Senator CUMMINS. Was that not qualified by the statement that those second advances applied only to certain coal fields? There was no general second advance that I recall.

The CHAIRMAN. You mean the advance of 62 cents?

Senator CUMMINS. Yes.

The CHAIRMAN. I think that was the only advance as to coal furnished by England to foreigners, including the allies, and did not apply in domestic transactions at all.

Mr. THORNE. In answer to your question it seems to me that we are required to consider the conditions confronting us here. If we pursue the English policy blindly, we will go a great length along some lines. Four days after declaring war they took over all the railroads in the country. When you consider the situation here there are certain facts which would lead one to believe that the coal operators are simply trying to get the O. K. of the Government for at least an extended period oftime on excessive prices, on prevailing prices now existing throughout the section from which I come.

One gentleman I personally know is operating utility plants, I think, at 46 stations in Iowa. He said that if this advance goes in that the Peabody committee wants to go in he can not make any contracts along the line of former years; that it will simply use all of the net profits that his entire industry has been receiving, or otherwise he will be compelled to advance the utility prices throughout all those towns and modify contracts already executed. If the Peabody committee had suggested a price somewhat reasonable as compared to that of former years, there would be good ground for adopting it tentatively until after careful investigation by the Federal Trades Commission, the permanent prices to be fixed later. But what we are protesting against is the adoption of these figures even as tentative figures. In order to show the excessive character of them, I think it would be well for you to consider the actual price that they are proposing should be adopted to-day and those of a year ago, because generalizations are so easy to make, and the price is vastly more instructive.

Take the eastern Kentucky situation, for example. The present market price on this free coal, egg, is $5 to $5.50. The price a year ago was $1.20 to $1.60. To-day it is from 300 to 400 per cent of the price a year ago, and the price proposed by the Peabody committee is $3 to $3.50. That price, you will notice, is from 200 per cent to 300 per cent of the price a year ago. In the Kanawha district in Kentucky, the price the Peabody committee proposed is $3.50, and the price a year ago was $1.40 in the same district.

The CHAIRMAN. You say the price suggested by the Peabody committee was $3.50?

Mr. THORNE. It was from $3 to $3.50.

The CHAIRMAN. I thought it was $3.
Senator CUMMINS. For that district.

The CHAIRMAN. I thought it did not exceed $3 anywhere.
Senator POMERENE. It is the same in Ohio.

Mr. THORNE. You may be correct. I have asked for a copy of the resolution of the Federal Trade Commission. Mr. Farrell, who tried to secure a copy, was told that there was only one copy in the possession of the commission, and they would not release it, but they were

preparing a list of prices, and it will be here in this room before we get through.

Senator SMITH of South Carolina. I understand that the prices you are quoting here are the prices at the mine?

Mr. THORNE. Yes, sir.

Senator SMITH of South Carolina. And have nothing to do with transportation-that is, at the mine?

Mr. THORNE. Yes, sir.

Senator SMITH of South Carolina. Do you know the cost of mining that coal-whether they will get $1.40 for it?

Mr. THORNE. No, sir; but I can tell you the price at which they were selling coal to the Chesapeake & Ohio, and the price at which they contracted in that district for 1,000 tons a day for the next year to the Chesapeake & Ohio.

Senator SMITH of South Carolina. At what price?

Mr. THORNE. $1.08. Last year it was 99 cents. Here is a printed statement made by the Chesapeake & Ohio to the Interstate Commerce Commission, in reply to my request for a statement of their contracts. Their contracts range from $1.08 this year up to as high as well, there was one for $3.

Senator SMITH of South Carolina. Before you leave that point, you say they have contracted for the next year at $1.08?

Mr. THORNE. Yes, sir.

Senator SMITH of South Carolina. That contract is good, and they are going to fill it?

Mr. THORNE. Yes, sir. It is 1,000 tons a day.

The CHAIRMAN. When was it made?

Mr. THORNE. A year ago.

The CHAIRMAN. It covered two years?

Mr. THORNE. It covers six years, under a sliding scale.

Senator POMERENE. If it will not interrupt you, I have a statement here from the Washington Times of June 29, giving the prices in Ohio, Illinois, and Indiana which were fixed by this committee. Senator TOWNSEND. The Peabody committee?

Senator POMERENE. Yes; proportionately fixed. I read as follows: Ohio.-No. 8 district. Thick-vein Hocking Cambridge, $3 for mine run; $3.50 lump and egg. Thin-vein Hocking Pomeroy, Crooksville, Coshocton, Columbiana County, Tuscarawas County, Amsterdam-Bergholz district, $3.25, mine run; $3.50 lump and egg. Massillon district, Jackson County, Palmyra district, $3.50 mine run, lump, egg.

Senator SMITH of South Carolina. Have you also the prices that preceded the fixing of prices by the Peabody committee?

Senator POMERENE. No; I have not those, but they were the current prices. No spot coal has been advanced since January 1. Mr. THORNE. In the East?

Senator POMERENE. No; in this particular district. Where we could get run-of-mine coal our factories have always gotten it, prior to two years ago, at 90 cents a ton, run of mine, f. o. b. mine. It was gradually increased slightly during the last years, but it has been trebled and quadrupled since that time.

Senator WATSON. In other words, there has been no stable price for coal in the last nine months?

Senator POMERENE. No; the only stable price is what they can get.

Senator WATSON. As far as Indiana is concerned, we can not get it. Mr. THORNE. Here are the prices at which the Chesapeake & Ohio is going to secure its coal for the following year commencing April 1, approximately. Some of these are under contract for one year and others for five years. Here is one contract commencing April 1, 1917, for $1.50 a ton for one year. It calls for 75,000 tons.

Senator WATSON. Do I understand this to be a railroad contract? Mr. THORNE. Yes, sir.

Senator WATSON. With the C. & O.?

Mr. THORNE. Yes, sir; one contract commencing April 1, 1917, for two years at $1.50, and for three years at $1.25 a ton; another contract, commencing April 1, 1917, for two years at $1.60, and for three years at $1.25; another contract for two years at $1.50, and for three years at $1.25; another contract for one year, commencing April 1, 1917, at $1.50; another contract for two years at $1.60, and $1.25 for three years; another contract for two years at $1.50 and for three years at $1.25; and another for $3 and for one year. Now, last year, as I related a while ago, they had one of those contracts at 99 cents.

The CHAIRMAN. I did not catch the last contract. a contract for $3?

Mr. THORNE. Yes, sir.

You say it was

The CHAIRMAN. What character of coal was it when that contract was made?

Mr. THORNE. That is the Raleigh Coal & Coke Co., the Raleigh mine, New River district, run of mine-mine-run coal, $3.

The CHAIRMAN. That must be a superior coal?

Mr. THORNE. No.

The CHAIRMAN. When was that made?

Senator WATSON. What was the date of that contract?

Mr. THORNE. Commencing April 1, 1917.

The CHAIRMAN. That was a new contract?

Mr. THORNE. Yes, sir; but, Mr. Chairman, all the contracts that I have so far described to you were new contracts, except the one for $1.08.

The CHAIRMAN. I did not catch the dates as you went along.

Senator WATSON. How can you account for anybody making a contract for $3 if he can get it for less than half of that?

Mr. THORNE. That is a superior quality to what I have read at $1.25 and $1.50. Those were slack, but the $1.08 is mine-run coalis almost 300 per cent higher than what they were able to contract for a year ago.

Senator CUMMINS. How much did they agree to pay $3 for?

Mr. THORNE. Sixty thousand tons. I will say that they do have a good many optional contracts (that they do not expect to exercise) in order to protect themselves. For instance, one company had contracts covering almost twice as much, I think, as their requirements would be, as indicated by the last year's consumption. Senator CUMMINS. You mean the consumer?

Mr. THORNE. A railroad company contracted for practically twice as much coal as its requirements would be, judged by last year's consumption.

One word more about the $1.08 rate on the Chesapeake & Ohio. The other contracts I described were new contracts.

Senator SMITH of South Carolina. That is what I wanted to ask you about these contracts for $1.50 and $1.25.

Mr. THORNE. Those are new contracts.

Senator SMITH of South Carolina. When were they made-last year to begin their execution this year, or were they made this year? Mr. THORNE. They were made this year, as I understand it. The one made last year was for six years, beginning April 1, 1916. The others all commence April 1 or July 1, 1917.

Senator SMITH, of South Carolina. And were made in 1917?

Mr. THORNE. So I understand. The one made a year ago was for 99 cents for that year, but it provided a sliding scale contingent upon the wages paid the miners, and the increase of the 1917-18 price over the 1916-17 price was 9 cents per ton net. As to this price a year ago in the Kanawha Valley district the price of domestic lump was $1.60 at the mine.

Senator POMERENE. When was that?

Mr. THORNE. A year ago-free coal at the mine a year ago.
Senator POMERENE. What is your source of information?

Mr. THORNE. The Black Diamond quotations, which are considered reliable. But the mine run is a different proposition. This is the free coal at current quotations.

Senator POMERENE. Oh, I thought you gave that as the cost of production. I misunderstood you.

Mr. THORNE. Oh, no. The Peabody price is $3.50. On the question of cost of production, the significant figures that I was offering were these coal contracts, which covered large quantities. How can you expect the Chesapeage & Ohio to be getting a thousand tons a day at $1.08, which cares for the increase in miners' wages over last year, if it was not doing that at some profit?

I desire now to review the tentative prices on coal established or agreed upon by the Peabody committee last week.

The Smokeless mine run a year ago was $1.25 to $1.35 on the market, compared with the Peabody price of $3.

Senator POMERENE. That is West Virginia coal?

Mr. THORNE. Lump and egg at $1.60 to $1.90, as compared with the Peabody price of $3.50.

The Clinton domestic lump last year was $1.50, mine run, as compared with $3.50 proposed by the Peabody committee; and screenings last year sold for 95 cents to $1.

Knox County lump last year $1.50, and mine run $1.15. I do not have the Peabody quotation with me, but I understand it is $2.75 to $3.50.

The Fulton and Peoria Counties, Ind., lump last year, $1.75; screenings, $1.10, as compared with the Peabody price of $3.50 and $3. Central Illinois lump $1.50, screenings 90 cents and 95 cents, as compared with $3.50 to $2.75 prices established by the Peabody committee.

Hocking domestic lump last year $1.60, compared to the Peabody committee price of $3.50.

Kanawha 1 inch lump last year $1.40, compared to the Peabody committee price of $3.50.

Eastern Kentucky domestic lump $1:25 to $1.90 last year, compared to the Peabody committee price of $3.50.

Estimating the production of the mines of the United States last year at approximately 509,000,000 tons of bituminous coal, the storage coal used would bring the total to 550,000,000 tons of bituminous coal consumed last year. Probably 150,000,000 tons will be consumed by the railroads. The Pennsylvania Railroad System estimates the average increase in their price for the ensuing year for the system to be 82 cents a ton, and recently Mr. Rea has announced that there is a still further advance in their fuel cost.

On the Baltimore & Ohio the increase is not more than approximately 30 cents a ton, but if you assume the average to be in the neighborhood of 60 cents a ton that the railroads will have to pay in excess of what they did last year, there will be an increase in the price of fuel of possibly $60,000,000 to $80,000,000. Perhaps this will be in the neighborhood of $100,000,000, as the railroads estimated in the 15 per cent case.

Senator CUMMINS. What proportion of coal hauled by the railroads would you say they consume?

Mr. THORNE. I suppose about 24 per cent of bituminous and anthracite coal. Twenty-eight per cent of bituminous coal alone has been estimated as that portion of the coal produced which is consumed by our railroads.

Senator CUMMINS. The Interstate Commerce Commission, I think, reported that of every 35 tons of coal hauled by the railroads they consumed 12 tons.

Mr. THORNE. I was speaking of the total production. I do not know how the Interstate Commerce Commission arrived at its figures. The estimate made by the United States Geological Survey a year or so ago was 24 to 25 per cent.

Senator POMERENE. Mr. Chairman, I will have to leave the committee. I understand the Senate meets at 11 o'clock this morning.

Senator CUMMINS. I want to get Mr. Thorne's views with regard to the proposed legislation. He has given us a very lucid and intelligent statement, and that will add that much. But Mr. Thorne has studied the question of legislation regarding this matter, and I would like to get his views on that subject.

Senator TOWNSEND. There is another point that I wish, if you are coming to the committee this afternoon, you would be prepared to discuss. The witness that I referred to the other day admitted that the prices were extortionate, and that they ought to be reduced. I asked him why he did not reduce the price, and he said he could not do it because if he reduced his price some of the jobbers, or somebody, would gobble up everything he had and the consumer would pay the same price. He insisted that one of the reasons why the charges were so high for free coal was that they had not been able to get the cars, for one thing, and not being able to get them they could not run their mines at full force; that at his district they were shut down all but three days in the week, and that the men were leaving them to go into the munitions factories and other places where they received better wages, and where they could get steady work. I just present that matter as being in line with the statement he made in answer to my request for the reason why he had charged so much.