Senator POINDEXTER. What is the normal price of coal, or what was it before this shortage occurred? Mr. BECKWITH. It has been around a dollar at the mine-that is for the coal we burn. Senator POINDEXTER. That is at the mine? Senator POINDEXTER. This $5 that you mine also? Mr. BECKWITH. Yes, sir; $5 at the mine. speak of, is that at the We pay the freight rate. Senator POINDEXTER. How long has that price prevailed? Mr. BECKWITH. That probably was about March or April. Then I think it began to go up. We got prices from $3, $4, and up to $5. Senator POINDEXTER. What is the price now? Mr. BECKWITH. $4 was the last quotation we had. Senator POINDEXTER. Do you know what condition these mines are in with respect to their facilities for transportation and their supply of labor? Mr. BECKWITH. No, sir; not at present. I know that when they told me they could not fill my contract, as they did not have the coal cars, we had coal cars at our mills loaded with coal as soon as we were willing to pay $5 a ton for it. Then we got the coal. I know when I could not sell my coal at a dollar I could buy it at $5, and I know I have been under the impression that all coal in our territory was sold on contract. I have not understood that it was a car shortage. Senator POINDEXTER. You say the mills have had the same experience that your railroad did; that is, when they were willing to pay the price they could get all the coal they wanted? Mr. BECKWITH. Yes, sir. The CHAIRMAN. Is there any further statement that you desire to make? Mr. BECKWITH. No, sir. The CHAIRMAN. The committee will now adjourn until Thursday, July 5. (Whereupon, at 4.15 o'clock p. m., the committee adjourned to meet at 10 o'clock a. m., Thursday, July 5, 1917.) PRICE REGULATION OF COAL AND OTHER COMMODITIES. TUESDAY, JULY 3, 1917. UNITED STATES SENATE, COMMITTEE ON INTERSTATE COMMERCE, The committee met at 10 o'clock a. m., pursuant to adjournment, at Room 326, Senate Office Building, Senator Francis G. Newlands presiding. Present: Senators Newlands (chairman), Smith of South Carolina, Pomerene, Cummins, La Follette, and Watson. Senator CUMMINS. Mr. Chairman, I have been advised that Mr. Thorne is present and would like to be heard upon the coal situation. The CHAIRMAN. Mr. Thorne, are you ready to proceed? STATEMENT OF HON. CLIFFORD THORNE, REPRESENTING THE LEAGUE OF IOWA MUNICIPALITIES, CHICAGO, ILL. The CHAIRMAN. Mr. Thorne, the committee will be glad to hear anything you desire to say. Mr. THORNE. Mr. Chairman, I have prepared a concise statement of the position that we take, and I desire to supplement the statement with such citations from the records and authoritative data as the committee cares to hear. Senator POMERENE. What do you mean by "we?" Whom do you mean by "we?" Mr. THORNE. I have been asked to appear before you on behalf of the League of Iowa Municipalities, which includes practically all the cities in the State of Iowa, and for the Iowa section of the National Electric Light Association in regard to governmental regulation of prices of coal and metals. Senator TOWNSEND. What is your position? Mr. THORNE. I am an attorney; my office is in Chicago. Senator TOWNSEND. Do you represent those institutions as their attorney? Mr. THORNE. Yes, sir. The CHAIRMAN. You were formerly on the Public Utility Board of Iowa, were you not? Mr. THORNE. I was formerly chairman of the Iowa Railroad Commission for four years and a member for six. Senator CUMMINS. I should say for Mr. Thorne that he has been representing for many years and still represents-aside from his work in a public capacity-the shippers of that part of the country those who are interested in keeping freight rates at a reasonable point. Mr. THORNE. During the past few weeks I have had occasion to investigate the prices on iron and steel articles and fuel, as chairman of a committee representing the National Shippers' Conference, composed of representatives of the organizations having an aggregate membership of a little over 1,300,000. I have been sent here to urge that the Government, without any unnecessary delay, shall take over the regulation of coal and metal prices throughout the United States. We must have Government regulation of the charges on these commodities while the war lasts. Several factors serve to distinguish these commodities from others generally: First, coal and metals are so vitally connected with the manufacture of war munitions that their production and sale at reasonable prices constitute an essential element of the whole defense program of our National Government; second, those engaged in the manufacture and sale of metals and the production and sale of coal have been able to so effectively organize under the domination of a comparatively few men that they have been able to force extortionate prices upon all parties, including the ordinary consumer, and also including large public utilities, railroads, and even the Government itself. The coal men have proposed, as a substitute for Government control of prices, that a committee composed chiefly of coal operators shall exercise this function of price fixing. While this is the suggestion of the coal men, I do not understand that such a policy has been approved by any department of the Government. A committee constituted in this manner was recently created and has acted. We claim: First. That the tentative prices established by the Peabody committee are excessive and unreasonable. Second. That the determination of reasonable maximum prices on coal for the public as well as for the Government during the period of the war should be definitely placed under the jurisdiction of a disinterested tribunal, and this should be done as quickly as possible. In support of the first proposition, we are unable to present to you any figures of value concerning the cost of production. No final conclusions as to what the prices should be can be fairly arrived at until the cost of production has been ascertained. But we have some very significant facts to present to you which demonstrate quite conclusively that the proposed prices are excessive. Let us consider this first effort of Mr. Peabody's committee on coal production. The prices established by the Peabody committee are on bituminous coal at the mines. Very few business men are conversant with mine prices. Consequently, the quotations published recently have little meaning to the ordinary citizen without investigation. It is true that some of these prices, especially those in the eastern district, are very substantially less than the current market quotations on what is called free coal, not subject to contract. This free coal constitutes ordinarily a very small percentage of the output of a mine. In the Indiana fields recently it was shown that some of the largest mines in the district had only from 2 to 8 per cent free coal. The average in the Indiana field was estimated to be approxi mately 22 per cent. In other words, more than three-quarters of the coal turned out by the Indiana mines is sold at prices from one-half to one-third the current quotations on free coal. The price established by the Peabody committee for the Indiana fields is over 100 per cent greater than the actual average prices the Indiana operators have been receiving for their product during any one of the past six months. Senator TOWNSEND. May I interrupt you to ask a question, in view of the fact that there was a witness who was before our committee the other day on that subject. Mr. THORNE. I shall be very glad of the interruption. Senator TOWNSEND. You speak of the contract price of coal, that it was selling at a lower rate than free coal is being sold. It was maintained the other day that the contract price was made at a time when the cost of production was very much less than it is now, and that they are losing money on that price. Have you investigated that question to know about it? Mr. THORNE. Yes, sir; to this extent: First, we have a voluntary contract price that the mines have made during the past few months, since April 1, with the railroad companies of the country. In the second place, I understand the investigation of the Federal Trade Commission disclosed the fact that the increased price of labor does not exceed 25 to 30 cents a ton. In the third place, we have the fact that in the contracts providing for a sliding scale there has been an increase in the cost of labor. For one road, for instance, the Chesapeake & Ohio, the increase of the 1917-18 price over the 1916-17 price is only 9 cents a ton. The CHAIRMAN. That is the increased labor cost. Mr. THORNE. Yes, sir. The mines are now declining to make contracts for extended periods, as they have in the past, and are trying to force all sales on the market basis. The Peabody prices are very much lower than the existing market prices on free coal, especially in the eastern fields, but they will cause practically no reduction in the prices at which large consumers of coal are able to purchase the product in western fields. Their adoption will simply place the O. K. of the Government on existing prices which are excessive. Senator POMERENE. I may say in connection with that, I have a letter from somebody in Flint, Mich., who was at the head of an organization to provide coal for the poor people. They advanced the price, and the excuse that was given by the coal operators was that the Government had advanced the price $1 per ton. Senator WATSON. I thought Mr. Thorne would probably touch upon that, and if he did not, I wanted to ask him about it, because that matter was brought out the other day. Mr. THORNE. Notwithstanding the prices proposed by the Peabody committee caused a substantial reduction of eastern market prices on free coal, we claim that the following propositions can be completely substantiated by incontrovertible facts: First. The tentative prices established by Mr. Peabody's committee last week average more than 100 per cent greater than the prices on the same coal at the same markets one year ago. 106986-PT 1-17-22 |