PRICE REGULATION OF COAL AND OTHER COMMODITIES. WEDNESDAY, JUNE 27, 1917. UNITED STATES SENATE, COMMITTEE ON INTERSTATE COMMERCE, The committee met, pursuant to adjournment, at 10 o'clock a. m., in room 326, Senate Office Building, Senator Atlee Pomerene presiding. Present: Senators Pomerene (acting chairman), Robinson, Cummins, and McLean. Also present: Mr. Walter F. Bogle and Edwin C. Turner. The ACTING CHAIRMAN. The committee will first hear Mr. Walter F. Bogle. You appear representing the operator, do you, Mr. Bogle? STATEMENT OF MR. WALTER F. BOGLE, REPRESENTING THE W. S. BICKLE CO. (INC.), CHICAGO, ILL. Mr. BOGLE. Yes, sir. The ACTING CHAIRMAN. What company do you represent? The ACTING CHAIRMAN. Where? Mr. BOGLE. Chicago. The ACTING CHAIRMAN. How long have you been engaged in business? Mr. BOGLE. Forty-five years. The ACTING CHAIRMAN. What is the capital stock of the company? Mr. BOGLE. $100,000. The ACTING CHAIRMAN. Are you operators? Mr. BOGLE. Yes; we are operators. The ACTING CHAIRMAN. What is your capacity, your annual capacity? Mr. BOGLE. The present capacity is about 3,500 tons a day. The ACTING CHAIRMAN. Where is it located? Mr. BOGLE. The Clinton field, Indiana. The ACTING CHAIRMAN. You may proceed with your statement. Mr. BOGLE. I do not know that I have any particular statement. to make. Senator CUMMINS. I might suggest that there are two bills pending before the committee, and I suppose that what the committee wants is to get your view with regard to the practicability or advisability of doing something on this subject. The ACTING CHAIRMAN. Yes; and in addition to what Senator Cummins says, I shall want to know something regarding the relative cost price during the last three years, as well as the selling price during the last three years. Mr. BOGLE. In the first place I should like to make plain that the operators are not responsible for the high prices of coal. They have been brought about by the buyers. My first experience with it was in early October, 1916. I was in Springfield, Ill., conferring with some people I was interested with there, and a buyer from Detroit came into our office and asked us what we would take for 50 cars of coal, what our price was. We made him a price and he said, “I will give you 50 cents a ton more than that if you can ship it in the next 10 days." That was the first indication I had of an advance in prices in our field, and the advances since that time have been brought about in the same manner. The buyers have dictated the price, not the operators. There is one other point I should like to touch upon that came up yesterday. That is the point of coal in different centers, where it is delivered by dealers in those centers. I want to make it plain that the operators can not control and do not control those prices. The only way they do control is in the price of the coal at the mines. The price of coal at these centers, of course, will be affected by the price that we get at the mines, but we have no control whatever over the margins that the dealers in these different centers may charge for their service. I should like to make that plain. The ACTING CHAIRMAN. You are distinguishing between dealers and operators? Mr. BOGLE. I am. We operate coal mines and we sell our coal f. o. b. cars at mines, and we are dependent on dealers in small towns and in the larger cities to distribute our product to the consumers. But they buy that product from us and after it gets into their possession we have no further control over the price that they will charge for that product. I do not mean by that to blame the dealers or say they are doing anything they should not do, but at the same time I have to make it clear that the operators are not responsible for what those dealers might do. The chairman yesterday referred to a letter which he had from St. Paul and to prices charged there for coal delivered to some industry or building by local dealers. Now, the man that produces that coal had no control over that price, and, in all probability, knew nothing about it. As far as the State of Indiana is concerned, we are making every effort that man can make to get out coal. In May, 1916, the States of Illinois and Indiana produced some 80,000 cars of coal. In May, 1917, that is, this year, they produced 164,000 cars of coal. I want to make it plain that the operators are not taking any action that would increase the price of coal in this country. The ACTING CHAIRMAN. Let me understand that. Are you speaking for the operators over the entire country now? Mr. BOGLE. No; but I state what I know is a fact in regard to the operators over the entire country. I do not pretend to speak here to-day beyond Indiana, because there are gentlemen here who represent all the other States and who will appear before you. The one thing that operators could do to advance the price would be to limit production. Now, every gopher hole, every abandoned mine that could not stay in the production on account of the low prices that have prevailed in the past 10 years and had to be closed up are being opened up now. There are 22 new mines going down in Indiana to-day. The operators are doing everything that it is possible for humans to do to meet this situation and give the country the coal it needs. The ACTING CHAIRMAN. What is the inducing cause for those 22 new mines at this time? Mr. BOGLE. Simply because they think there is going to be a lot of money in the business, and they are rushing into it the same as they did 15 years ago, after the anthracite strike. The capacity of Indiana and Illinois pretty nearly doubled after that time. A lot of people that did not know anything about the business went into it. There were probably 20 syndicates formed to buy going coal properties and purchase virgin property, and out of all those syndicates just one survived; the rest paid anywhere from 25 to 40 cents on the dollar on the bonds that were issued to finance them. The ACTING CHAIRMAN. There have not been any of the companies going into the hands of receivers since January 1, have there? Mr. BOGLE. No, sir. They would not have gone into the hands of receivers if they had not had the history they had, if the present conditions had prevailed during the last six years. The ACTING CHAIRMAN. You may proceed. Mr. BOGLE. As far as the present situation is concerned, I believe that the best results will be obtained by handling this matter through a committee of men that understand the business thoroughly, controlled by the Government. I think there should be governmental control. The ACTING CHAIRMAN. With or without legislation? Mr. BOGLE. Whatever is necessary to make it effective, Senator. If it is necessary to have legislation to make it effective, why I am in favor of legislation. Senator MCLEAN. By fixing prices? Mr. BOGLE. I think it may reach that point, sir. If the coal men continue to get to a point where they are demanding unreasonable prices, they should be made to make reasonable prices. The ACTING CHAIRMAN. When I put the question to you, with or without legislation, I had reference to the controlling of this situation by this corps of experienced men you speak of, and what I intended to bring out is this, should that be done as a voluntary matter or should it be done under authority of law? Mr. BOGLE. I believe that authority of law would be of great assistance to them in some cases. Senator CUMMINS. Authority to fix a price? Mr. BOGLE. Yes, sir; if necessary. The coal dealers are in convention here at the present time, and the disposition of all of them is to make a fair price on their product, and I believe that will be the result. They appointed committees yesterday, and those committees will be at work to-day, and possibly it may take several days for them to reach a conclusion. Senator CUMMINS. You said the operators were not responsible for the advance in price? Mr. BOGLE. No, sir; they are not. Senator CUMMINS. How much more are you getting for your coal at the mine than you got a year ago. Mr. BOGLE. At the present time? Senator CUMMINS. Yes; at the present time. Mr. BOGLE. About $1.50, we were yesterday. Senator CUMMINS. You mean, I assume, that the operators are not responsible because the buyers have come and offered you these prices? Mr. BOGLE. Yes, sir. Senator CUMMINS. And you, of course, accepted that. Senator MCLEAN. You would not want the Government to interfere with the operators' price? Mr. BOGLE. Why not? Senator MCLEAN. I am asking you. Mr. BOGLE. I would if the price was unreasonable. In our section of the country we have been all the way from $1.50 to $2 a ton below some other portions of the country with our prices. The ACTING CHAIRMAN. You say you are making $1.50 a ton on it now? Mr. BOGLE. No; I did not say that, Senator. The ACTING CHAIRMAN. Did I misunderstand you? Mr. BOGLE. I said the price has increased that. The ACTING CHAIRMAN. What is your profit now per ton? Mr. BOGLE. In the month of May our profit was about 50 cents a ton. The ACTING CHAIRMAN. Do you regard that as a reasonable or unreasonable price or profit? Mr. BOGLE. I should say it was very reasonable, under the circumstances. The ACTING CHAIRMAN. That is, reasonable compared with other operators' prices, you mean, do you? Mr. BOGLE. Yes; and as a profit that the business ought to have. Senator MCLEAN. Would a profit of 50 cents a ton discourage production? Mr. BOGLE. No, sir. Senator MCLEAN. The same enthusiasm would continue? Mr. BOGLE. I believe it would; yes, sir. The ACTING CHAIRMAN. What would you regard as a reasonable profit for operators generally? Mr. BOGLE. Under the present circumstances? The ACTING CHAIRMAN. Yes; under the present circumstances. Mr. BOGLE. $1 a ton. The ACTING CHAIRMAN. What do you estimate as the reasonable profit which has been made upon this coal, assuming there has been a production during the past year of 600,000,000 tons in the United States? Mr. BOGLE. Well, I think if they made 5 cents a ton they were doing pretty well. The ACTING CHAIRMAN. Assuming that production would be 750,000,000 tons during the present year, what do you think should be the profits of the coal operators and the coal dealers if present conditions were to be permitted to prevail? Mr. BOGLE. That would take some figuring to figure that out, because prices vary so in different sections of the country, Senator. But a profit of $1 a ton would not mean $750,000,000 profit to the industry. We are carrying contracts on our books to-day that are a positive loss to us, made last year for two years. The ACTING CHAIRMAN. I want to go into this matter a little more systematically than I have. What did you pay your miners in each of the years 1915, 1916, and 1917? Mr. BOGLE. In 1915 and 1916 we paid them-wait a moment-1916 was the last agreement we made with them, and that price was 67 cents a ton for picked mining. The ACTING CHAIRMAN. What is it now? Mr. BOGLE. Seventy-four cents. The ACTING CHAIRMAN. What is the cost of your coal, including overhead and everything else, during the years 1915 and 1916 at the mouth of the mine? Mr. BOGLE. I have not in mind at just this moment what our scale was in 1915, but 1915 would be less than 1916. In 1916 our net cost was about $1.17 or $1.18 a ton. The ACTING CHAIRMAN. What is it now? Mr. BOGLE. About $1.35 or $1.52. The ACTING CHAIRMAN. What were you getting for your coal? What was your average price in 1915 and 1916? Mr. BOGLE. In 1916 we averaged about $1.20. The ACTING CHAIRMAN. What was it in 1915. Mr. BOGLE. It was something less than that. I think 10 or 15 cents less. The ACTING CHAIRMAN. What was your minimum and your maximum price during those years? Mr. BOGLE. Take it generally through Indiana, I have got to explain that we had two or three different qualities of coal there, and the coal I have been testifying about is the coal that ordinarily goes to steam purposes, and, to a very limited extent, for domestic purposes. We have another coal there that is of a great deal more value that commands a better price. The ACTING CHAIRMAN. What is it? Mr. BOGLE. It is the No. 4 coal. The ACTING CHAIRMAN. What is the price? Mr. BOGLE. Well, the price for that coal last year would run about $1.40 to $1.50. The other coals, the steam coal, would, as I say, average about $1.20, or somewhere in that vicinity. The ACTING CHAIRMAN. What is the average price of your coal during the year 1917? Mr. BOGLE. I do not know as I have made up an average for the year. Our average price in May was $1.79. The ACTING CHAIRMAN. What were your maximum and minimum prices during that time? Mr. BOGLE. Our minimum price was $1.325, and our maximum price was $2.75. The ACTING CHAIRMAN. Were you selling spot coal during this time? Mr. BOGLE. Yes, sir. The ACTING CHAIRMAN. What were you getting for your spot coal? Mr. BOGLE. About $2.75. The ACTING CHAIRMAN. What were you getting for your contract coal? 106986-PT 1-17- 8 |