Mr. GRAY. I misunderstood you; I thought you said price area. For district No. 1 it was $2.3887.

Mr. ROBERTSON. And the minimum price in that district now is $2.09?

Mr. GRAY. $2.1872.

Mr. ROBERTSON. What is the cost of production in western Pennsylvania, district No. 2, price area No. 1?

Mr. GRAY. The cost in district 2, is $2.2140.

Mr. ROBERTSON. And the present price?

Mr. GRAY. $2.0488 is average minimum price.

Mr. ROBERTSON. In both those Pennsylvania districts coal is being sold below the cost of production in those districts?

Mr. GRAY. On the average; yes, sir.

Mr. ROBERTSON. What is the cost of production in northern West Virginia, district No. 3?

Mr. GRAY. $1.8366.

Mr. ROBERTSON. What is the sale price?

Mr. GRAY. $1.8519. Almost identical; 3 cents higher.

Mr. ROBERTSON. But above the cost of production?

Mr. GRAY. Yes, sir; slightly.

Mr. ROBERTSON. What is the cost of production in the West Virginia panhandle, district 6?

Mr. GRAY. $1.9775.

Mr. ROBERTSON. And the sales price?

Mr. GRAY. $1.9684.

Mr. ROBERTSON. Very close, but below the cost of production?
Mr. GRAY. Slightly.

Mr. ROBERTSON. What is the cost of production in that southern district, where most of the Virginia counties are located?

Mr. GRAY. That is district 7, the cost is $2.1940.

Mr. ROBERTSON. And the price?

Mr. GRAY. $2.1931.

Mr. ROBERTSON. And the remaining end of southeastern Virginia is in another district?

Mr. GRAY. District 8; the cost is $2.0301; and the selling price $2.0888. Mr. ROBERTSON. Mr. Wallin claimed that the price that was fixed in Pennsylvania was in the interests of the large, efficient mines, and against the interests of the little mines, and if I followed the testimony of the representative of the southern interests he referred to the increase of coal hauled by the Pennsylvania and the B. & O., serving the Pennsylvania northern area, and the decrease in tonnage on the Norfolk & Western and C. & O. and L. & N., and the other southern roads serving the southern field, as showing that the code prices were gradually shifting competitive business from the southern fields to the Pennsylvania fields. My present inquiry is: Could we in part, if not wholly, meet those two complaints if we established Pennsylvania as one production district?

Mr. GRAY. That complaint is not founded on fact. It is very simple to explain what that difference in that tonnage is. It is caused by the movement from captive steel mines going into the steel busi

ness.

Mr. ROBERTSON. Of course, the increase in the steel business, jumping from 30 percent of capacity to total capacity, will increase the coal

movement.

Mr. GRAY. From the captive mines, the mines they own.

Mr. ROBERTSON. A captive mine that sells only to the owner is not under the coal prices, is it?

Mr. GRAY. That is right.

Mr. ROBERTSON. He doesn't sell anybody else.

Mr. GRAY. It is just taking it from one pocket to the other. Those figures were brought up by Mr. Sullivan, and very completely answered.

Mr. ROBERTSON. What I am wondering is, if the cost of producing coal in both Pennsylvania No. 1 and Pennsylvania No. 2 is above the present minimum prices fixed in Pennsylvania and Pennsylvania costs are higher than the remainder of the price area No. 1, and has to be averaged into the price that is charged the consumers from area No. 1, if the practical effect of that would not be to raise the price of coal to all the consumers except in Pennsylvania.

Mr. GRAY. No, I don't think that that would follow. The reason those prices are put below cost is because you must coordinate them as nearly as possible. As nearly as possible is as near as we can do. Now, then, you must put these costs at this price or close them out, stop them from doing business. We can't do that. There is a great element of practicality in this thing, which we must observe, which doesn't fit the theory.

Mr. ROBERTSON. Well, I understood you to say it cost $2.38 and they sold for $2.19. I was just wondering how that helped stabilize the industry in Pennsylvania.

Mr. GRAY. Because before that they weren't getting that. They weren't getting even that in open competition. I can safely say that. Mr. ROBERTSON. You don't think this problem would be facilitated in any way if we took the whole great State of Pennsylvania and made that one area, the price to be fixed upon the average cost in the State of Pennsylvania, rather than to mix it up with West Virginia, Virginia, and Ohio?

Mr. GRAY. We would have to open these hearings up again, and start the mess all over.

Mr. ROBERTSON. I know it would involve a great deal of detail work, but I was just wondering, if in theory to have one more district in district 1 wouldn't help.

Mr. GRAY. Their coals are different and their markets are different. There are various differences in those two areas, in the grades of the coal, the texture of the coal, and the markets they ship to. Mr. ROBERTSON. That is all.

The CHAIRMAN. The Chair would like to make this observation. If there has been any question the Chair has asked that the witness thinks discourteous, the Chair will have it stricken from the record.

Mr. GRAY. Not a one, Mr. Chairman. I appreciate that, and I am very sorry I seemed excited or anything of the kind.

The CHAIRMAN. If I said anything that seemed discourteous, or offended you in the least, I didn't mean it that way.

Mr. GRAY. I appreciate that, Mr. Chairman.

Mr. MCKEOUGH. I ask unanimous consent to include in the record a letter which I received, together with a resolution from the Southern Illinois Coals, with reference to a 2-year extension of the act.

The CHAIRMAN. Without objection, it may be included.

(The letter and resolution are as follows:)

(An identical resolution was submitted for the record by Mr. Dingell.)

Hon. RAYMOND S. MCKEOUGH,

SOUTHERN ILLINOIS COALS, INC.,
Chicago, Ill., March 15, 1941.

House of Representatives, Washington, D. C.

MY DEAR CONGRESSMAN: I submit to you herewith a copy of a resolution which was adopted unanimously by the board of directors of Southern Illinois Coals, Inc., at its meeting in Chicago on March 3, 1941, relative to the proposed extension of the provisions of the Bituminous Coal Act of 1937 for a 2-year period from April 26, 1941. Southern Illinois Coals, Inc., is an association of bituminous coal-mining companies operating in Franklin, Williamson, and Saline Counties, Ill.

I subscribe personally to all of the expressions contained in the above mentioned resolution, and sincerely hope that, after full consideration, you will support House Joint Resolution 101, the adoption of which, in my opinion, will increase the stability which is so urgently required in the bituminouscoal industry during this troubled period of the Nation's existence. Respectfully submitted.

GEORGE B. HARRINGTON, President of Southern Illinois Coals, Inc.

RESOLUTION ADOPTED BY BOARD OF DIRECTORS OF SOUTHERN ILLINOIS COALS, INC., ON MARCH 3, 1941

Whereas there is now pending before the two Houses of Congress a joint resolution which proposes to extend the provisions of the Bituminous Coal Act of 1937 for a 2-year period from April 26, 1941, the date of expiration of the present act, such resolution, known as Senate Joint Resolution 32, having been referred to the Interstate Commerce Committee of the Senate, and the same resolution, known as House Joint Resolution 101, having been referred to the Ways and Means Committee of the House of Representatives; and

Whereas the Bituminous Coal Act of 1937 was enacted into law only after extended investigations and consideration of the bituminous-coal industry by every Congress from 1916 to 1937;

Due to the complexities of the situation, and the necessity for care in the establishment and promulgation of minimum prices under the act, minimum prices and marketing rules and regulations did not become effective until October 1, 1940;

The long delay which occurred before the establishment of minimum prices leaves only a very inadequate period of less than 7 months before the expiration of the act for a fair and determinative test of its provisions;

The seasonal nature of the coal industry, the widespread extent and tremendously complicated character of the business, and the great diversity of business conditions, particularly at this time, would make a trial of the benefits or disadvantages of all the work that has been done in connection with the act inconclusive if the results of at least 2 full years of actual operation of the price provisions are not obtained;

Even though the minimum prices and rules and regulations have been effective for so short a period of time, the bituminous-coal industry is at the present moment better stabilized than for many years past, and it may be assumed that. with the adjustment of inequalities as they appear from time to time, that degree of stabilization may be still further increased;

The act is unique among legislative acts in that the entire cost of its adminis tration has been met by the industry, and such cost has not been imposed upon the Government or upon the taxpayers;

Evidence of the smooth functioning of the administration of the act within the Department of the Interior since July 1939 is the relatively small number of complaints from within or without the industry; and

The extension of the act for 2 years, as proposed in the joint resolution, will be of inestimable benefit to the national-defense program, insuring complete and accurate records on production costs and current movement of bituminous coal which can be used in restricting the movement of coal in the event necessity for restriction arises: Now, therefore, be it

Resolved, That this association express itself as strongly urging the passage of the joint resolution extending the act for 2 years in order that the experiment in the regulation and in the orderly marketing of the product of this basic industry be continued for a period sufficient to demonstrate conclusively the advisability of repealing, modifying, or further extending the act; and be it further

Resolved, That a copy of this resolution be sent to each Member of Congress as a statement of the well-considered views of the members of this association on the subject.

The CHAIRMAN. This closes the hearings; the committee will meet in executive session tomorrow morning at 10 o'clock.

(Whereupon, at 12: 50 p. m., the hearings were closed.)

APPENDIX

DEPARTMENT OF THE INTERIOR,
BITUMINOUS COAL DIVISION,
Washington, March 20, 1941.

Hon. R. L. DOUGHTON,

Chairman, Committee on Ways and Means, House of Representatives.

MY DEAR MR. DOUGHTON: I am transmitting herewith the data requested by I various members of the committee during the course of the hearings on House Joint Resolution 101 extending the Bituminous Coal Act of 1937 for 2 years, and certain additional information supplemental to that contained in the report of the Secretary of the Interior dated February 28, 1941, as follows:

I. That portion of the annual report of the Secretary of the Interior for the fiscal year ending June 30, 1940, relating to the Bituminous Coal Division. II. Reorganization Plan No. II of the President, dated May 9, 1940, abolishing the National Bituminous Coal Commission and transferring its functions to the Secretary of the Interior.

III. Bulletins of the Bureau of Labor Statistics of the United States Department of Labor relating to wholesale prices of commodities in October and November 1940.

IV. Statement relating to the percentage of bituminous coal which is consumed by domestic and industrial users, respectively.

V. Statement relating to the problem of coordinating f. o. b. mine prices for coals shipped by rail and by river into common consuming markets.

VI. Statement relating to litigation involving the Bituminous Coal Division. VII. Statement relating to the personnel, other than administrative and clerical, of the Legal Division of the National Bituminous Coal Commission on June 30, 1939, the number of such employees no longer in the employ of the Bituminous Coal Division, and the number of attorneys added to the office of the General Counsel since June 30, 1939.

If the committee desires any additional information, please do not hesitate to call upon me.

Sincerely yours,

H. A. GRAY, Director.

PORTION OF ANNUAL REPORT OF THE SECRETARY OF THE INTERIOR FOR THE FISCAL YEAR ENDING JUNE 30, 1940, RELATING TO BITUMINOUS COAL DIVISION

On October 1, 1940, minimum prices and marketing rules and regulations for the stabilization of the marketing of bituminous coal produced throughout the United States became effective.

Market stabilization is prescribed by the Bituminous Coal Act of 1937 as a means of relieving the economic ills which have pervaded the coal industry for nearly 20 years. The grave social and economic consequences of the conditions in this industry affect the entire Nation; they are described in the reports of the many extensive public investigations and studies which ultimately led to passage of the Coal Act.

The minimum prices are designated to maintain a “cost floor" under the prices at which coal may be sold at the mine and to prevent the incessant price-cutting

1 Pursuant to Reorganization Plan No. II, effective July 1, 1939, and orders of the Secretary of the Interior issued in accordance therewith, the Division, by and through its Director, administers the functions vested by the Bituminous Coal Act of 1937 in the National Bituminous Coal Commission, which was abolished by Reorganization Plan No. II.

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