Senator CUMMINS. You do not expect any diminution in industrial activity? Mr. MODERWELL. No, sir; but, Senator, the railroads are all stocking coal this summer, something many of them have not done before. They are putting large stocks of coal on the ground. Senator CUMMINS. Why is that? If the railroads, as I assume, are managed by men of intelligence and foresight? Now, if they believe with you that the supply will be greater next winter in proportion to the demand, why are they accumulating a supply at the present enormous prices? Mr. MODERWELL. In my experience in the past only one or two have. But now I think it is almost universal that they are trying to accumulate stocks, partly of course with the idea that they feel they have got a duty to the public and they can not afford to fail next winter. Senator POINDEXTER. Have you ever investigated what percentage of the coal used by transportation companies is mined by themselves? Mr. MODERWELL. I have not those figures; no, sir. There is quite a large percentage of it in Illinois and Indiana. Senator POINDEXTER. Do you believe that within any reasonable time the profit on coal will come down to $1 a ton? Mr. MODERWELL. Why, Senator, if you will wait until some of these gentlemen get here, that have the figures. I think they will show you that coal men have not been making $1 a ton. The man getting $1 a ton profit now is the exception rather than the rule in mine run. Senator POINDEXTER. I thought you answered Senator Kellogg in a way that would indicate they were making $2 or $3. Mr. MODERWELL. I am speaking of what we call free coal on the market. There is a tremendous amount of coal being sold. Senator POINDEXTER. You sell all the coal you produce. I assume? Mr. MODERWELL. We contract a great deal of it at low prices by the year. Unfortunately my company had a two-year contract made a year ago last April. Senator POINDEXTER. That free coal that is not under contract is being sold at much larger profit than $1 a ton, is it not? Mr. MODERWELL. That may be, but it brings your general average down to a point Senator POINDEXTER. Your contracts will expire before long, will they not? Mr. MODERWELL. The 1st of April. Senator POINDEXTER. And after that time do you see any chance at all of reducing the profit on coal to even $1 a ton? Mr. MODERWELL. I do not think I could answer that question intelligently. I have not any means of knowing. I could not answer offhand. Senator KELLOGG. Now, if I may be permitted, Senator Cummins, I should like to ask a question. Senator CUMMINS. I have no control over it at all. The CHAIRMAN. Senator Kellogg. Senator KELLOGG. I do not think that the statement is accurate that I was opposed to bills regulating coal produced. I have not made any such statement at all. Do you know of any reason why a coal miner should be required to sell to a railroad company at the price of a year ago, irrespective of the cost of production, any more than to sell to the general public at that same price? Mr. MODERWELL. No, sir. Senator KELLOGG. Is not the general public entitled to get as much consideration as the railroad companies? Mr. MODERWELL. Yes, sir. Senator KELLOGG. Is there any economic reason why they should be forced to accept prices of a year ago from one purchaser and not from another? Mr. MODERWELL. No, sir. Senator, as a matter of fact, if the railroads of this country had paid the price for coal which they ought to have paid in the past they would be able to buy their coal very much cheaper to-day than they can. It is a very safe proposition to say that the railroads have bought their coal at less than cost of production for very many years and we have been obliged to make our profit out of the smaller consumers. Senator KELLOGG. This bill applies to other commodities than coal. The railroads buy from thousands of producers and manufacturers all over the country, do they not? Mr. MODERWELL. I presume so; yes, sir. Senator KELLOGG. In nearly every State and fair-sized community of every State, is that not true? Mr. MODERWELL. Yes, sir. Senator KELLOGG. All kinds of products and if the ultimate price they should receive for those products had to be tried out in a court by a commission appointed by the President it would take an enormous force, and the principal business between the railroads and the public would be in litigation, would it not? Mr. MODERWELL. I should think so. It would seem like a pretty big task. Senator KELLOGG. And you say that 10 per cent, in addition to cost, would allow a fair profit to all producers and sellers to the railroads? Mr. MODERWELL. Of other commodities than coal? Senator KELLOGG. Yes. Mr. MODERWELL. Oh, no; I know nothing about that, but I should not suppose it would. Senator KELLOGG. It might be a much more than fair profit in some cases and much less in others. That is all I wish to ask. The CHAIRMAN. Mr. Moderwell, I want to recapitulate briefly what we have gone over. As I understand it the total production of both soft and hard coal in this country has been about 600,000,000 tons? Mr. MODERWELL. It was last year. The CHAIRMAN. Have you any idea what the production will probably be this year? Mr. MODERWELL. One of my associates on the committee, who has to do with the anthracite field, estimates that the production of anthracite will be 12 to 13 per cent more than it was a year ago— approximately 90,000,000 tons against 80,000,000 tons last year. The CHAIRMAN. How about the soft coal? Mr. MODERWELL. Bituminous coal, if the ratio of increase keeps up that exists now, it will be 650,000,000 tons of bituminous coal. The CHAIRMAN. So that the total production upon that estimate will increase from the 600,000,000 of last year to nearly 700,000,000 this year? Mr. MODERWELL. Yes, sir. The CHAIRMAN. Do you think that increase in production is largely due to the increase in market price? Mr. MODERWELL. Oh, that has had a great deal to do with it, of course. The CHAIRMAN. That stimulates production, does it not? Mr. MODERWELL. Surely. A number of mines are opening now that never opened before. The CHAIRMAN. Is it your opinion there will be a still larger production next year? Mr. MODERWELL. Yes, sir. The CHAIRMAN. If the war continues? Mr. MODERWELL. Dependent upon the ability of the railroads to carry it, and I presume they will increase their facilities to some extent. The CHAIRMAN. Do you know how much the foreign requirement will be this year-the requirement of the allies from us? Mr. MODERWELL. Italy has asked us to furnish them 350,000 tons a month of what Senator Pomerene called "battleship coal "-coal for their navy, as I understand it. France wants approximately, I think it is 6,000,000 tons they have asked us for. Senator POMERENE. You mean 6,000,000 tons a year? Mr. MODERWELL. Yes, sir; a year. The CHAIRMAN. And Italy has asked us for about 4,000,000 tons a year? Mr. MODERWELL. About 4,200,000 tons a year. The CHAIRMAN. That means 10,000,000 tons? Mr. MODERWELL. Yes, sir. The CHAIRMAN. That is not a very largely increased demand, is it? Mr. MODERWELL. Not in itself; no, sir. The CHAIRMAN. Is there likely to come an increase from any other source that you know of? Mr. MODERWELL. This gentleman from Canada I spoke of-the coal controller up there-thinks there will be, I think he said, three or four million tons needed there in excess of what we have given them in the past. The CHAIRMAN. Three or four million tons a year? Mr. MODERWELL. Yes, sir. The CHAIRMAN. And that is not a very large proportion of six hundred or seven hundred million tons, is it? Mr. MODERWELL. No, sir. The CHAIRMAN. Why will this country require for its uses so large an increase, from 600,000,000 tons to 650,000,000 tons? Mr. MODERWELL. It looks to me as though industry in this country is speeded up to a point now where it could not go very much higher. I am not an expert on that subject, but I understand the munition factories and the steel mills and industries of that kind are working 24 hours a day, up to the limit of human capacity right now. The CHAIRMAN. You say it has been the increased demand that has raised the price, and yet the increased demand does not seem to be very large as compared with the supply of a year ago, but you say that increased price has not affected your production, the bulk of the production of the coal mines is already under contract at lower prices, is that so? Mr. MODERWELL. Yes, sir. The CHAIRMAN. Would you say the majority of it? Mr. MODERWELL. It is in the country I am familiar with. I can not speak of industries as a whole. The CHAIRMAN. Would you say three-fourths of it was? Mr. MODERWELL. Well, I should say more than one-half of it was. The CHAIRMAN. You also have stated that coal operators regard themselves as entitled to an increased price brought about by this extraordinary demand because for 15 years they have been operating at a loss. Do you mean to say, take the bituminous coal operators as a whole, that during 15 years they have been operating their mines at a loss? Mr. MODERWELL. A man largely speaks out of his own experience and things he knows of. I can speak principally about the situation in Illinois. The CHAIRMAN. Well, take Illinois, then. When you are speaking of Illinois, are you speaking simply of your own experience? Mr. MODERWELL. I am speaking of my knowledge-what I know of the State of Illinois. There have been not less than 25 receiverships of large coal operators in Illinois in the past two years. The CHAIRMAN. How many coal companies have you got there? Mr. MODERWELL. I do not know how many companies we have. We have approximately 300 mines, shipping mines. The CHAIRMAN. What portion of the production was furnished by these 25 mines? Mr. MODERWELL. A pretty large proportion, perhaps 40, well, not 40, but a large proportion, perhaps 30 per cent. They were substantial companies. The CHAIRMAN. Was that not due to the fact, perhaps, that they had acquired too much area in order to control the output of the future? Mr. MODERWELL. I am afraid it was due largely to the fact that there was an overproduction of coal, an oversupply of coal. Mines up to this year in Illinois have only worked about 170 to 175 days a year out of a possible 315 days, and that is the history of the coal business in Illinois. The CHAIRMAN. You did not mean to say they have all conducted their business at a loss during the last 15 years? Mr. MODERWELL. Not the industry as a whole. I get figures on a large scale which show the industry as a whole is not profitable. The CHAIRMAN. You have indicated if this matter were left unregulated by law and the coal operators were given to understand that they can not regulate it without violating the Sherman law, that they will agree, that they will fix a price that will meet the popular demand for a reduction? Mr. MODERWELL. I am inclined to think so, from what I know of them. I think that can be done. The CHAIRMAN. How large a percentage of the coal mining interests is interested in this convocation you have now? Mr. MODERWELL. We have called the prominent coal operators of the entire United States, but I do not know how many are here. The CHAIRMAN. What percentage of the ownership of the coal mines in the country is represented at this convocation that is being held under the call of Mr. Peabody? Mr. MODERWELL. I could not answer the question, for we were obliged to come away before this meeting convened and there was no roll called, but a large tonnage was represented, not so many operators. The CHAIRMAN. Would you hope to form an organization amongst the coal operators that would result in fixing a fair price? Mr. MODERWELL. I think we could do that if we were permitted to do it; yes, sir. The CHAIRMAN. Have you any idea what that figure would be? Mr. MODERWELL. No, sir; not for the country as a whole; no, sir; I could not. The CHAIRMAN. The contention of the coal operators at present is that as they have had 15 lean years they are now entitled to a fat year; is that it? Mr. MODERWELL. There are some of them who are not as thoughtful perhaps as they might be. We are all human, Senator. We are just like everybody else, and we are just as patriotic as anybody else if you give us the chance. The CHAIRMAN. You will find the same thing in every locality, a rise in price everywhere, and no particular industry is chargeable with the fault, and the only thing we have to deal with in legislation is whether we can not by some law, some regulation, guard against these soaring prices which are bound in the end to produce dislocations of every kind, labor disturbances, food riots, every possible complication that will embarass us in our supreme contention abroad with contentions at home. Now, of course, we could be very glad to listen to any proposal from a well organized operators' union looking to a determination of fair prices; we would be glad to consider it, but I imagine there has been no time for you to come to that conclusion, and we have to hurry on with that legislation. Mr. MODERWELL. Yes, sir. The CHAIRMAN. I will present a communication from Mr. Peabody, chairman of the subcommittee on coal production of the Council of National Defense and ask that it be printed in the Record. (The communication referred to is here printed in full as follows:) COUNCIL OF NATIONAL DEFENSE, MY DEAR SENATOR: I am inclosing extracts from a conference I had with Mr. Joseph Davies, private secretary to the Right Hon. Lloyd-George, on the manner in which the coal industry is being handled in England. I had this interview in my office and am giving you extracts which might be of use as a precedent to follow: 66 WAGE AGREEMENTS. "All wage agreements entered into between operators and mine workers must be approved by the Government. In the Welsh mines wage scales have been adjusted principally with regard to the selling prices of coal, and to some extent with regard to the cost of food and living expenses. In the northern |