Mr. VINSON. Most of them can; some of them can not live at all under any circumstances. They have got to go out of the business. They are simply the world's unfortunates as you find in every business. The majority of them, if they can, save a lot of their power and a lot of their sales; and various ways, if they cooperate together, maybe for one clerical force, then they can get along; they will not earn as much money as the big concerns could; they can not install the same economics, but they can live and make a little money.

Senator CUMMINS. You do not advocate, do you, any arrangement by which the prices shall be held up in order to allow the producer whose cost is greater to sell his output at a profit?

Mr. VINSON. Certainly not.

Senator CUMMINS. You recognize, do you not, that the price ought to be fixed as a general proposition by the producer who can put his product on the market at the lowest cost?

Mr. VINSON. I think not; I think it ought to be averaged.
Senator CUMMINS. Who ought to average it?

Mr. VINSON. Well, the general trade or somebody in the nature of the commission that I have just spoken about. If you follow this suggestion, and I had a large coal company, and could produce coal at 8 or 10 cents a ton cheaper than any of my competitors, I could drive every one of them out of the business legitimately. That would not be right.

Senator CUMMINS. Then the real end of your suggestion, or the results from it, is that the Government in some form or other ought to fix the price of coal?

Mr. VINSON. NO; I do not think that.

Senator CUMMINS. Well, if such an arrangement is to made as to allow the producer, whose cost is greater than that of his competitor, to get his product in the market at a fair profit, how do you escape the conclusion?

Mr. VINSON. The price, as a matter of fact, ought to be fixed by competitive conditions from the very States. Take the large companies that are producing coal, say, in Pennsylvania, some in Ohio, and some in Illinois, and they compete with each other and the West Virginia companies to such an extent that the price will always be put down to a minimum of what it would be in the market. Let me illustrate. The authorities of West Virginia undertook to raise the rate of our lake coal shipments 94 cents a ton. The evidence that was taken before the Interstate Commerce Commission-and it is quite voluminous showed that if that rate went into effect, based on the actual cost sheets and the price received at the lake, the West Virginia coal fields must go out of the lake business. In other words, that margin of 9 cents was sufficient to take that whole lake market and northwestern market away from the West Virginia coal fields. Senator CUMMINS. The commission, under your proposition, would have jurisdiction of all the coal mines and the coal business of the United States.

Mr. VINSON. Yes, sir.

Senator CUMMINS. And your proposition, as I understand it, is that in some way the Government should arrange that the small producer whose cost is greater than that of his competitor shall be protected in order to enable him to put his product on the market and make a profit.

Mr. VINSON. The right to put himself in a position to get the benefit of some of the economies that are used by those larger competitors.

Senator CUMMINS. Then you would not have the commission, under any circumstances, fix the price of the product?

Mr. VINSON. No; I would not. I would have the commission— pardon me if I make a suggestion there that in order to give the small man the benefit of the economics to which I think he is entitled, if that should be attempted to be exercised, to raise that price, which the bill itself provides, beyond what the ordinary supply and demand would require, then the agreement would not be legal and would be declared to be illegal.

Senator CUMMINS. You do not suggest any agreement between the small producer and the big producer, do you?

Mr. VINSON. I do not limit it.

Senator CUMMINS. Do you see any occasion for an agreement between the small man and the big man?

Mr. VINSON. There may be.

Senator CUMMINS. What would be the occasion?

Mr. VINSON. I have a mine, or rather I am interested in it, that is producing about 60,000 tons a year, and it is within a mile and a half of another concern that is producing nearly two and a half millions tons a year. That big concern has its selling agency all organized and it is enabled to sell its coal at 4 or 5 cents at the outside. Now, the other mine has to pay 10. If I were in a position to say to the big concern, "I want you to take my coal and handle it and I will pay you a cent a ton over and above the cost of handling it, as you handle it without any additional cost scarcely, I will give you a little profit on it and save me 4 or 5 cents a ton." I see no reason why the operation of it should be limited to a real combination as between the small operators when it might be of some advantage to the small operator to have the big concern handle his coal for him. Senator CUMMINS. But your last suggestion is the equivalent of a sale by the small concern to the large concern. That is the substance of it.

Mr. VINSON. It may be.

Senator CUMMINS. There is nothing in the law now that prevents that, is there?

Mr. VINSON. I think there is.

Senator CUMMINS. That prevents the sale of your output and your coal to another dealer?

Mr. VINSON. I think there is a certain section in the Sherman antitrust law that is very stringent against anybody, a person or an individual, who would attempt to create a monopoly.

Senator CUMMINS. But you do not think there is anything in the law that would prevent a small company from going to the large company and saying, "We want to sell you so much coal at so much per ton," and that is the real equivalent to what you have suggestedthat is, the selling arrangement.

Mr. VINSON. I shall give you an isolated instance-it might not be so. Take a seam of coal in a given area. That particular coal is not found outside of a certain district and all that seam of coal is being operated. Now, to sell all of the product to one of the operators, or to an individual, or to a joint selling agent covering that whole district we fear would be condemned.

Senator CUMMINS. The last proposition probably would not be disputed.

Mr. VINSON. I mean in a small district.

Senator CUMMINS. You are suggesting an arrangement between a small concern and a large concern by which the latter would agree to sell the product of the small concern at a certain price. Now, that is in substance a sale of the product itself by the small producer to the large producer, is it not?

Mr. VINSON. It has that effect, while it would not be. He simply takes the market price. The small producer would take the market price less the commission of the larger concern deducted. His coal would go on the market at a certain price.

Senator CUMMINS. In how many instances do you think your business in West Virginia would be benefited by an arrangement of that sort!

Mr. VINSON. You mean to sell it to the large concerns?

Senator CUMMINS. Yes; I mean arranging with the large concerns to sell the product of the small concerns.

Mr. VINSON. I can not give you a definite idea. I know of several. Senator CUMMINS. What motive would the large concern have to become the sale agent of the small concern?

Mr. VINSON. It would have the motive of keeping the small man from going and selling his coal at a loss, and therefore bringing the coal of the big producer down also practically to a loss.

Senator CUMMINS. Now, that comes to the real heart of it. The real object that is sought to be accomplished is to prevent the small producer from selling out at a lower price than the large producer wants to get for his product?

Mr. VINSON. No, sir; not just that way. It is to protect the small producer from being compelled to sell his coal for a much less sum than it cost him to produce it.

Senator CUMMINS. But the effect is just the same. If the small producer goes on and sells at a lower price than is current the big producer can meet the price.

Mr. VINSON. Yes; he must meet it.

Senator CUMMINS. And therefore the real object to be accomplished is to eliminate competition as between the big producer and the small producer?

Mr. VINSON. To a certain extent that is true.

Senator CUMMINS. Now we pass over to the other phase of it. Your other suggestion is that there ought to be the right of agreement between the small producers to reduce the cost of production as well as the cost of sale?

Mr. VINSON. Yes.

Senator CUMMINS. Do you think that an agreement between the small producers establishing a common power plant would be a violation of the antitrust law?

Mr. VINSON. That of itself and alone I think it would not. Senator CUMMINS. Do you think that an agreement by which certain clerical work was performed for a series of companies by one man, or one company of men, would be a violation of the law? Mr. VINSON. No; I do not.

Senator CUMMINS. I feel sure that it would not. Therefore, there is nothing in the present law that would prevent the small producers

from entering into an agreement with each other to reduce the cost of production?

Mr. VINSON. No; not where they are located in the same district; there is nothing in the law to prevent that.

Senator CUMMINS. Even when they are located in the same district or elsewhere?

Mr. VINSON. Or elsewhere.

Senator CUMMINS. Now we come to the sale. You observed, and I think you were quite right in it, that an agreement between the small producers employing a common sales agent might be objectionable to the law?

Mr. VINSON. I think so.

Senator CUMMINS. That is because such an agreement immediately underlies all competition between the small producers!

Mr. VINSON. It does; yes, sir.

Senator CUMMINS. You see no way in which the small producers can economize upon their sales without such an agreement as that? Mr. VINSON. I do not; some such arrangement by which they can reduce the price-I mean the cost of making the sales.

Senator CUMMINS. Do you not see that the very moment you make an agreement of that kind that all competition would cease between the small producers-you have just said that that is true.

Mr. VINSON. Yes; that is true.

Senator CUMMINS. Do you believe that the competition between the small producers ought to cease?

Mr. VINSON. Not necessarily.

Senator CUMMINS. If your law-the proposed law-were adopted and the commission was organized and such an agreement as that was proposed to the commission, how would you preserve the competition, in view of an agreement of that sort?

Mr. VINSON. You would only preserve it in the size of the combination that was made to restrict the competition.

Senator CUMMINS. That is, all competition between those who entered into the agreement would at once cease?

Mr. VINSON. I think so.

Senator CUMMINS. But your idea is that there would then arise competition between that combination and some larger producer? Mr. VINSON. Yes, sir.

Senator CUMMINS. How much do you think would be saved per ton by such an agreement?

Mr. VINSON. In selling?

Senator CUMMINS. In selling.

Mr. VINSON. Of course that would depend to some extent upon the size of the quantity sold. Now, there ought to be, from the present prices that are paid to the sales agent, ought to be 5 or 6 cents a ton saved, where you have got 800,000 or 1,000,000 tons to be handled by one sales agent.

Senator CUMMINS. When any such arrangement as that were made it would be the fusion of the companies, with one exception, I think, namely, that if one of the small companies were producing at a less cost than another, it would still get the benefit of that lessened cost of production?

Mr. VINSON. Certainly.

Senator CUMMINS. But that would only be the difference between such a fusion or combination of single ownership?

Mr. VINSON. Yes, sir; that is right.

Senator CUMMINS. Do you believe that there is any middle ground between competition that fixes prices and the Government fixing prices?

Mr. VINSON. I do not know that I understand the question.

Senator CUMMINS. Well, what fixes the price in business of any kind?

Mr. VINSON. Ordinarily it is the supply and the demand. If the economic forces have free play then conditions fix the prices. Of course, prices may be jerked up or jerked down, according to the power that some particular person may have over the commodity in question.

Senator CUMMINS. But in most instances the supply can be increased indefinitely?

Mr. VINSON. Well, it can in a given length of time; yes.

Senator CUMMINS. And therefore speaking for the past at least, the effective factor in fixing prices has been competition has it not? Mr. VINSON. To a large extent.

Senator CUMMINS. That is, the willingness of the man to produce something and sell it at a fair profit?

Mr. VINSON. Well, that is true in general business. In the coal business, Senator, it has been a necessity. Men had to sell for whatever price was offered.

Senator CUMMINS. After they had gone into the business?

Mr. VINSON. After they had gone into the business, of course.
Senator CUMMINS. After they had invested their capital?

Mr. VINSON. Yes, sir.

Senator CUMMINS. But you do not believe, do you, in adopting any system that will drive competition out of the industrial life of the country as a factor in fixing prices?

Mr. VINSON. I do not.

Senator CUMMINS. So that any authority you would give the proposed commission must be given and exercised so that competition will be preserved?

Mr. VINSON. Will be preserved absolutely-I mean preserved to a certain point.

Senator CUMMINS. Well, let us see. Just to what point?

Mr. VINSON. Competition ought to be preserved to the point where it will produce the greatest quantity of commerce to the best interests of the public. Now, if it goes beyond that, instead of increasing the commerce of the country it will diminish it.

Senator CUMMINS. There has been my difficulty, to understand just who is to determine when it reaches that point.

Mr. VINSON. Only a commission that knows the business, in my judgment.

Senator CUMMINS. And it has seemed to me, when I first began to examine the subject, that that power necessarily involved the power of determining prices on the part of the Government.

Mr. VINSON. Well, the Government, with this commission, will always have the power-any well regulated body-to say that a certain price is reasonable. In other words, if a combination is using