of what they could otherwise transport to the seaboard. They do it in this way: They all put their coal-your coal, Senator Poindexter, your coal, Senator Cummins, and your coal, Mr. Chairman, into the box, and they give the amount of the coal, and Mr. Peale takes the tidewater end and distributes that coal, and they there arrange it and pay each man according to the amount of coal he had, and it comes down instead of having a number of consignments that otherwise would require a number of cars for each and the handling of trains all day. That is, it has reduced the problems so they can put them all to the market all together just as fast as they can make up the trains, putting them all in one bunch and distributing them. That is going to relieve the situation. That has also been the process on the Lakes. The CHAIRMAN. Do I understand that the individual coal that belongs to the individual operator is not delivered necessarily to the person with whom he contracts, but that it is some other person's coal of the same quality? Mr. FORT. The idea of the operator is that as far as he is concerned that is loss. You can not get quite as good a grade of coal. There has been quite a good deal of trouble about that. The CHAIRMAN. He may get better and he may get worse? Mr. FORT. Possibly so. The character or quality of the coal of the different operators in the Pennsylvania is not enough different to make any substantial loss or to inflict any injury upon the consumer. I want to say now, gentlemen, that I think the situation now is better than it has been. The distribution and transportation are largely alike, and there is no use of my taking time to discuss that. For the last two days there has been in this city a meeting of coal operators of the United States-400 of them-in the auditorium of the Interior Department's new building. I have attended those meetings, and the result of the meetings is that they have passed a resolution authorizing the Secretary of the Interior and the Federal Trade Commission and the committee headed by Mr. Peabody as a coal committee to adjust and fix prices and have guaranteed to reduce the price of coal on the part of all of these 400 men to the price which that committee shall fix. They have agreed on two methods Senator CUMMINS. Who is to reduce and fix the price? Mr. FORT. The Secretary of the Interior, the Federal Trade Commission, and the coal committee of the committee on national defense. Senator CUMMINS. Suppose they do not agree? Mr. FORT. I do not believe there will be any trouble about that. Senator CUMMINS. Do they vote upon it, or is it the individual view of the members composing all those boards? Mr. FORT. Yes, sir. Senator CUMMINS. Is there any arrangement by which the opinion of the majority should prevail? Mr. FORT. I should suppose the majority would control. I do not think they will have the slightest difficulty about that. If so, it would be only a matter of a very few cents. Secretary Lane's letter, which I have here, was read to the body this morning. The CHAIRMAN. Let me ask you how many representatives the committee of the coal operators would have upon that committee? Mr. FORT. None. The CHAIRMAN. I thought from what you said that Mr. Peabody would be a member. Mr. FORT. He represents the Government in this matter. He is a sworn officer. The CHAIRMAN. Does he stand alone, or does his entire committee? Mr. FORT. I imagine he is standing alone. He has just been called on to come down there, and I know none of his committee are there but himself. I suggested putting him in as chairman in the resolution adopted to-day; but he said there would be no difficulty about that, that he would act and put it up to his committee. Secretary Lane stands alone, and there are only four of us gentlemen. I do not think we will quarrel. We have not so far. The CHAIRMAN. How many, in all, would there be in this committee? Mr. FORT. If Mr. Peabody's whole committee comes in I could not answer, because I do not know how many are on that committee. If he is alone, that is one; Mr. Willard is two; we are four; and if the President adds one the committee will consist of five members. Senator CUMMINS. I think there are 14 on Mr. Peabody's committee. Mr. FORT. I do not know; I could not answer that. Secretary Lane wrote this letter to the conference this morning [reading]: THE SECRETARY OF THE INTERIOR, Washington, June 28, 1917. DEAR MR. PEABODY: I feel that the present extremely high prices on coal require immediate action by the coal operators, and therefore would urge upon you that they should be reduced at once and maximum prices fixed which would apply to sales on and after July 1, 1917, and continue until such time as the investigation which you propose into costs and conditions shall warrant a reduction or increase. These prices should not be used to affect present contracts or apply to export or foreign trade. In other words, the people of the United States should have, as I urged upon the operators the other day, immediate relief and knowledge of their disposition to make a reasonable price, irrespective of the possibilities of obtaining higher prices. This would be regarded by the people as meeting the situation promptly and wisely if the prices materially cut those which exist. Cordially, yours, Mr. F. S. PEABODY, Chairman Committee on Coal Production, FRANKLIN K. LANE. Council of National Defense. Senator CUMMINS. May I ask one other question: Where must they fix the price of the operator? Mr. FORT. F. o. b. mine. Senator CUMMINS. There is no arrangement for fixing the price beyond that? Mr. FORT. Not at all. Senator CUMMINS. Of course, contracts hereafter made? Mr. FORT. You express it as a contract. I may look at it in a different way. Senator CUMMINS. The reason I asked the question was this: The coal operators who have appeared before us up to this time have indicated a very large percentage of their output was under contract? Mr. FORT. Yes, sir; nearly 90 per cent, sir. Senator CUMMINS. And most of these contracts were made until the 1st of April? Mr. FORT. They have not made any contracts so far, excepting a few railroad contracts; they have been refusing to make contracts, and hardly any contracts have been made, except with the railroads. One contract was made last week with the Pennsylvania Railroad for 67.000.000 tons at $2.85. Senator CUMMINS. So the commission will control contracts heretofore made? Mr. FORT. The difficulty was we tried to control those made, and were afraid of the constitutional provisions. Senator CUMMINS. We are not bothering so much with the Constitution. Mr. FORT. We could not very well violate the obligations of the contracts as they existed. The CHAIRMAN. You say they made a contract at $2.85? The CHAIRMAN. What was the price paid last year-do you know? Mr. FORT. Yes, sir; $1.10, I think. I have Mr. Rea's letter. I can give you a copy of that. It was transmitted to us by Commissioner McChord-was handed me when I began this investigation. It states that 11 railroads, at an increased cost of $1 a ton for this year, would be required to pay $55,000,000 more for their coal this year than last. Senator CUMMINS. Have you any idea how much the cost of production has increased in that time? Mr. FORT. You mean at the mine? Senator CUMMINS. At the mine; the mine operator. Mr. FORT. No; excepting this, there is a mine operator we know pretty well, Mr. Wynne, will answer that; he is acquainted with the cost, I think, of a very large number of mines. If I did not have to state that just now, because of the situation in regard to prices I would rather not, because we have got to fix them and fix the cost to the Government. I would not want to say here what cost we likely will fix. I think it better that we should not do so. The cost of labor has increased 35 to 50 per cent. That is within safety. The cost of supplies to the operator has been very great, particularly steel nails; everything they have to use in the way of lumber and cars for the transportation of their coal. I want to say here that I think these operators are disposed to be pretty fair, Senator. Senator CUMMINS. We are not challenging their fairness. Senator CUMMINS. We want the truth about it, is all. Mr. FORT. I was not saying that to you. Senator CUMMINS. They have said to us repeatedly here, a dozen of them, that the cost of production had increased within the past year from 50 to 75 cents a ton. Mr. FORT. I think that is largely true. In many cases that is true. Now, they adopted this resolution. I want you to have this on your record, because it may be worth your while to have it. If we get a price under this we will get somewhere where the people of the United States will feel they are going to get their coal at a fairer price than they have been getting it lately, and that it is going to be furnished; because when they start operating fully and the railroads give them the supply of cars, if they do, and I apprehend they will when this situation is made clear, then I think we are going to get nearer a solution of the question than we have been, and a good deal of the scare ought to be driven away. A lot of the trouble has been scare. The trouble is that the coal man, not the operators so much, but those who handle large coal, write letters like this one that came to me on my desk, dated June 26: Since the investigation we had a letter from one of our suppliers (naming the company), a copy of which we are inclosing you herewith. While we asked them to offer us a proposition on 2.500 tons they wrote back an offer to renew our contract for one-half the amount, 1,200 tons, and then subject to all conditions (that means conditions of increase of damages and increase of cost and all that sort of thing they put in their contracts). We are sending you a true copy of the letter and can send you the original any time you may desire. We want you to see for yourself what their offer is, $1 in advance of the price you suggested (that was $3), and then they will not even do this unless we will allow them to buy an equal quantity of coal on the spot market (then to buy it), billing such spot coal to us at the purchase price plus their customary commission of 25 cents a gross ton. (He asks me what is the best thing to do.) To save ourselves are we compelled to accept such an agreement, because everyone else has told us they did not have any coal; or shall we simply wait the decision of your committee to give us coal at $3.50, even, or $4 at the mine? Will you kindly tell us what you think we should do? They name the company and also another company. point to that? You see the Senator CUMMINS. Speaking of the scare, I should think a man who received a letter of that kind naturally would get a little scared. Mr. FORT. Absolutely, Senator. Now, all over the country that sort of letters have been written. Not by the operators. Those are dealers, as you may call them. I do not mean retail dealers in the city, although it is true of them also, but jobbers, brokers, speculators. Senator CUMMINS. I am not criticizing anybody, but I should think he might be a little apprehensive. Mr. FORT. He is apprehensive. Now, if we can get this situation where those gentlemen can not get the coal operators in the position where they think they have got them now, because of the shortage of cars and other reasons, where men like those gentlemen that wrote that letter, and that letter is written from Philadelphia on the 21st of June, that operator's letter, a large concern, handling a large amount of coal-where they can not write such letters as that, because the price is fixed at the mine and everybody in the United States will know what he is to pay for his coal and does not have to pay any more, and when he charges him f. o. b. mine $4, $5, or $6. The gentleman, who is at the head of the largest coal company in the city of Boston said he was paying for bituminous coal for his comanpy-he told me the other day in the presence of a number of gentlemen when we were discussing this question he was paying $9.75 a ton, and he had been paying $7 and $8 f. o. b. through these operators who have been handling the coal. Now, the resolution which this convention have passed, and I want to say that every man voted for it and they got up in answer to the patriotic address of Secretary Lane, and Secretary Lane stated the facts, and they frankly said they were going to meet this situation in a patriotic way; they did not want to lose any money; they wanted these different boards to fix a fair price; that they were going to leave it to them to mine their coal. The resolution I refer to is as follows (reading): Whereas under the act of Congress approved August 29, 1916, providing that a council of national defense be established " for the cooperation of the industries and resources for the national security and welfare, to consist of the Secretary of War, the Secretary of the Navy, the Secretary of the Interior, the Secretary of Agriculture, the Secretary of Commerce, and the Secretary of Labor," authority is given to the council to organize subordinate bodies for its assistance and cooperation; and Whereas pursuant to this authority the Council of National Defense has appointed Mr. Francis S. Peabody, chairman of, and with authority to appoint a committee on coal production, representative of the coal-producing districts of the United States; and Whereas a great national emergency now exists in the fuel supply of the Nation, and as the coal operators and miners of the United States desire to cooperate as closely as possible with the Government, and as the Department of the Interior, the Federal Trade Commission, and the committee on coal production have given close and intelligent study to the necessities now existing: Therefore be it Resolved, That it is the sense of this meeting that a committee of seven for each coal-producing State and an additional committee of seven appointed by the representatives of the anthracite industry be appointed by the representatives of each State now attending this convention to confer with the Secretary of the Interior, the Federal Trade Commission, and the committee on coal production of the Council of National Defense, to the end that the production be stimulated and plans be perfected to provide adequate means of distribution. And, further, that these committees report forthwith to the Secretary of the Interior, the Federal Trade Commission, and the committee on coal production of the Council of National Defense costs of and conditions surrounding the production and distribution of coal in each district, and that these committees are authorized, in their discretion, to give assent to such maximum prices for coal f. o. b. cars at mines in the various districts as may be named by the Secretary of the Interior, the Federal Trade Commission, and the committee on coal production of the Council of National Defense. That resolution standing alone only relates after we have ascertained the cost and only relates to the price which we shall fix then permanently, but the following resolution was immediately passed to take effect on the 1st of July. Speaking of this one I have just read, it says as follows [reading]: This convention by resolution heretofore adopted having requested the Secretary of the Interior, the Federal Trade Commission, and the committee on coal production to fix a fair and reasonable price at which the several operators in the several coal districts of the United States shall sell coal, do hereby further authorize said Government representatives so named in said resolution to forthwith issue a statement fixing a tentative maximum price-which, in their judgment, is fair and reasonable as applied to the several coal districts-at which coal shall be sold from and after the 1st day of July next and until the accurate costs have been ascertained and a fair and reasonable price based thereon fixed by said Government agencies designated under said resolution. To this end, therefore, be it Resolved, That the several States here represented do present to the chairman of this convention a suggestion, for use by said agencies in fixing the price which the several interests here represented feel should be the fair and reasonable price to be so tentatively fixed by the said agencies. That, it seems to me, gives these committees, if they can agree, and I can not see for the life of me why they can not agree they are waiting for me to come back now, and I am going to ask you gentlemen to go with me. Secretary Lane is now there; we are going to meet at half past 3. Each of these gentlemen is requested to hand in his suggestion of cost in their several districts. They only ask that definite rates be fixed in the several districts; they do not ask that they be fixed at each mine. They ask that rates be fixed in the |