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siderably cheaper than it was in the northern area because of the different wage problem, the labor problem, is not that true?

Mr. TAYLOR. Well, I do not know whether you could say that that is true or not. Now, it has been brought out here repeatedly in the course of this hearing, the profound influence of modernization and mechanization on the cost of production. Well, as you know, and the other gentlemen know, the South by reason of historical factors is not a section in which there has been any large stimulation of capital which would permit of any extensive programs of modernization.

Mr. DUNCAN. Well, Mr. Taylor, is it not a fact that the southern field, being a newer field, in the coal industry, than the northern field, that they have the advantage of mechanization to a greater extent than those of the northern field, and that they were financed by eastern capital?

Mr. TAYLOR. That would be an exceptional situation if that condition prevailed in that industry, Mr. Duncan. It does not prevail with respect to the other industries in the South, notably the textile industry.

Mr. DUNCAN. But I am speaking now as a general proposition, as to whether or not you know that to be true.

Mr. TAYLOR. I do not know that to be true.

Mr. DUNCAN. Now up until comparatively recent years, the southern area was not unionized to the same extent that the northern fields were unionized, were they?

Mr. TAYLOR. I imagine that is so. I do not know of the situation. Mr. DUNCAN. And, of course, that made a considerable difference in the cost of production because they had a much lower wage scale. Mr. TAYLOR. Well, I would just like to go back to the thought, Mr. Congressman, that the wages paid, after all, are only one item in the cost of production.

Mr. DUNCAN. But they are 65 percent of the cost of that item, are they not?

Mr. TAYLOR. I do not know the percentage, but you do have a multitude of factors that enter into the cost of production, and where a mill or a mine is able to put in labor-saving machinery and displace a lot of workers, they will frequently reduce their overall in cost of production, while at the same time raising wages, and now whether that is a good thing or not, to displace people, I am not passing on that.

Mr. DUNCAN. That enters into the cost of production, quite naturally.

Mr. TAYLOR. Yes.

Mr. DUNCAN. Now the southern fields have been unionized completely, have they not?

Mr. TAYLOR. I believe that that is true; yes, sir.

Mr. DUNCAN. And that being true, as opposed to their not being unionized, that is a comparatively short period back, and will of course make considerable difference in the cost of production in the southern area; that would naturally follow?

Mr. TAYLOR. It will possibly make some difference, Mr. Duncan, but I go back to the thought that the South is laboring under so many difficulties and handicaps that all of these things have got to be taken into account. For instance, we have the lowest per capita

wealth of any section of the country, which means that for sustaining any given level of social services, our taxes have got to be higher than they have to be in Pennsylvania, for instance.

Mr. DUNCAN. The South has had more industrial development in the last few years than any other section of the country; that is true, is it not? They have got a great many industries from the North, have they not?

Mr. TAYLOR. The South has had a very splendid industrial development which we do not, however, attribute to legislation of this type.

Mr. DUNCAN. There are economic reasons for it, I understand, and probably they are perfectly sound, but that, of course, is likewise increasing your wealth considerably down there and your wage scale has been considerably lower than it was in other sections of the country also, has it not?

Mr. TAYLOR. Well, it has been some lower in dollars and cents, but on the other hand living costs have been lower, so that the real wages that the worker got, I imagine, were about as good as they were anywhere.

Mr. DUNCAN. I am talking about the dollars-and-cents return to the employee.

Mr. TAYLOR. That is true.

Mr. DUNCAN. And of course that entered into the cost of production of the particular commodity.

Mr. TAYLOR. That is true.

Mr. DUNCAN. That he was engaged in manufacturing, and carried into the field elsewhere.

Mr. TAYLOR. Yes.

Mr. DUNCAN. You do not have any figures, I assume, to indicate what the cost per ton is claimed by the industry which you represent, nor increase by virtue of this bill?

Mr. TAYLOR. Yes, sir.

Mr. DUNCAN. Do you have the cost per ton? I think that that would be interesting if we could have a break-down of that.

it.

Mr. TAYLOR. I believe that column that I am handing you will give

Mr. DUNCAN. I am not sure I understand just what that is. Are these prices given here, are these the prices fixed at the mines or the prices paid by the consumer?

Mr. TAYLOR. These are the new prices fixed at the mine, that went into effect in October, the 1st of October.

Mr. DUNCAN. Do you recall what they were before these prices went in; can you give those to us?

Mr. TAYLOR. The first two columns there, I believe, are those prices, are they not?

Mr. DUNCAN. This is the average realization per ton, April through December of 1937.

Mr. TAYLOR. The average loss is in the next column.

Mr. DUNCAN. I do not know that I just understand how they arrived at these.

Mr. TAYLOR. Well, the simple explanation of it is that in round figures, before the new prices went into effect, Pennsylvania had a loss, an annual loss of $18,000,000 or $19,000,000. Since the prices went into effect they still have the same theoretical annual loss, it has

been perpetuated, but the southern prices have been raised to make up for the difference.

Mr. DUNCAN. Well, those prices have been so far as the Coal Commission is concerned, the Administrator of the Coal Division, those prices are based upon the cost of production in the particular area, in which the coal is produced.

Mr. TAYLOR. That is correct, but there was an apparent exception made in the case of Pennsylvania, where these losses are still being perpetuated; that is the thing that we are complaining about, as to that aspect of it.

Mr. DUNCAN. Where did you get those figures, Mr. Taylor?

Mr. TAYLOR. The second annual report of the National Bituminous Coal Commission, the findings in Docket 15, of the Bituminous Coal Commission.

Mr. DUNCAN. Do you represent in your organization the coal producers, or is it confined to industrial members?

Mr. TAYLOR. There are some coal producers that are members of the council, Mr. Duncan.

Mr. DUNCAN. And have you any information from them as to their attitude?

Mr. TAYLOR. The general information that we have as to the producers in districts 7 and 8 is that they would favor the letting of this act expire. Now district No. 13, I believe, which embraces Alabama, they do not apparently feel that way about it; they would be willing to see it extended.

Mr. DUNCAN. Where are the other two districts located?

Mr. TAYLOR. Districts 7 and 8 are Virginia, West Virginia, Kentucky, and Tennessee.

Mr. DUNCAN. They would be willing to let it expire?

Mr. TAYLOR. As I say, we said in our principal statement that we have not conducted any thoroughgoing survey, but I did send out this letter last fall; and from the letters received and communications received since then, I would gather that the operators in that areathat is, districts 7 and 8, with the possible exception of the panhandle part of West Virginia-would not favor the extension of this act.

Now, we have a somewhat different reaction from Alabama-from the producers in Alabama.

Mr. DUNCAN. That is, of course, entirely the reverse of the information that we have about it individually; I do not know what the record will finally show. That is all, Mr. Chairman.

The CHAIRMAN. Mr. Taylor, Mr. Duncan referred to the fact that railroads and other public utilities are under public control. But is there not quite a distinction between the function of public utilities and private industry? Public utilities, in the first place, are granted the right of eminent domain. They go where they please, are granted a practical monopoly, and they are not allowed to have competition. The regulation of the railroads and other public utilities is primarily for the protection of the public; therefore, I see no analogy whatever between public utilities and private industry.

Mr. TAYLOR. You express our position, Mr. Chairman, better than I could hope to do it, and I think that that is absolutely logical and sound.

The CHAIRMAN. Do you see any great distinction, so far as the necessity for regulation is concerned, between the regulation of the coal

industry and the food industries? They are surely as essential to the welfare of the people as coal, and yet none of us has ever contended that the price of food commodities should be under governmental control.

Mr. TAYLOR. I should think just on the basis of the intimate needs of the people and their necessities, a much stronger case could be made out for the regulation of the food industry than could be made out for the regulation of the coal industry, if you are going to proceed along that line, but that is one of the reasons why we object to this type of law, because there is not any logical or tenable or dependable stopping place, once you cross that line, where you regulate what are in effect public utilities; once you cross that line you simply open up a Pandora's box; there isn't any place that you can logically stop.

Mr. JENKINS. I think, Mr. Taylor, you made a very fair statement from your standpoint, and I want to compliment you for it, and I want to be fair about it; and there is no question but that it is a hard matter to tell us where to commence and where to stop on these things. Whenever you talk about the regulation of food-of course, in modern days they regulate the price of wheat into this country by a 42-percent tariff, and they regulate the price of meat and the production of meat, and so on, when they plow under the little pigs, and they control the price of cotton when they pass the Bankhead bill, and all of those things— it is hard to say where to stop and where to stop.

But getting back to our proposition now about the price of coal, this bill, as it stands, in the estimation of the people in the producing territory of West Virginia, I may be wrong about this and you may know the facts, but I know that in 1935 that the Island Creek Coal Co., which is one of the biggest coal-producing companies in the country, was very vigorously against the adoption of the Guffey coal bill, and the Pocahontas people were very vigorously against it, and they are two of the largest coal-producing companies in West Virginia, but I understand now that they are both in favor of it. You know what the facts are?

Mr. TAYLOR. I would be surprised if that were so, but I do not know.

Mr. JENKINS. I understand that they both are, and if I am wrong I would like to be told about it. I see somebody smiling back there in the audience; I do not know whether I am wrong at all, but anyhow that is my understanding, as I understand it. If that is the case, the point of your argument falls as far as they are concerned.

But let me ask you, did you ever think about this when you think about freight rates, did you ever think that practically all of the big railroads run east and west?

Mr. TAYLOR. That is generally so.

Mr. JENKINS. They run east and west and do not run north and south, outside of those that run along the eastern coast that carry mostly passenger travel. Those are about the only ones and the rest of them run east and west. You take the C. & O., that is not a southern railroad, it runs clear across from Chicago and goes up to New York, does it not, and from Chicago down to Cincinnati and up to New York? The Norfolk & Western is another great coalcarrying railroad, and both of them pass through our section, and that is not a southern railroad except that it runs near the border. Would not that have something to do with freight rates?

Mr. TAYLOR. Yes; I think the gentleman raises a matter of very fundamental interest to us, and illustrates it in an extremely forceful manner, and I would ask him why there are no roads running north and south, and I would answer my question-at least the way I would answer it would be that the South has been industrially undeveloped, and it has been an agricultural section and we do not have a balanced economy down there.

We are trying to build it now, but these discriminatory freight rates and this type of legislation here and some of this other stuff is not helping us any.

Mr. JENKINS. Here is an answer to it: At the start of the empire the country moved westward and moved toward the West and not toward the South or North, but just naturally moved west, and all of the railroads and all of the highways run across the country.

Mr. BOLAND. You dwelt quite at length upon the fact that this legislation would probably precipitate legislation along other lines. You would consider Great Britain a democracy, would you not?

Mr. TAYLOR. I do not know about that.

Mr. BOLAND. In fact, we are trying to help democracies in this present situation.

Mr. TAYLOR. I do not know what I would have to say about Great Britain, Mr. Boland, but in support of my original statement I would point to the movement which apparently is going to succeed, for Federal mine inspection, for the movement which apparently is making headway toward the Federal regulation of the insurance business, and, in other words, the trend all seems to be in that direction.

Mr. BOLAND. I appreciate that, but I just asked the question if you would consider Great Britain a democracy.

Mr. TAYLOR. I suppose Great Britain is a democracy.

Mr. BOLAND. Are you aware of the fact that the Government of Great Britain has complete control over the mining industry of Great Britain-it is completely nationalized?

Mr. TAYLOR. I Would not say that that particular practice of Great Britain as a democracy was conducive to its continuation as a democracy.

Mr. BOLAND. The facts are that it has nationalized the coal industry; it is nationalized; and, of course, you would not consider that fascism in Great Britain?

Mr. TAYLOR. I would consider that getting over into the place of state socialism rather than democracy.

The CHAIRMAN. We will now adjourn until 10 o'clock in the morning. (Whereupon, at 4: 15 p. m., an adjournment was taken, to reconvene the following morning, March 13, 1941, at 10 o'clock.

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