents a ton, and thereby we can save that much out of the cost, which is a waste to us." Their attorney says, "No; you can not do that, because if you do that it is a combination in restraint of trade, or, rather, it is a suppression of competition in the market, and therefore you are under the ban of the Sherman antitrust law." Then they get among themselves-eight or ten of them who have perhaps a joint production of four or five or six thousand tons a year-and they say, "Let us employ a single selling agent; let us get one man or one concern to sell the coal for our district "-which is composed of eight or ten small mines. Well, they know the man that can do it; they know of one that they can employ; they would pay him a wage and they would save 4 or 5 or 6 cents a ton on their coal from that source, and when they go to their lawyer and consult him, he says, "No; if you do that your arrangement will get you into trouble; you will be indicted under the Sherman antitrust law." Then they say, "Can we sell our property out to anybody?" "Well, you have only one customer for it, because if some other purchaser will come in and undertake to buy a district composed of eight or ten mines he, too, would be subject to the ban of the Sherman antitrust law, and the large company-that is, your neighbor and your friend and your competitor-is the only purchaser you have got for your property. But you can not sell to him, because if you do you will not only get into trouble yourself, but your neighbor, the big company, will get into trouble likewise."

Now, gentlemen of the committee, that is the condition of the coal trade in West Virginia. These small concerns can not live. They 22877°—VOL 1-12- -3

are simply being driven into bankruptcy by the operation of that law which prescribes and enforces competition between the little man and the big one. It is a fight between a giant and a pygmy. The little coal operator in West Virginia has just as much chance to operate and do business as a mouse has in a combat for its life with a cat.

Now, that is no fault of the big companies. They are simply using the ordinary and the usual economies in business, because we must all recognize that increased capital, if you please combinations if you please that have a concentrated power, must, if it is ably administered, continue to operate along the continual lines of increasing efficiency, both in the production of the coal as well as in its sales.

Now what must the small men do? They must either go out of business, or there must be some means some remedy, if you please— by which they can get together, and in a reasonable way have a joint selling agent so that they can save themselves this expense and have a joint power plant, if you please, so that they may live. I take it that none of us would be willing to see the operation of a law on our statute books that would drive the middleman-and particularly I mean the small man who is engaged in any industryinto bankruptcy. Now, that is a concrete case of the Sherman antitrust law as applied to the coal industry in West Virginia, under my own observation.

Now the interest that I have in these small companies is that we are simply holding on and losing as little money as we can, and trying to do the best we can, and we look to this Congress to give us some relief in order that we may live. It is a necessity. Of course you may ask, "Why don't you shut down your mines? Why don't you shut down until conditions get better-until you can go into the market and make something on your coal"? Under the leases that are prescribed-I take it in all the States, and it is particularly so in West Virginia-the man who is operating a coal mine must pay his royalty whether he mines a pound of coal or not, and that royalty will amount to from $5 to $8 an acre minimum each year, payable quarterly. So that if I have a lease on a thousand acres of coal property I have to pay, whether I mine any coal or not, from $5 to $8 an acre, from $5,000 to $8,000 each year, although that mine is shut down. If I happen to be unfortunate enough to owe some money on this property-and most of them do-the interest is to be paid, the taxes have to be paid, and there is no property known in the industry of this country that will disintegrate so rapidly as an unused coal plant. If you shut down your mine, your houses become vacant, and they soon disintegrate and depreciate in value until you have practically to rebuild again. The same is true of your tipples and your mining cars. You have got to keep your mine, if it is too wet, and there is water in it-and this is the case with a great many of them-you have got to keep men busy pumping the water out of that mine, whether you are operating your mine or not. So that it is less expensive, as a matter of fact, to keep on running at a loss, and at a net loss, than it is to shut down the mine, because when your organization is disintegrated it takes a long time to build it up.

Now, gentlemen of the committee, that is the condition that actually exists. We know, and we appreciate the difficulty that Congress must necessarily have in passing a law that will undertake directly and immediately to either repeal the Sherman antitrust law, or largely modify it. We appreciate that fully. In the bill that Í have prepared, we ask neither of these things. We do not mention— we do not even refer to the Sherman antitrust law as such, and it seems to us that whether that law ought to be repealed or ought to be modified or ought to be strengthened, here is one industry that must be protected, and we feel that the best way to do it is to have a commission to pass upon the legality of these contracts, and I want to say frankly that they are contracts in restraint or rather eating up the competition that now exists between neighbors and friends, and it is a necessity. Now, whenever that contract or agreement for the selection and the hiring of one selling agent to represent eight or ten, if you please, or four or five, or three or four of these small mining operations-whenever that contract has been entered into, before it would become legal under the operation of this bill, if it becomes a law, that contract is taken to your commission that is appointed, and that commission inspects it and investigates it, and if it is a reasonable contract the commission puts its approval upon it, and the men can go on and do business without the fear of going to the penitentiary for violation of this law. If that contract creates a monopoly, or if the commission believes that it is in unreasonable restraint of trade in the coal business, then it would refuse necessarily to approve it. So that the commission at all times would stand in the position of an arbitor between the small men engaged in an industry-they would stand as an arbitor between the combination that would be entered into of the kind that I have been speaking about between those men and the public interests. They would see after an investigation that instead of this contract being opposed to general commerce it is the preservation of it; it is the protection of it; it is the continuation of the life of this business which, if it is not done, must go out of existence.

Now, I take it that the old doctrine that competition is the life of trade no longer can be applied universally in this country. It is an economic doctrine that will not bear the test of modern conditions. I have maintained that up to a certain point, or I might say down to a certain point, the principle of competition should and ought to be maintained, but when that competition goes further, and by the economic laws which it invokes, it is going to drive men out of the business and ruin and destroy their property, that its operation should not go to that extent, because instead of preserving and protecting the industries of the country it would be destroying them to that extent.

Now, it seems to me that a commission of the kind that I have been speaking to you about would stand ready and willing, with full knowledge, to say to all of the coal companies, "you may employ a joint selling agent; you may lease your property under the terms of this contract." If this contract, however, should develop, or give to that company, or the new concern, if you please, or the old concern, such power, and if it would exercise that power in an oppressive way, then of course the contract would not be approved, and the

result would be that they would have to get a contract of the kind that would be approved.

Now, just suppose that you had a commission of that character to have passed upon the organization of the United States Steel Co. at the time it was organized, and if that organization had been formerly declared by the commission, who knew about those things before it was organized and before it had acquired any interests at all, to be an illegal combination, and the commission had said, "If you do so-and-so, then the combination would be legal, and it would be accepted as legal by all the courts of the country," it would have saved, gentlemen of the committee, a tremendous amount of uncertainty in the business world which is depressing it from one end of the country to the other. The trouble with the business man to-day is that he doesn't know, and his lawyers can not tell him, whether he is violating the law or whether he is doing a legitimate and sane thing.

Now, that is the difficulty with the business man. A man does not know how to do it. They do not want to violate the law, and they will not if they can help it, but there is the condition. Now, I know it is claimed that the atmosphere has been cleared very largely by the recent decisions of the Supreme Court in the oil and the tobacco The construction that the court put upon that statute by putting the word "reasonable" in there, it seems to me, was the only construction that the court could have given it, because we can not assume that this Congress would propose a law that would require men to do an insane thing or do an unreasonable thing, and to keep from being destroyed, or rather the business being put into bankruptcy, it would be the sane thing or the reasonable thing for any business man to go to his neighbor and say, "I can not live, this business is ruining me, and I want you to take it over at a fair price," and the law would say this whether you are a trust and using oppressive powers or not.

In my judgment the court is wholly inadequate to do those things. They can not administer economic laws. Their laws are constitutional laws, and laws, of course, that are passed by Congress. Take, for instance, those two cases which the court has just decided. If we look at the result in those cases we see the complication that must necessarily arise in any and every case that the court passes upon. For instance, the court in those cases has said that the combination— take the Standard Oil case as an illustration, composed of 34 small companies must be disintegrated, and each one of those small companies must go on and compete with each other. The stock held by the Standard was returned to the treasury of the small companies and reissued to the stockholders of the Standard. The same controlling stockholders in the Standard have a controlling interest in each one of the small companies. So that the 34 companies have control exactly-have stock ownership with the small interests that formerly controlled the Standard. Now, then, the decree is, and the injunction is, that each one of those 34 companies must go into real and actual competition one with the other. Gentlemen, in my judgment that is humanly impossible-that two or three gentlemen may get together and own two or three companies engaged in the same business, and they can force and compel, and will force and compel, those companies all to engage in real and actual competition one with

the other in the market it seems to me is asking a little bit too much of human nature.

Now, if that is not done-and I do not see how it is possible that it may be done or could be done-what is going to be the result? The result is that every stockholder, that everyone who has any interest in these companies, will be cited a hundred times a month on contempt proceedings, and in my judgment litigation in those cases has only really begun after the court has approved the reorganization plans. I hope I may be mistaken about that, but I do not see any other way out of it.

Now, take the coal industry. It can not live two years if we form a combination. We do not want to form combinations of any character and then go to the district attorney and tell him to indict us for a criminal offense in order to find out whether we are doing a legitimate business or an illegitimate business.

Now, that is the condition we are in. If the Government proceeds against us by a suit of dissolution, then it would take two or three years, at the very best that can be done, to finally come to a conclusion as to whether or not we are legitimate or whether or not we are violating the law. Now, it would be so much easier, so much simpler, and so much better, gentlemen of this committee, if in the first instance you had four or five men who are skilled in the mining business, from the digging of the coal out of the ground to selling it in the market, to pass upon the legality of these contracts, so that if your contract or your combination which you propose is an illegal one you must not establish it, you must modify it; or, where it is legal, then we put our business upon a legal basis, and we can go on and not only do business but our small men themselves will be in a position where they can protect their property and their investment and keep on doing business. Otherwise we must go out of business; we must stop.

Now, we ask this Congress to give us that relief. We feel that if this commission is created it will accomplish great purposes, in helping us out of the difficulty we have gotten into. By obeying the law we are running into ruin, and we want the law changed so as to prevent that ruin. Now, the commission can do it. It can do it justly; it can act quickly with all the facts before it, and instantly; not only in these trade agreements which are so necessary under existing economic conditions, but they can administer this miner's relief fund and give those men the relief to which they are entitled and make the charge upon the industry, and they are entitled to it; otherwise we will have to stop the operation of the employers' liability laws over the country; that would be just as disastrous, if not more so it certainly will be more so so far as explosions and accidents are concerned to the smaller men-than even the operation of the Sherman antitrust law.

Now, we think and feel that if a bill was passed along the lines indicated, you could give us the relief that we think we are entitled to, and which will preserve our business.

I would like to have the privilege that is exercised at the other end of the Capitol for extending my suggestions in the record. I would like to file a copy of the bill with some reasons, and to also refer to some questions as to the legality of the act.