Senator CUMMINS. Now, let me see if I understand just what you mean by that. Suppose this bill should become a law next week. The President could instantly take hold of the coal situation and under this bill I assume he could fix a profit that the various persons who are engaged in it might make. It may be that he could get such an order as that into effect as soon as Congress could do anything in the way of passing a maximum-price bill. Mr. THORNE. Well, what you have there stated passes the task on to some other person. In that sense it would be applicable. What I have reference to is that there is no provision here for the tentative price that the President might well make. Senator CUMMINS. I think that provision, if it controls prices at all, contemplates probably a changing price; what I mean is, fixing one price for one month and another price for another. I have said several times on the floor that in my opinion it would not be effective to meet the emergency that now confronts us, and if you have any views on that subject I would be very glad to have them put into the record. I may say, in order to save your looking clear through the bill, that this section does not apply to farmers or cooperative associations of farmers, or to carriers, or to retailers. Mr. THORNE. I see that. Senator, if Congress delegated permission and power to establish a maximum rate, could the commission delegate that power unless it was specifically so provided? I think not. Senator CUMMINS. I think the President could call to his aid any person, or any body of persons, whom he might designate. Mr. THORNE. It is just the same proposition that Congress can not delegate legislative functions. Senator CUMMINS. The bill in another part provides that he can establish any agency. Mr. THORNE. It does not provide it in section 5. Senator CUMMINS. No; but other parts of the bill make ample provision of that kind. Mr. THORNE. The hasty examination that I have given the bill would lead me to say that if that bill were passed immediately, and the President acted immediately under the powers given along the line that I have suggested, about tentative prices, as far as the coal situation is concerned, it would be adequate, and as to metal prices and other articles it would probably be adequate. You would, of course, be more certain of immediate results if specific instructions and directions were given governing the proposition that I named, rather than leaving it optional to another department of the Government. But if this is promptly passed and promptly acted upon I can see no just reason why it should not meet the situation. Senator CUMMINS. What is your view of adding a section providing for the price for coal along the line of your suggestion until the President operates under section 5? Mr. THORNE. I would certainly advocate it for this reason. This is a body that a person or an interest normally comes to in regard to matters of this kind. If the situation has been adequately presented to you gentlemen, to persuade you that immediate action should be taken, I think this is the body that should do it, instead of delaying and seeking to similarly impress another party, who is overwhelmed with superhuman duties to perform. I think that if the proposition I have submitted is correct that you gentlemen ought to provide for it specifically. Senator CUMMINS. Do you think it would be feasible to adopt the same kind of legislation governing metal prices, and especially steel and iron prices, that you have given us for coal? Mr. THORNE. Yes, sir; those are the two most striking illustrations of the tendency to reap extortionate profits, due to the present war situation, that we have in the United States anywhere. That would justify the emergency action that I have suggested. Senator CUMMINS. What time would you adopt as the basis for metal prices? Mr. THORNE. I see no reason why the same provision should not be adopted, a given date of last year. Senator CUMMINS. Do you know whether the cost of production in various metals, especially steel and iron, has increased any more rapidly within the past year than the cost of production of coal? Mr. THORNE. I do not, but I do know this, the manufacturers of steel and iron products ought to absorb some of those costs, and more so, perhaps, than coal operators, because the prices of steel and iron were excessive last year while the coal prices were more normal last year. The main purpose of my coming before this committee to-day was to urge the wisdom of immediate action, rather than the framing of a measure, and, second, to demonstrate by concrete figures, the excessive character of the prices established by the Peabody committee, and the wisdom of immediately, without waiting for more extensive investigations that might be ultimately justified, but immediately adopting some method that will supplant the Peabody report. Those constitute succinctly the purposes of my coming here, and if showing these charts and the very recent enormous increases in prices, showing the excess of the Peabody prices over actual prices that the coal companies have been contracting for with railroads during the last 30 days mean anything it is that some emergency step should be taken without further delay. I have a little statement summarizing my remarks along those lines that I should like to leave with the reporter-three pages and a half-to be considered as the conclusion of my statement. The CHAIRMAN. That will be inserted in the record. Is there anything further? (The statement referred to is here printed in full, as follows:) SUPPLEMENTAL STATEMENT OF MR. CLIFFORD THORNE, We petition you gentlemen for immediate and favorable action on the proposition of lodging adequate power over these prices on coal and metals with the Federal Trade Commission or some other tribunal. In the recent hearing in the Fifteen Per Cent case it was disclosed that quotations for future deliveries of iron and steel were exorbitant. They were so described by certain members of the Interstate Commerce Commission and by counsel for the carriers. So far these railroads have been protected from many of these excessive prices by means of overlapping contracts, but the situation will not continue indefinitely. We urge immediate and favorable action on this subject, because First. Our public utilities throughout the State of Iowa must purchase their supplies for the ensuing year, and if they are compelled to pay an advance of a dollar a ton on fuel and one to several hundred per cent more on metal sup plies, some of these companies will not be able to pay their operating expenses unless they are able to pass the increase on to the public. It always goes back to the people. Second. Because our railroads must be protected against extortionate prices or else they in turn will be able to reopen the Fifteen Per Cent case, and then force an increased transportation burden upon the public, as the commission clearly stated in its opinion that it will do if the railroad prophecies are actually fulfilled. Third. Because the ordinary consumers should be able to put in his winter supply of fuel gradually at reasonable prices without being forced to particupate in a mad scramble for fuel at the end of the season, which might produce a fuel famine throughout the Nation. The public utilities selling gas, water, electric light, telephone, and telegraph services in our cities have not increased their charges generally throughout the United States. There are exceptions, but the analysis recently made by Dr. King, of the University of Pennsylvania, proves that the vast majority of the companies in those States where records have been kept and published by State officials have been charging the same or less prices than during former years. Our railroads have been properly denied the right to make a general increase of 15 per cent in their freight charges throughout the United States. This is not an appropriate time for our coal companies and iron and steel companies to force a hundred per cent advance in their charges. These people in the railroad business and in the iron and coal industries must learn that the loss of human lives, the cost of maintaining an Army of a million or several million men and clothing them, building ships to be lost at sea, and so forth-all these heavy burdens of a terrible war are enough without asking the people to bear at this time an added burden of extortionate war · profits. If these corporations were only blest with a soul, with just a little humanity, they would have given heed to those eloquent words of our brilliant Secretary of the Interior. It seems quite difficult for some persons to realize that this war is not intended to be a money-making enterprise. War profits, and all that is akin thereto, must be relegated to oblivion in this great struggle for a world democracy. Production hesitates for a higher price when the price is uncertain; but production will thrive when the price is firmly fixed for an extended period of time providing that price be reasonable and just. The laborers, the wage earners and salaried men, the producers of the United States, must not only support themselves during this war, but they must carry the burden of a large portion of our population not engaged in productive occupation. Now, on top of this burden, if I mistake not the trend of the dominating American thought of to-day, we do not propose to add large profits to the corporations of the country. During this trying period they must make up their minds sooner or later to content themselves with ordinary profits. In the matter at issue here we are in favor of a genuine bona fide investimust learn that the loss of human lives, the cost of maintaining an army of a ested tribunal at the earliest possible date. Senator CUMMINS. There is one point in your plan that it seems to me may disclose a weakness. I suggest it, hoping that it can be removed. You began with the suggestion that the price fixed immediately on coal as a tentative price should be higher than any price subsequently fixed after investigation. That, in order to deprive the operators of the motive to hold their coal and not fully supply the demand at present. When you give to the body that fixed the permanent price during the war a rule for ascertainment of the price which must follow that rule, no matter what the result may be, and if it should happen that, following the rule, it arrived at a price higher than the tentative price, it would have to be adopted, would it not? Mr. THORNE. Not if it qualified the maximum. The provision might very well carry a clause that it should not be exceeded, the price fixed by Congress, or this tentative price should not be exceeded except by act of Congress. That would make them come back to you before it could be exceeded, though the other tribunal thought it ought to be exceeded. The fact is, Senator, it is so easy in the application of rules to interpret things differently. It might be well to fix a maximum independent of the proposition of preventing the hoarding of the coal. The method that I suggest, it seems to me, would appeal to any reasonable man as providing a liberal basis that should not be exceeded. You take the prevailing market price on what? Not on their average sales at all but on the average of the 22 per cent "free coal" (using the figures found in Indiana) as your base figure and starting from that and going up. It seems to me, in other words, that it would be possible to quickly Senator CUMMINS. I am looking at it rather from the abstract standpoint, possibly, than from the concrete. Assuming now that anything we do may be subject to review in the courts in some way, in order to be sure that the price we fix now is higher than any price that might be fixed by the permanent tribunal, we would be compelled to fix so high a price at this time, that it might not be fair to those who use the coal. Mr. THORNE. I qualified my statement, if you remember, Senator, except for other increases in maintenance or other increases in the cost of production. I now add the other clause, except by action of Congress. Senator CUMMINS. If, however, we made a mistake in the cost of production and it could be shown thereafter that we had made it, the permanent tribunal would have no power to correct it? Mr. THORNE. Did not the clause that I last suggested care for that? Senator CUMMINS. These take care of any increase in cost? Mr. THORNE. No; but my last clause takes care of what you now suggest, Senator. I said, except by act of Congress, it should not be exceeded. Senator CUMMINS. Of course, that would cure it, to bring it back here. Mr. THORNE. It would give it more permanence, a greater stability. The CHAIRMAN. Are there any further questions? We are much obliged to you, Mr. Thorne. Mr. THORNE. I thank you, gentlemen. (The statement of coal contracts entered into or effective since January 1, 1917, referred to in Mr. Thorne's statement to the committee, is here printed in full, as follows:) Statement of coal contracts entered into or effective since Jan. 1, 1917. Name of railroad. Date of Expiration of contract. contract. Cost per net ton. ↑ Coal field and remarks. Norfolk Southern R. R. July 1, 1916 June 30, 1917 $1f. o. b. mines.. Virginia. |