HD900G M^^f K.^*' ^^■Mi. r iK>^' ' . I ■S: '4 4)1^^' '^^!..:>-^^ miiMr- '>-J-A Cornell University Library HD 9006.A5 1919m Extension of the Food-control act.Hearin 3 1924 013 805 704 JXTENSION OF THE FOOD-CONTROL ACT HEAEINGS BEFORE THE COMMITTEE ON AGRICULTURE HOUSE OF REPRESENTATIVES SIXTY-SIXTH CONGRESS FIRST SESSION OX H. R. 10376 A ^"^ NOVEMBER 7, 1919 fl */) / y/^' PART 1 WASHINGTON (JOMCUNMENT }>UINTINlJ OKFICIC iniiJ COMMITTEE ON AGRICULTURE. House op Representatives. GILBEET N. HAUGBN, Iowa, Chairman. JAMES c. Mclaughlin, MioUgau. SYDNEY ANDERSON, Minnesota. WILLIAM W. WILSON, Illinois. CHARLES B. WARD, New York. WILLIAM B. MCKINLEY, Illinois. ELIJAH C. HUTCHINSON, New Jersey. FEED S. PURNELL, Indiana. EDWARD VOIGT, Wisconsin. M. O. MCLAUGHLIN, Nebraska. EVAN J. JONES, Pennsylvania. CARL W. RIDDICK, Montana. J. N. TINCHER, Kansas. J. KUHIO KALANIANAOLE, Hawaii. GORDON LEE, Georgia. EZEKIEL S. CANDLER, Mississippi. _ J. THOMAS HEFLIN, Alabama. THOMAS L. EUBEY, Missouri. JAMES YOUNG, Texas. HENDERSON M. JACOWAY, Arkansas. JOHN V. LESHER, Pennsylvania. JOHN W. Rainey, Illinois. L. G. Hauoen, Clerk. /J-'E -6 >. o EXTENSION OF THE FOOD-CONTEOL ACT. Committee on Agriculture, House or Representatives, Friday, November 7, 1919\ The committee met at 3.30 o'clock p. m., Hon. Gilbert N. Haugen (chairman) presiding. The Chairman. We have before us House resolution 10376, to amend section 24 of the food-control act, August 10, 1917, a bill iden- tical with the drafts proposed by the Attorney General. Without objection, the Chair will have incorporated in the hear- ings the Attorney General's communication to the Speaker, together with a draft of his recommendation. Office of the Aitoeney General, * Washington, D. C, October SO, 1919. Hon. Peedeeick H. Gillett, Speaker of the Souse, Wasliington, D. C. Mt Deab Mk. Speaker f Existing conditions in the country very plainly require an extension beyond the war period of the food and fuel control act, approved August 10, 1917. I inclose a draft of an amendment to section 24 of the act which will keep it in force six months after the existing state of war between the United States and Germany shall have tfermlnated. May I ask you to kindly refer this com- munication to the proper committee of the House of Representatives for prompt consideration? I shall, of course, hold myself in readiness to appear before the committee at any time to explain the purpose of the amendment, If the committee should desire to hear me. Very respectfully, yours, A. Mitchell Palmee. AN ACT To amend an act entitled "An act to provide further for the national security and defense by encouraging the production, conserving the supply, and controlling the distribution of food products and fuel," approved August 10, 1917, Be it enacted by the Senate and Souse of Representatives of the United States of America in Congress assembled, That section 24 of the act entitled "An act to provide further for the national security and defense by encouraging the production, conserving the supply, and controlling the distribution of food products and fuel," approved August 10, 1917, be amended to read as follows : " Sec. 24. That the provisions of this act shall cease to be in effect six months after the existing state of war Jbetween the United States and Germany shall have terminated, and the fact and date of such termination shall be ascer- tained and proclaimed by the President; but the termination of this act shall not affect any act done or any right or obligation accruing or accrued, or any suit or proceeding had or commenced in any civil case before the said termina- tion pursuant to this act ; but all rights and liabilities under this act arising before its termination sTiall continue and may be enforced in the same manner as if the act had not terminated. Any offense committed and all penalties, forfeitures, or liabilities incurred prior to such termination may be prosecuted or punished In the same manner and with the same effect as if this act had not been terminated. We have with us Attorney General Palmer. May we hear from you, General Palmer? 148161— 19— PT 1 g 4 EXTENSION OF THE FOOD-CONTKOL ACT. STATEMENT OF HON. A. MITCHELL PALMER, ATTORNEY GENERAL. Mr. Palmee. Mr. Chairman and gentlemen of the committee, the bill which I submitted, which I assume is the one the cha.irinan, has referred to, provides for only one thing, and that is to extend all of the provisions of the so-called Lever Food-Control Act for six months, beyond the termination of the war, the termination of the war to be determined in the same manner as now provided in the act. Under the law as it stands to-day all of the remedies that are pro- vided for in the act it will be impossible to apply after peace finally comes, and all of the things which are therein declared to be un- lawful will, after peace coiiies, no longer be unlawful. My reason for asking this is very simple. The conditions in the country, following the peace, make it even more necessary that these governmental restrictions shall be continued than the conditions which prevailed during the war itself. The general purpose of the act, when passed as a war-time measure, was to increase production and distribution for the strengthening of the Government's arm in the war, under such restrictions as would 'make the increase, without serious consequences to the people them- selves. In other words, the general purpose of it was to maintain production and, at the same time, protect the people against the re- sult of war-time conditions, which might result in very high prices. I have seen a chart, prepared by the War Industries Board,- giving ihe result of control of the prices of necessary commodities during the war, arid the result of the lack of control of other, commodities during the war, and it is a very interesting and illuminating docu- ment. The chart shows that the moment Federal control began the spread between the prices of controlled and uncontrolled commodities began to widen. When the armistice came, the spread between con- trolled and uncontrolled prices was very wide, the prices of con- trolled products being constantly downward; the prices of uncon- trolled products constantly upward. Now, since the armistice, prices have very largely increased. It would' be idle to attempt to give figures, you all know them as well as I do, and we do not need the figures to prove it, but it has seemed to me that unless there is a continuance over the control of the prices of certain kinds of prod- ucts, the after-war conditions are morely likely to result in largely increased prices than the conditions during the war itself. Of course, I do not contend, gentlemen, that the use of this law will of itself protect the people against high prices or will result in any large and sweeping reduction of prices. In large measure what we know as the high cost of living in this country is, of course, due to economic conditions, which are world-wide in their scope, and which are based upon circumstances which must change, in the natural course of time before we can hope for the results to be different. The tremendous withdrawal of men from the ranks of productive industry and the placing of millions upon millions of the best men of the world in what I may call the ranks of destructive industry, is the circumstance that is chiefly responsible, of course, for high prices. When the active fighting- stopped on November 11, 1918, the world was filled as it never was before with stocks of goods which were useful for destructive purposes, and depleted, as it never EXTENSION OF THE FOOD-CONTROL ACT. & was before, of the stocks of goods which were necessary for con- structive industry. The world was chock full of the things which made for death, and was swept clean of the things which made foi* life. That, of course, is the fact, with the law of supply and demand operating, resulting in high prices. So, gentlemen, should the de- mand constantly increase, it will take nothing but a readjustment following peace to work out a change in that situation. I refer to these things for the purpose only of drawing a con- clusion, because they are as familiar to you as to me. And the im- mense borrowings of the Nation have had a tremendous effect upon prices. Every nation involved in the war borrowed all the money it could borrow from its people, then it spent it amongst the people, and then it borrowed it again, spent it again, until credits were pyramided high in every bank of the world. While it may be per- fectly true, as the Federal Reserve Board says, there is no inflation of currency, because there is as much gold behind the money as ever there was, there is an immense expansion, if not inflation, of credit currency. After all, we pay our debts, not with regular money, but with promises to pay — checks or notes, or something of that kind. These are economic conditions which the law-making department of the Government, or the law-enforcing department of the Govern- ment, can not change, but advantage is constantly being taken, and will be taken as long as those economic conditions remain by un- scrupulous persons of those very conditions to further enhance prices and make the burden of living greater for the people, and right there is the necessity for this law. The necessity for it continues as long as those economic conditions continue to make the burden heavy, and if it was wise and proper, therefore, to have this thing in the public interest during the war, it is even more necessary to the public interest, in my judgment, to have it now when we can prevent these unconscionable persons from taking advantage of these economic conditions to make prices higher. That is the whole argument for it, as far as I am concerned. As to the legal power of Congress to pass this kind of law I have no question. Under the war power the Congress took over the rail- roads, and because it was a necessary part of the business of taking them over. Congress provided the Government should keep them for a period of 21 months, I think it was, after the war, or might keep them 21 months after the war. If Congress has the right under ite war power to exercise some sort of control over the production and distribution of necessaries, and that control is being exercised, it has a perfect right, I think, to provide for the lap-over beyond the war, when the conditions created by the war bear even more heavily upon the people than during the war itself. Mr. PuENELL. Do you think economic conditions that you mention here as necessary for this extension will have banished in six months? Mr. Palmer. No; not banished. Mr. PuENELx,. I mean — what I am getting at is, do you think there will be a request for an additional extension? Mr. Palmer. Well, there might be. Mr. Jones. All actions started before the termination of the war, under the original act and the amendment passed by Congress, will continue until the termination of the actions, will they not? Mr. Pat.mer. Yes. sir. 6 EXTENSION OF THE FOOD-OONTKOL' ACT. Mr. Jones. This will simply be an opportunity to start new actions in case the necessity arose after peace is declared ? Mr. Palmer. Yes ; but the value of this act is not in respect to the actions we actually began under it, but in the moral force of the law. We have not been compelled to make many arrests, we have got a few men in jail out West somewhere under the straight-out profiteering section; we have made some arrests, and have given them pretty general publicity, and profiteering, straight out is taboo now be- cause this law is on the statute books, not because we have actually made arrests. Mr. Jones. If the newspaper articles are correct as to the return of the railroads, they are intending to return on the first of the year. Is that not rather inconsistent with the position you take for the extension of the other things? Mr. Palmer. No ; I was talking about the power of Congress. Mr. Jones. I agree with you on that absolutely, but should not the Government continue the operation and control of the railroads if the emergency is so apparent with regard to food products ? Mr. Palmer. That is a big question. I should not like to discuss the railroad problem here to-day. I think we want to get out of all these things. Mr. Jones. I agree with you. Mr. CandlEe. What have you to say as to the suggestion made by Mr. Purnell as to whether or not a six months' extension would be sufficient, or whether or not it should be a longer time? Mr. Palmer. My suggestion was six months chiefly because that period has a closer relation to the war conditions. I think the same argument would apply to a year's extension. Of course there is this thing to be thought of: You may overdo this kind of restrictive legislation. In peace times the people get exceedingly restless under restrictive or repressive laws, and the very benefit of it might be lost by reason of resentment against it if it goes beyond the period of its actual necessity, therefore I would adopt the six months' idea without closing the door against a further extension, if that should prove desirable. Mr. Candler. It is your idea, then, to make it six months, and if the necessity seemed to exist at the expiration of that time that would justify it and would not affect the people in the manner you have mentioned, that then it could be extended farther ? Mr. Palmer. Yes; that gives the public notice that we are not going any farther than we absolutely must, and makes it a matter of good will — ^helps the good will of the thing. Mr. McLaughlin of Michigan. I was going on the theory, per- haps, that these unusual conditions would continue to exist a long time ; they might not be called unusual ; they will be normal, and it might be proper for us to invoke the war power of the Government in handling them. Mr. Palmer. Well, that is very likely. I am pretty liberal myself in advocating the use of the interstate commerce power, the power to regulate interstate commerce in these matters. I think we could extend this act very much longer under the commerce clause of the Constitution. Mr. McLaughlin of Michigan. Do you think it would be advisable to extend the life of all these sections, or pick out the ones under EXTENSION" OF THE EOOD-CONTROL ACT. 7 which you would wish, or might wish, to operate, saying nothing about the others, or repeal the others and continue the life of those you wished ? There are some there that I would think ought not to be extended, or at least it would seem so. Mr. Palmer. I would not like to see any part of it repealed, be- cause "it is pretty hard to prophecy just what it may be necessary to do. We thought, when we were here before, that we probably never would be required to use the regulations of the Fuel Administration, and it certainly was not in my mind when I asked for amendments here some months ago that we would ever reestablish either the Fuel of the Food Administration. I think I said it would be hard to do, in fact, impossible, in answer to a question why we would not increase the Food Administration. But we have found it abso- lutely necessary, in the public interest, to reestablish the Fuel Ad- ministration, and the Fuel Administrator has put in force his rules and regulations, and his sole authority for it is this law, and if this strike situation should not clear up in the coal trade it will undoubt- edly be necessary to continvie the Fuel Administration for some time. The Chairman. How about section 16, giving the President au- thority to fix the price of wheat ? It would not be necessary to con- tinue that, would it ? Mr. Palmer. I do not know. The Chairman. It is not the purpose to fix the price of wheat next year now, is it ? Mr. Palmer. I cain not say anything about that, but what harm ? If we are going to extend the law, why not extend all of it ? Mr. Anderson. May I ask, Mr. Palmer, whether outside of the use of the powers conferred upon the Fuel Administrator in the act, the request for this legislation has any other relation to the coal strike? Mr. Palmer. No ; not that I can think of. Of course all the legal action that we contemplated has already been taken. We do not know what the future may develop. So far as the facts now present themselves, we are in court with the only case we contemplate. What- ever else would be incident to that case, and if the act went out of existence, which it might do if the treaty were ratified, we would still be in court with that case, but I think with that case pending we ought to have the power at the same time to use the terms of this law, prevent the operators from making any arrangement or agree- ment that would decrease production and enhance prices, I think having brought suit against the mine workers' union to be prevented by the running out of this statute from bringing an action against the operators, if the case should develop that they have violated the law, would be unfortunate. Mr. Anderson. You expressed the opinion that we had the power under the Constitution to extend this act. I concede that we have the power to extend it with respect to matters that are clearly con- nected with the closing out of war functions, but there is some ques- tion in my mind as to whether we have the power to extend it solely for the purpose of internal regulation. I think we can reach it by entirely different methods. Mr. Palmer. It seems to me that if these high prices are the result of war conditions that the Government is justified in keeping its 8 EXTENSION or THE FOOD-CONTEOL ACT. hand on the situation as long as war conditions continue to be burden- some. Mr. Andekson. There is a difference, it seems, between the justifica- tion of the Government for doing a thing and its power to do a thing in a certain way. For instance, I would concede instantly that the power under the war clause of the Constitution would continue and extend, for instance, to enforcing terms of peace or for purposes of demobilization, but when we extend those powers purely for the pur- pose of internal regulation, which might be accomplished in any other way, say under another power of the Constitution which operates in peace times, it seems to me that that is a different situation. Mr. Palmek. The internal regulation of war conditions which are lapping over into peace times. Mr. Anderson. I loiow, but this condition of high prices might co'n- tinue for the next 100 years. Mr. Palmer. Yes. I think they will be very much higher than they were before the war for a long time. We have got to reach a higher price level before we got back to the prewar prices. But that is not quite it. Conditions now are purely resultant from war and they are so bad that opportunity is present for taking advantage of them. Mr. Jones. The coal situation is not resultant from the war. Mr. Palmer. When the whole price level on both sides of the eco- nomic fence gets stabilized, even at a higher level, there will not be any excuse for this kind of law, but it is not yet stabilized even oil a higher level. Mr. Jones. The coal condition is not resultant of the war, is it? 'The strike has not been produced because of the war ? Mr. Palmer. To say that the war is the cause of the strike, no ; but (he failure of the men to carry out their contract to work at certain wages during the war is primarily at the bottom of the trouble. Mr. Anderson. The conception of this war legislation, as I under- stand it, is that it was essential in the conduct of the war to do cer- tain things, and that our power to do those things or to authorize them to be done was limited absolutely Mr. Palmer. Yes. Mr. Anderson. Limited absolutely by our ability to demonstrate, either by conditions that existed or in some other way, that the thing had to be done as an essential in the prosecution of the war. Mr. Palmer. Yes. Mr. Anderson. Or in the winding-up conditions that existed. Mr. Palmer. In the very doing of those things you create condi- tions which run over into peace times, and the question is, "Are you going to take the support out from under them the moment that pea.e (omes, or are you going to let them slough off normally into peace times ? " The fact that war conditions made it necessary to build up this Fuel Administration is responsible for the Fuel Ad- ministration operating now. It is operating, and it would be a very serious thing if this act were chopped off to-morrow and the Fuel Administrator would have to take his hand off the fuel situation in this emergency. Yet his operations are, under that law, created because of war conditions. It is the same principle that actuated yon in extending the period of railroad control to 21 months EXTONSION OF THE POOD-CONTROL >GT. 9 Mr. McLaughlin of Michigan. In section 5,. which is called the licensing section, when you were here before you said there was no intention to operate under that and that you practically could not operate under it, that the machinery was all gone and you could not get it together again. Is there any need of continuing section 5 ? Mr. Palmer. I had reference at that time particularly to the Food Administration ; that we could not rebuild that. There is no present intention on anybody's part, so far as I know, to put the licensing system into effect again. I do not think that if it is continued that we will ever use it. But I imagine conditions which might make it necessary. Mr. McLaughlin of Michigan. Also the section in regard to boards of trade, and so forth. Is thei-e any idea that that would be needed ? Mr. Palmek. I have not any plans that contemplate using it? Mr. McLaughlin of Michigan. Also section 15 in regard to using foods in the production of distilled spirits for bevarage purposfts. Is there any reason for cojitinuing that section after peace is de- clared? Mr. Palmer. Not after next January. I think the other act pos- sibly takes care of that. The Chairman. How about the section authorizing the President to buy and sell for cash, wheat, flour, potatoes, .meal, meat, and so on ? Is the Government doing anything with that now ? Mr. Palmer. The wheat The Chairman. It covers wheat, flour, meal, beans, potatoes, etc. Mr. Palmer. The wheat director is still operating, you know. The Chairman. But under another act. Mr. McLaughlin of Michigan. Yes; he is operating under an- other act. Mr. Palmer. Yes: and under tliis act also. I think he is operat- ing under the President's proclamation issued in pursuance of this law, is he not? Mr. Anderson. No; I think that was covered by the amendment that was passed. The Chairman. The general contention is that the act should be repealed so far as dealing with the grain corporation, but we are dealing simply with this act. Will it be necessary to continue the section which authorizes the President to buy and sell for cash, wheat, potatoes, etc. Mr. Palmer. I think we ought to keep in mind, Mr. Chairman, ■what I said a little while ago, that you must have public support for a law of this kind if it is going to be effective. If you begin dis- criminating between industries by regulating certain ones and spe- cifically omitting others from the regulation, you add to the unrest. The Chairman. There has been discrimination all the time be- tween the industries, so far as that goes. Mr. Palmer. Yes ; but why make it worse ? The Chairman. The result was that it depressed prices to one and increased prices to others. It seems unnecessary to continue that practice unless there is some good reason for it. It would shorten the act ; we might better get down exactly to what is necessary. If some of these things have become obsolete, why not wipe them off the record? 10 EXTENSION OF THE FOOD-CONTBOL ACT. Mr. Palmer. The shortest thin§ to do is to just extend it all for six months. That is the easiest thing to explain to the House. The minute you start repealing a part of it and leaving. a part of it in force, you are going to run up against a contest somewhere.. At least, that is what my experience tells me. The Chairman. Now, with reference to section 12, authorizing the requisition of food for the Army, and so on. Mr. McLaughlin of Michigan. Section 12 states : That whenever the President shall find it necessary to secure an adequate supply of necessaries for the support of the Army or the maintenance of the Navy, or for any other public use in connection with the common defense, he is authorized to requisition and take over, for use or operation by the Govern- ment, any factory, packing house, oil pipe line, mine, or other plant, etc. Mr. Palmer. I think if you are going to continue the act that I would continue that. Mr. McLaughlin of Michigan. The words " or for any other pub- lic use " would not authorize the taking over of the mines under the present situation, would it? Mr. Palmer. It says for any other public use connected with the common defense. I think as long as the war is on — and I am not saying this with the slightest intention, so far as I know, of doing it— 'but as long as the war is on, and as long as the Government is charged with the duty of running the railroads, troops have got to be transported and all that, and the President will probably have the power to take over the mines, if he saw fit. Mr. Jones. In other words, he has the powers under this act that the act gives him until the termination of the act. Mr. Palmer. Yes ; I think so. The Chairman. Section 13 says: * * * he is authorized to prescribe such regulations governing, or may either wholly or partly prohibit operations, practices, and transactions (m, in, or under the rules of any exc]iange, board of trade, or similar institution, or place of business as he may find essential in order to prevent, correct, or re- move such evil practices, etc. Are they now being regulated by the Federal Government? Mr. Palmer. I think to some extent, yes. That is a very helpful section, and the fact that we have had it has been helpful in restrain- ing speculation. Mr. Purnell. What are the sections of the act that need to be continued ? Obviously, some of them would not be invoked ? Mr. Palmer. I haven't examined the act critically for the purpose of determining that, but I can do so. Mr. Jones. I thought perhaps you had two or three high points in your mind. Mr. Palmer. There are high points in my mind. It is highly im- portant that section 4 should be continued. Mr. Jones. And section 8, probably? The Chairman. No ; section 8 has been repealed. Mr. Palmer. Section 7 Mr. Jones. Section 8 was the destruction of food. Mr, Palmer. Sections 8 and 9 were repealed by the amendment. The Chairman. Yes; 8 and 9 were repealed, and that is all em- bodied under section 4. Mr. Jones. Yes ; that is correct. EXTENSION OF THE FOOD-CONTEOL ACT. 11 Mr. Palmer. I would continue sections 11, 12, 13, 14, and 17. The Chairman. Referring to section 14, it is not contemplated to fix the price of wheat, is it ? Mr. Palmer. Not that I know of, but I would not repeal the law at this time. That is all th-at I am referring to. Mr. Jones. What condition has arisen since you were before the committee the other time and asking for further amendments at that time— what condition has arisen since then to justify this further amendment to this bill. At that time was it not just as apparent that the necessity might arise for an extension of six months? Mr. Palmer. Yes, sir; I asked for it at that time. Mr. Jones. I did not recall. Mr. Palmer. Yes ; and the President, in liis message to Congress at that time, asked for it. Mr. Jones. I thought probably conditions had arisen since then that justify your request now? - Mr. Palmer. No, sir; the conditions are continuing, just as we anticipated. The Chairman. May we have your opinion as to the other sec- tions? Section 14, 1 believe, is the last one you mentioned. Mr. Palmer. I think it is necessary to have sections 1, 2, 3, 4, 5, 6, 7, 11, 12, 13, 17, and 21. Mr. PxTRNELL. We have got to pass this. Mr. Palmer. Section 21 ought to be left in, I suppose. Sections 22 and 23, they are just definitions; section 24 is what we propose to amend, and should be left in as amended; section 25 is very impor- tant ; section 26 ; aiid I do not know what to say about section 27. The Chairman. Section 26 goes in, does it? Mr. Palmer. Yes. Mr. Pttrnell. I did not catch what you said in reference to section 14, which gives the President the power to fix the price of wheat. Mr. Palmer. I should say this: The matter of fixing the price of wheat is entirely out of my jurisdiction. I do not know anything about it and have not had anything to do with it. I know of noth- ing, no action of the Government, which contemplates the use of this section, but I can conceive it might be proper to have it in an emer- gency, and I think further that it is unwise to spoil the support which would be given by the public to this reconstructive measure after the war by making any further discriminations. Mr. Palmer. The wheat section may or may not be important. I do not know. Is there anything else, gentlemen, that I can say? The Chairman. What would you say about making the 6 months extension a shorter or a longer time? It has been suggested that the time ought to be cut down, and if an extension is to be made it might be made for a shorter time, Congress will be in session later, and if it is found necessary at that time to extend it, it could be extended at that time. Mr, Palmer. I think that 6 months is the shortest time that you ought to extend it for. Mr. EuBEY. It occurs to me that the simplest and the best way would be a pass a concurrent resolution extending this 6 months, and this will give you, as a department of the Government, the use of any provisions in the laws you might want to use, and other 12 EXTENSION OF THE FOOU-CONTBOL ACT. provisions, such as have been .mentioned here to-day,, have not been used, and probably never wUl be used. It occurred to me that, rather than reenact a certain section of the law, that the best way would be to pass a joint concurrent resolution. Mr. Palmer. And that would have the same effect as amending section 24. Mr. EuBEx. That would have the same effect as amending section 24, and if we take up here a lot of sections and reenact certain sec- tions, we will have a lot of trouble on the floor, I am afraid. Mr. McLatjghlin of Michigan. It would possibly mean that there would be a lot of amendments on the floor. Mr. RuBET. And if you would pass a concurrent resolution ex- tending the law, you would get rid of all of those amendments ? Mr. Palmer. I think, in addition to that, it would have this Jfurther bad effect, that the country would get the impression that you were passing a new law. When this amendment went out be- fore, a large part of the country got the impression that a new law was being passed ; when the sections, as amended, were printed in the newspapers all through the country, the idea was prevalent that we were putting into effect a new law. As a matter of fact, we did only two things: we simply put wearing apparel under the list of necessities and adde,d a penalty for profiteering. That is all we did. If you pass or reenacted a part of this, the country will think that you are legislating a new law, after this is all over. I think that your suggestion is splendid. I think we would be doing it in the simplest way, or by amending this section 24, and either one of those methods is what I think ought to be done. Mr. McLattghun of Michigan. Either method would not have the effect, would it, of making a reappropriation here of anything that was appropriated here ? Mr. Palmer. No, no. I think that the money appropriated there is appropriated to be expended in a specific time, and the time- has expired, if I am not mistaken. Mr. Anderson. It would not act as reappropriating anything. Mr. McLattghlin of Michigan. I think you are entirely right about that. It occurred to me that in reenacting the law it might possibly act as reappropriating, but I do not think that that would be the effect. The Chairman. The law would terminate, except certain sections. Why extend all the sections, unless it is the purpose to enforce them ? Mr. Palmer. I think that the answer to that is, it is not what sections would have to be enforced and what not, and the quickest and easiest thing to do would be to reenact the old law. The Chairman. The question would be asked, Why extend this act ? And the answer would be to do away with the profiteering, as far as possible. That is the main purpose of the act. Mr. Palmer. Yes ; that is the main purpose of the act. The Chairman. And this section 24 has some significance Mr. Palmer. Certainly. It will make it possible to continue the regulation of the coal industry and so on. The Chairman. So far as the department is concerned, it will have to do with section 24 ? Mr. Palmer. No; there are other regulatory measures there, and as long as they are the law we are immensely aided in our cam- EXTENSION OF THE FOOD-CONTEOL ACT. 13 paign against profiteering. It has the effect to stop resales in the trade and speculation, and all that kind of thing, and we have been able to use that section in stopping speculation, without ac- tually going into court to enforce them, because it is the law. The Chairman. Are there any other questions? Did not you send over a communication to make available certain appropriations for certain purposes? I have sent for the communication. Mr. Palmer. Have you got the letter ? The Chairman. Yes ; here is the communication : Novemhek 4, 1919. Hon. Gilbert X. Halogen, Chairman Commitlcc on Agriculture, House of Representatives. My Dear Me. Haugen : Referring to recent correspondence relative to the extension of the life of the food-control act and to amendments to said act, I wish to invite particular attention to the fact that the funds under the control of this department are available for Investigation only, and can not be used for the vitally essential work of educating and informing the people at large in such manner .is to relieve them as far as possible ^of undue oppression and control the food situation generally. I therefore urge that in connection with this vital matter, which it is needless to say is urgent and innnediate, a joint resolution be introduced providing that the existing appropriation for the detection and prosecution of crimes against the United States be made available for the expense of activities of the character above mentioned. It is believed that the following language would be adequate : "Resolved liy the House of Representatives of the United States of America in Congress assembled. That the appropriation under the control of the Attorney General known as 'Detection and prosecution of crimes' shall be available for services and expenses subsequent to July 1, 1919, in Washing- ton and elsewhere, incident to conducting activities designed to regulate the cost of the necessities of life and improve the abnormal conditions existing in connection therewith." Respectfully, A. Mitchell Palmer, Attorney General. Mr. McLaughlin .of Michigan. Is this six months to run from the declaration of peace by the President? Not six months from this time; is that the idea? Mr. Palmer. Six months from the time that the act under its present term expires. The Department of Justice is gi^en an appropriation of a million dollars, I think it was, under the recent cleficiency appropriation bill, for the detection and investigation of crime. The appropriation was made on the theory that the department would need more than had theretofore been appropriated in its cam- paign against Eeds, and in its campaign against the high cost of living, for violations of this and other laws, and in a general investi- gation of crime. It is a lump-sum appropriation, and the language of it is pretty broad, and we would like to have the privilege of using that appropriation for purposes which have only an incidental relation to the detection and investigation of crime. We have in mind, for instance, an education campaign, to be conducted through- out the country by volunteer organizations, looking to the promotion of a sentiment against waste, against extravagance, for thrift and economy in purchases^ against the "buy now" campaign which is responsible for a part of our high prices, and the campaign of educa- tion as to the causes of the high cost of living and tlie means bv 14 EXTENSION OF THE FOOD-CONTKOL ACT. which the people themselves may change the conditions. How much that would cost, we do not know, and how much of a campaign it would have to be, we can not tell. We would not enter upon it so largely as to make serious inroads into that appropriation, because most of it will be used for the regular detection and investigation of crime. The suggestion was made to you in the letter, in asking, either by resolution or by law, that the appropriation should be made available for the purposes mentioned. Mr. PuENELL. And that is a campaign to be directed by the Department of Justice? Mr. Palmer. Under the direction of the Department of Justice. We are going to do it anyhow, but we will have to cut out that part of it if it is going to cost money, unless we can spend a little money in it. The Chairman. Is that all, gentlemen? We are very much obliged to you. General. Mr. Palmer. You are very welcome. (Thereupon, at 4.12 o'clock p. m., the hearing was adjourned, subject to the call of the chairman.) EXTENSION OF THE FOOD-CONTROL ACT HEARINGS BEFOnB THE COMMITTEE ON AGRICULTURE HOUSE OF EEPRESENTATIVES SIXTY-SIXTH CONGRESS FIltST SESSION ON H. R. 10376 NOVEMBER 11, 1919 PART 2 WASHINGTON GOVEUNMENT PRINTING OFFICE 1910 COMMITTEE ON AGRICULTURK House op Representatives. GILBERT N. HAUGEN, Iowa, Chairman. JAMES C. MCLAUGHLIN, Michigan. SYDNEy ANDERSON, Mitt!i33Dta. WILLIAM W. WILSON, Illinois. CHARLES B. WARD, New Yorlc. WILLIAM B. Mckinley, Illinois. ELUAH C. HUTCHINSON, New Jersey. FEED S. PURNELL, Indiana. EDWARD VOIGT, Wisconsin. M. O. MCLAUGHLIN, Nebraska. EVAN J. JONES, Pennsylvania. CARL W. RIDDICK, Montana. J. N. TINCHER, Kansas. J. KUHIO KALANIANAOLE, Hawaii. GORDON LEE, Georgia. EZEKIEL S. CANDLER, Mississippi. J. THOMAS HEFLIN, Alabama. THOMAS L. RUBEY, Missouri. JAMES YOUNG, Texas. HENDERSON M. JACOWAY, Arkansas. JOHN V. LESHER, Pennsylvania. JOHN W. RAINEY, Illinois. L. O. Haugeh, Clerk. EXTENSION OF THE FOOD-CONTROL ACT. Committee on Agriculture, House of Representatives, Tuesday, November 11, 1919. The Committee this day met, Hon. Gilbert N. Haugen (chairman) prcsidins;. The Chairman. You may proceed, Mr. Cushing. STATEMENT OF MR. GEORGE H. CUSHING, MANAGING DIREC- TOR, AMERICAN WHOLESALE COAL ASSOCIATION, WOOD- WARD BUILDING, WASHINGTON, D. C. Mr. Cushing. Mr. Chairman and gentlemen of the committee, the executive committee of the American Wholesale Coal Associa- tion has been in session in Washington for the last two days. There are two distinctions which we wish to draw. One is that if any public emergency naakes it advisable to extend the price-fixing powers of the Lever bill, we have no objection. But, we would and do object to a continuation of the practice of substituting a newly-created government distribution organization for the normal distribution function of the coal trade. We do not believe there is — now that the strike is over — is likely to arise any emergency which will suggest, within six months, the advisability of returning to price control for the next six months. Prices are likely to be so much below any conceivable Government maximum that no public purpose could be served by price fixing. But if there is a public purpose to be served, we have no objection whatever to price control. We do, however, see no reason whatever for setting aside a distribu- tion force which has been created through years of experience and effort only to create a new distributing organization within some Government bureau over night. The second distinction which we should like to draw — and we are perfectly wUling to say that this is a new distinction — is that we do not believe that the coal trade, which is essentially a destructive industry, is properly united, in legislation, .with a reproducing in- dustry such as farming. The two industries are in no sense compara- ble. Coal when once produced and used is gone forever. The land which has been worked over in the mining of coal never can be worked over a second time. We have, therefore, an entirely different economic problem in coal than you have in agriculture or any other reproducing business. We beheve that the Congress of the United States should take into account the essential difference between those two classes of industry. Our position with respect to price is that the coal business to-day is in a position where, in the open competitive market, it will be im- 15 16 EXTENSION OF THE' FOOD-CONTBOL ACT. possible for the next six or eight months, or perhaDS longer, to realize, under competition, anything like the prices which must be fixed and which have been fixed imder the Fuel Administration. It may intsrest you to know that whereas we have a demand to-day, if it couM be satisfied, for easily 150,000,000 tons of coal a year in the foreign markets, it is jproving a physical impossibility for America to ship abroad more than seven and a half or eight or per- haps nine milhon tons a year. This is so for the simple reason that on our Atlantic and Crvii coasts there are not enough docks to trans- fer any greater amoimt of coal from the cars into the vessels. The world is waiting for American coal, but can not. get it because we have not the docks with which, as we say, to transship it. We are then le"t at home with our entire production available for home con- s'impt'on. For the last four or five months we have been producing in excess of 2,000,000 tons per week more coal than we would consume if aU the industries and aU the railroads were working at normal capacity and ii the householders were using the normal amount of coal. That has resu ted in creating a storage pile of coal which wouM, if this strike had continued, have lasted the United States for at least 30 days without the production of any coal from nonunion mines and without the prbduction of coal from any so-called "Avagon" mines. The strike lasted only 11 days. In that time no ■appreciable inroad was made u^on that surplus reserve. It is available for the people of the United States in addition to the coal that wiU be produced when the mines resiune work, as we hope they will do within the next 36 hours. That simply results in a giutted coal market in America. This, under strong competition, always means necessarily a reduc- tion in price. With no possibility of getting coal abroad, with an abundance of coal above ground, with plenty of coal hkely to be produced, and with only about four months ahead of us when the househoMers are actively consuming domestic coal, we see no reason for fear that within the next six months there wiU be any emergency which wou-M suggest the return of the Fuel Admin'stration. As far as the distributing force in coal is concerned,, we are con- fronted, so long as this act remains on the statute books, with this possibihty : Prior to the 30th of October we had produced and shipped coal at a considerably higher price than the so-called Goverjiment-per- mitted price. The President restored his price-fixing power. His Executive order was made retroactive by at least l2 hours of actual producing time. The power of the Government was exercised not only over the coal produced after that order was issued but over all the coal then on the rails of the railroads. And some of the coal had been, as we say, rolling for 10 days, 2 weeks, 3 weeks, and in some cases a very much lono'er time. Mr. McLaughlin of Michigan. When was that action taken by the Government? Mr. Gushing. The Executive order of the President was signed either on the night of October 30 or the morning of October 31, and the ruling of the Attorney General Mr. McLaughlin of Michigan (interposing). Ten days ago? Mr. Gushing, Yes, sir; 10 days ago. The ruling of the Attorney Geileral and of Dr. Garfield was that the order, although not signecl-, KXTENSION OF THE FOOD-CONTKOL ACT. 17 as some of us believed, until noon of the 31st, was made effective at midnight on October 29. Mr. Young. What day of the week ? Mr. Gushing. As I recall, it was Wednesday. Sometime about Saturday afternoon of the same week, November 1, an order was issued by the Central Coal Committee of the Fuel Administration, as org;anized by the United States Railroad Administration, that all coal then in cars had been diverted to the Director General, who thereby became invested with all title to that property. That order was decided upon in an executive meeting in the Railroad Adminis- tration office, we understand, some time Saturday afternoon. The press notice on it was issued that night and published in the Sunday papers. The coal men were not given any official notice of this — at least the members of our association were, not — until the following Monday morning. And there never has been an official order issued to that effect; we have as yet no official notice. _ Mr. McLaughlin of Michigan. Heretofore how was the notice given officially ? Mr. CusHiNG. The official notice was given through the Fuel Administration by the issuance of a formal order with the date attached and with a specific hour set for its effectiveness. That notice was available at the Fuel Administration office to anyone who went there for the information. Mr. McLaughlin of Michigan. Was there any proceeding of serving you with a notice to persons to whome directed ? . Mr. CusHiNG. None whatever. Service through the columns of the daily press was supposed to be sufficient. We upon receiving a copy of that notice were supposed to give notice to the 600 mem- bers of our association, scattered throughout the United States and Canada. Mr. Jones. You considered that sufficient notice so far as your organization was concerned ? Mr. CusHiNG. Yes. If the notice of diversion issued on November 1 had been given to us in that way in that same way We would have considered it sufficient notice. It has always seemed to be a little bit irregular to do public business in that way. But, when this happened before we were under war conditions and we took many tilings for granted. This current order, however, was not even promulgated in that irregular way. There was no notice. Nevertheless they took every pound that had been shipped and had not been delivered and diverted that to the Director General. It then became subject to distribution by him to whoever he thought actually needed the coal. In one instance a member of our asso- ciation had as much as 50,000 tons or more of coal on cars which had been bought at four dollars or thereabouts a ton at the mines and had been resold at four dollars plus eight per cent, the mer- chandising margin recommended by our association, or $4.32 a ton. Some of it, a great quantity, had been sold in the export market at considerably higher prices. This coal was diverted from the export market and from the consignee named by the members of our association to persons not known to our members, who had, indeed, no means of knowing or of coming to know anything about him. 18 EXTENSION OF THE FOOD-CONTROL ACT. Mr. EuBEY. What do you think should have been done, do you think that it should have been exported and sent out of the country in this emergency? Mr. Gushing." Not at all; nor anything like it. I am merely describing the plight in which the members of our association found themselves when this diversion order took effect. This coal was diverted to other consignees at, we will say, two dollars and thirty- five cents a ton. There was no way for us to pass our invoice price on it to the new consignee. Our people were thus left in the position where they had bought thousands and hundreds of thousands of tons of coal at one price and it had been diverted to other con- signees at another price. And there was no way, no machinery, to take up the loss which we were forced to sustain. Mr. Anderson. How was the price of $2.3.5 arrived at? Mr. Gushing. That was arrived at by simply reviving the last price named by the Fuel Administration during the war and which was suspended on the first of February, 1919. With that financial loss staring us in the face we had all these facts to contend with. The Fuel Administration had durmg the war stated that they had the power to take our coal and divert it to other users; that they had the power to say what price the new consignee should pay for the coal; they, of course, had the power to say that he must take it in and unload it; but they had no power to compel him to pay for it, and they had not a dollar themselves to pay for it. They had no legal advice or legal help which they could give us in collecting the money from the consignee whom they chose, and, when it came to the question of presenting out claim to the Court of Claims, they refused even to certify to the Court of Claims that the statement of fact which we made was really a statement of fact. Mr. Jones. You do not question the power of the Government to act as it has up to the present time ? Mr. CusHiNG. Not at all. Mr. Jones. We are not sitting here to determine the measure of the damages under the action of the Government in exercising its power, and the only thing before this committee is the recommenda- tion or suggestion of the Attorney General to continue the operation of the Le%er bill for a period of six months. Mr. CusHiNG. Yes, sir. Mr. Jones. As to how the Government acted under this power during the last 30 days is something that we have not anythmg to do with. Mr. Gushing. It is proper for us to show this committee, is it not, the dangerous position which it puts the coal industry in if this power is extended and if we are subjected to this loss e-vcry time something unusual happens, e.en if it is beyond the powers of the coal trade to prevent its occurrence? Mr. RuBEY. If we are going into that kind of business, there ought to be present those who are on the other side of the question, so that your statement could be met by those on the other side. There are always two sides to a proposition. Mr. Gushing. I have no objection to that. Mr. RuBEY. I do not believe that we ought to sit here and hear these ex parte criticisms of the Government without the representa- tives of the administration being present. If we are going to hear EXTENSION Oli" THE EOOD-CONTBOL ACT. 19 one sido; we should hear both sides. As stated by the gcatloman from Pennsylvania, I do not think that is the question before the committee, anyhow. I think, as stated by him, the question is whether we shall continue this law or whether we need to continue it. Mr. McLaughlin of Michigan. I think it is safe to say that if it is continued it will be continued in its old form and that there will be no amendment of it. The Chairman. I should like to state that we heard the other side the other day. Mr. RuBEY. Who representing the other side ? The Chairman. We had Gen. Palmer, the Attorney General, representing the Government. Mr. RuBEY. Yes; but Gen. Palmer did not discuss any of this controversy; he merely made his statement why he wanted this law continued. The question of the action of the Government and all that sort of thing was not discussed by him or anybody else. The Chairman. The witness is just leading up now to show that whatever was necessary Mr. RuBEY (interposing). I did not come in until late and I do not know whom he represents or what criticism he has given, but if he continues along the present line it will take us the rest of to-day and to-morrow to get through. Mr. Cushing. I am just about through. The Chairman. I desire to say this for the committee. This com- mittee has always been willing to hear both sides. It is proper that both sides be given an opportunity to be heard. The door of the committee has always been open to all who desired an opportunity to be heard before this committee. Mr. Jones. In your association are there any operators or are they all wholesale dealers ? Mr. Cushing. They are wholesalers, but a good many of them have mines which produce a part of the coal which they merchandise. Mr. Jones. It is primarily a wholesale dealers' association ? Mr. Cushing. Yes, sir; a part of them have retail yards. Some of them are in all three branches of the industry. I represent an association which handled in 1918 190,000,000 tons of bituminous coal. The Chairman. In order that it may appear in the record, will you please state the amount of production, the annual coal output ? Mr. Cushing. Of the United States ? The Chairman. Yes, sir. Mr. Cushing. Those figures have escaped me just for the moment. About 545,000,000 tons of bituminous coal for 1918 and about 91,000,000 tons of anthracite coal in 1918. The Chairman. You spoke of the amount produced by union and nonunion mines ; can you give it by percentage ? Mr. Cushing. The percentage is about 37.5 per cent of nonunion coal, and the remainder is produced by union mines. The Chairman. What is the supply on hand at this time or at the time the strike began ? Mr. Cushing. The supply on hand at the time of the strike was practically equal to a 30 days' supply for the Nation of bituminous coal only. 20 EXTENSION OF THE FOOD-CONTEOL ACT. The Chairman. You say 30 days; that would be about one-twelfth of the annual production ? Mr. Gushing. About one-twelfth of the total production; yes, sir. In round numbers about, well, I should say, 38,000,000 tons. The Chairman. So far there has been no shortage in coal? Mr. CtrsHiNG. On the contrary, the difficulty was rapidly coming to be to find a market for the new coal thsit was put out. Mr. Jones. Whv was the price at the mine S4 with that condition ? Mr. CusHiNG. The belief had been current until about the 1st of October that there was going to be a shortage rather than a surplus. Mr. Jones. What was that belief based on ? Mr. Gushing. The fact that we had not produced so much coal early in the year, and then upon a miscalculation made by the Geo- logical Survey in that they based their figures on the calendar year, from January to December, instead of on the coal year from the 1st of April to the 31st of the next March. They had figured a shortage of about 85,000,000 tons. That statement of shortage was made to the Senate committee, which was then investigating the coal business, and it became circulated broadly throughout the country as early as the middle of last August. Then there was a belief that, owing to a known very great shortage of coal abroad, vastly more coal was going into exportation. Mr. Jones. Do you know what tbe average cost of mining coal is, say, in the Clearfield district, Pennsylvania ? Mr. CusHiNG. The average cost of mining coal? Mr. Jones. Yes. Mr. CusHiisTG. I have not checked up on those figures and I would not like to say anyhow because the technicalities of cost accounting in coal miniag are so numerous that really a cost statement does not mean much, if anything, because usually you do not know what a man has figured in. Mr. Jones. I take it from your testimony that your objection to the continuation of this Lever Act for a period of six months after it exoires under its terms is largely the inconvenience that the Fuel Administration would put the coal men to in case thev exercise the .right? Mr. CusHiNG. My objection to it is this, to put it simply: We do not feel in coal that there is any necessity for it or that there is any good reason for it. Mr. Jones. How do the operators feel with regard to the exercise of the right this last week ? Mr. CusHiNG. To fix prices ? Mr. Jones. No; to exercise their power under this act in getting this mjunction? This injunction was gotten under this act and it could not have been gotten under any other act. Do they justify it ? Mr.CusHiNG. Theoperatorsfeel t bis way about that: Tne instruc- tions in the statute, with regard to the conspiracy which the miners very clearly entered into four days after the amendment became eftective, were that the Attorney General had on^.v one method of procedure and that was to indict and punish the m'en guilty of that conspiracy and subject them to a fine of $5,000 or two years in the penitentiary, or both; that instead of foUowmg the specific instruc- tions of the statute the Attorney General allowed those who were I'lXTENSION OF THE FOOD-CONTROL ACT. 21 (gliilty of the conspiracy to escape merely with an injunction; that the full force and effect of the exercise of the powers under the Lever Act were visited upon those who had nothing whatever to do with the conspiracy, were not in it, and th eir mines were not a part of it ; they had no part whatever in the negotiations which ended in the strike; the nonunion miners were certainly not involved; the whole- salers and retailers were not involved, but we got the full force and effect of this law, and in some instances practically had our busi- ness wiped out. Mr. Jones. Not by the granting of the injunction? Mr. Gushing. Not by the granting of the injunction but by the exercise of the price-fixing power which did not take into account the increases -in wages which these nonunion mines had given to . th||r .miners during the summer and, in some cases, as early as last M^y. The wholesalers certainly had nothing whatever to do with the conspiracy itself, and yet every pound of coal we had was diverted to a consignee we did not know, and we stand to-day to lose tre- mendous sums of money on that account. The retail dealers had nothing whatever to do with the negotiations which led to the strike, and yet their business was demoralized. We do not feel, therefore, that the law itself was enforced as impartially as it might have been. We are not questioning the wisdom of the Government in taking over the coal until it could assure itself that the prople themselves were going to be freed from danger. Mr. Young. Here is a proposition that occurs to me : The power to handle this strike situation appears in this bill and nowhere else, so that they resorted to the use of the injunction remedy. Nobody knew what was going to be the result, and after debating the matter they took that course. The interest that the general public — con- sisting of 110,000,000 people — ^had in it was that this strike be stopped so that fuel might move, and apparently the Government has been successful in following the injunction remedy instead of the prosecution of some half dozen men, and the Government has made rapid moves in obtaining those results. Your whole criticism, it seems to me, should not be directed to that. If you have a criti- cism — ^in which there seems to be some merit — -it is that of fixing too low a price on the part of the Fuel Administration and on the output that was already in existence. That seems to me to be the criticism if you have one. Mr. Gushing. That is our only contention. Mr. Young. As you know, and as we all know, these Government officials move very rapidly. They called the Fuel Administration back, which had gone out of business, and the Fuel Administration had no basis on which to fix prices except their old basis. It would seem to me they are fair-minded men, American citizens, and do not want to rob anybody out of that which justly belongs to them, so that upon a proper showing of the facts — ^the increase in wages and ■the added value of coal — it seems to me it would be a simple matter to have that rectified. . Mr. Gushing. You are asking why we object to the continuation of this act in its present form, and everything I have had to say has been to lead to this one statement: We have no objection whatever 22 EXTENSION OF THE FOOD-CONTKOL ACT. to the proper exercise of any proper governmental function over the coal industry in case of emergency, but Mr. Young (interposing). Let us stoD right there just a moment. You gentlemen probably know that there is no other law on the statute books, at least that i am aware of, under which our Govern- ment could proceed in this emergency. V7e would have been helnless in this situation without this statute, and the law being in that shape and it being impossible to get another act through Congress in time to meet this situation, the Government had to proceed under it. Now, without the war power contained in this bill, which will soon die, would not the coal dealers, the coal miners and the public have been in an awful fix, with no remedy by which this strike situation could have been handled, i t seems' to me the lack of those powers would have been more harmful to your interests and the interests of the public than whatever little loss might incidentally enter into the handling of this situation, which was a very difficult one to handle. IVLr. CusHiNG. I am not a lawyer, but I have within three days read the decision of the United States Supreme Court in the Debs case, which is at least 25 years old, and the action in the Debs case was identical with the action of Judge Anderson at !' ndianapoUs in the miners' case, ihe Government had the power 25 or 30 years ago, in the case of the Pullman strike, to enforce its decrees, and those powers were the ones which were invoked by Attorney General Palmer and exercised by Judge Anderson at Indianapolis. Ihe powers were not invoked under the Lever bill. Mr. Jones. Oh, yes; they were. Judge Anderson in his opinion quotes the Lever bill. Mr. Young. And they held the argument down to the Lever bill. Mr. CusHiNG. But the method of procedure was identical with that in the Debs case. Mr. Jones. ] t was identical ia that there was an application made for an injunction, but the application for the injunction by Judge Ames, representing the Government, to Judge Anderson recited the Lever act, and the allegation was that the strike was a violation of its terms and provisions; that therefore the strike was unlawful and as an unlawful act it was enjoined. The Chairman. The Debs case was brought under the Sherman antitrust law but in the meantime the Clayton law, whicH recognized collective bargaining, intervened. Section 6 of the Clayton Act reads: Sec. 6. That the labor of a human being is not a commodity or article of commerce. Nothing contained in the antitrust lai\'s shall be corstrued to forbid the existence and operation of labor, agricultural, or horitcultural organization, irstituted for the purposes of mutual help, and not ha-ving capital stock or conducted for profit, or to forbid or restrain individual members of such organizatiors from la\rfully carn-ing out the legitimate obje:ts thereof; nor shall such organizatiors, or tl:e members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade under the antitrust laws. Section 4 of the food control act, under which the restraining order was issued, reads: Sec. 4. That it is hereby made unlavrful for any person •willfully to destroy any necessaries for the purpose of enhancing the price or restrictirg the supply tlereof; knowingly to commit waste or -willfully to permit preyentable deterioration of any necossaricis in or in connection with their production, manufacture, or distribution; to hoard, as dc^fined in section fl of this act, any necessaries; to monopolize or attempt EXTENSION OF THE FOOD-CONTROL ACT. 23 to monopolize, either locally or generally, any reressaries^ to engage in any disrrim- initory and uiiiair or any deceptive or ■wasteful practice or device, or to make any U just or unreasopable rate or c b arge in bardling or dealing in or with any rec essaries; to ' O'spire, c ombine, agree, or arrange with any otb er person, (a) to limit th e f a' ilities for tra: sporting, producing, harvestirg, manufacturing, supplying, storing;, or dealirg in any necessaries"^ (b) torestrictthesupply of any necessaries ; (c) to restrict distribu- tion of any necessaries: (d_) to present, limit, or lessen the manufa-^ture or pro- duction of any necessaries in order to enhance the price thereof; or (e) to exact excessive prices for any necessaries, or to aid or abet the doing of any act made unlaw- ful by this section. To this section a penalty clause imposing a fine not to exceed 15,000 or imprisonment for two years, or both, was recently added, together with a clause exempting the farmers as to collective bar- gaining. The recommendation by the Attorney General was that the act in its entirety be extended six months. Mr. Jones. I may be wrong, but my understanding is that the procedure at Indianapolis was wholly under the Lever Act. Mr. Young. Exactly. The Chairman. If it had not been for the Lever Act they could not have prosecuted because of the term.s of the Clayton Act. Mr. Candler. The papers stated that in the application for injunction the provisions of the Lever Act were set out absolutely. Mr. Jones. You mean in the petition % Mr. Candler. Yes; and then they proceeded to show that the pro- visions of this Lever Act — which were set out in the petition and taken from that act — had been violated in this way. Mr. CusHiNG. The apparent difference between your point of view and inine is that you gentlemen seem to proceed on the theory that this coal pniners' strike is going to recur very shortly, but our point of view is that it is not likely to recur until the dangers of this winter are over, because in the meantime the miners have becom,e aware of the fact — which every one else has become aware of, as a result of a survey of the coal situation — that this country is so well stocked with goal and the production from the nonunion and wagon mines is so great that the miners could not win the strike even without the mjunction or without the powers of the Lever Act. They would sim.ply starve to death in the m.eantim.e. Mr. Young. Do you think they have reached that conclusion % Mr. CusHiNG. I do ; because the facts are there. Mr. Jones. I will say for the benefit of the committee that I have been in my district recently. I represent the Clearfield coal district, and I have found that the miners were not in favor of this strike. I feel that if a referendum had been taken the vote would have been against it. The leaders of the local mine unions were not in favor of the strike, although in executive sessions they reported to the press that they would abide by the order for the strike. As 1 say, 1 do not beheve the m.iners wanted the strike, and I do not believe, on a referendum vote, they would have voted for the. strike. However, experience has taught us thai they will follow like a flock of sheep ; many of them are like raging wolves and will go where their leaders tell them, to go, so that it does not am.ount to m.uch, as far as the public is concernea, whether the miners are in favor of a strike or not, because if the leaders call on them to strike they will do so. 24 EXTENSION on? THE FOOD-CONTKOL ACT. 'Mr. RuBEY. Have .you read in the papers to-day^ in conHection with the announcement that the strike had been called off, the state- ment purporting to come from the leaders that, while the strike has been called off, as soon as the peace business is settled and this law goes out of effect the strike will be called again ? Mr. Jones. I have not seen that article. Mr. Gushing. The only point we want to make is this: I have shown you something of the serious consequences to the business of the people I represent of the quick exercise of this power. Any emergency in the country might be considered s3rious, enough, under the extension of this power, to call back the Fuel Administra- tion or to throw the control of the entire distribution of coal, first, into the hands of the Railroad Administration, then into th© Jjands of the Federal Trade Commission, or into the hands of s.ome "other bureau, or something of that kind. Shortly after the first of the year we may have an interruption of railroad service because of the passage of those railroads from public to private control; there is bound to be some disarrangement then and that might be considered an emergency which would arouse fear of a coal shortage and warrant calling back the Fuel Administration. We are likely to have a strike of the railroad men, which for the same reason would ca,ll back again the Fuel Administration. And under this bill we would be subjected, as we have been time and time again, to tremendous losses in our business. Under the terms of the bill there is absolutely no machinery set up. by which we can collect the money on the coal that is diverted away from us to a consignee that we do not know. Mr. Jones. Let me ask you this: When the Government assumed its powers under the war emergency, did the coal operators lose anything by the divergence of coal, by the taking over of the coal by the transportation companies, or anything of that kind? Mr. Gushing. Generally, yes. Mr. Jones. Has not everyone who has suffered any loss or damage filed a claim for compensation ? Mr. Gushing. No, There is only one organized presentation of claims. Mr. Jones. Why did not the rest do it ? Mr. Gushing. Because they remembered the experiences of those who filed claims in the Gourt of Glaims during the Givil War, some of which have been settled within the last summer. Mr. Jones. I wonder whether that is the only reason? Mr. McLaughlin. It seems to me you have more complaint against the way the law has been enforced than against the law itself. In this case suppose those who took the coal out paid you the $4.32 instead of the S2.35 a ton and sent you a check as soon as they received a bill for it. You would have been entirely satisfied, would you not ? Mr. GasHiNG. That would have simplified matters immediately. Mr. McLaughlin. Is that the way you think it should have been done ? Mr. Gushing. I think some machinery should have been set up, or some basis of settlement should have been made. If they take my property they ought to pay for it under the law. Mj. McLaughlin. Then it is a question of the enforcement of the law and the fault is not with the law itself, because one paragraph of the law says that they shall fix a fair price, allow a just profit EXTENSION OF THE FOOD-CONTKOL ACT. 25 over the cost of production, including a proper maintenance and de- preciation charge, and if the person entitled to the money is not sat- isfied he shall be paid 75 per cent of the amount the Government determines and then the claimant can sue for the recovery of the rest of it. What other proceeding would you set up for the owner of the coal to get the amount he thinks he is entitled to ? Mr. CtrsHiNG. If that proceeding had been followed during the former reign of the Fuel Administration or within the last ten days there would have been no objection to the extension of the Lever Bill on the part of any coal man in America. But, instead of an observ- ance of the law, in the manner you have just read from section 25 of the Lever Bill, we have been faced tiine and again with the state ment by representatives of the Fuel Administration, and more recently by representatives of the Railroad Administration, that the Government was not going to straighten out the business difficulties of the coal men because the Fuel Administration and the Railroad Administration had substituted themselves for the wholesaler in coal and were distributing coal. We were set aside. That was my first statement to you, that we were set aside and the Government organizations took our places. We would have no objection to the extension of all of the powers of this act if we could be assured under this law that our function was not to be destroyed and a Government piece of machinery set up in our place to do the work for nothing which we think we have a right to be paid for doing. Mr. Jones. Do you presume or argue, the strike being over, that the Government shall again disband the Fuel Administration, and that if the wholesalers have suffered any damage by reason of the acts of the Government, and file claims, that they cannot recover if they show any damage ? Mr. Gushing. Yes; I assume that. Mr. Jones. That you cannot collect any damage? Mr. Gushing. It is so difficult to prove the damage. Mr. Jones. If the law gives you the right to collect your damages and you simply say you can not exercise your right under the law, then the only alternative would be that the Government should not exercise these powers in an emergency but let you alone ? Mr. Gushing. No; we p.re not asking to be "let a^'.one. There f,re emergencies in coal which are so grave that no man in the coal business shouM be allowed to do as he pleased; if that occurred, the situation might easily become intolerable. We are not asking to be let alone; that is not our contention at all; we are asking, however, that if this power is extended for six months that we shall be pro- tected agpjnst being eliminated from business because somebody in Washington thinks he can distribute coal better thf.n we can. Mr. McLaughlin. Then you think the coal should be distributed through regular channels ? Mr. Gushing. Absolutely; yes. A man who is accustomed to buying his coal in one way, and goes there as a first resort to get his coal, shouM be allowed to get his coal through thf.t channel. Mr. RuBEY. If that had been pursued in this emergency and some factory that wanted coal very badly had come to you and offered you 110 a -ton for it, wouM that factory have gotten it at that price? 26 EXTENSION OF THE FOOD-CONTROL ACT. Mr. Gushing. No; under this emergency he would hp.ve gotten that coftl at the Government price plus the Fuel Administration's wholesale margin of 15 cents a ton. Mr. RuBEY. Would there have been anything to have prevented profiteering by those who wanted to profiteer in the sale of coal and who had plenty of it to sell? Mr. Gushing. There is Mr. RuBEY (interposing). Just answer the question. What do you think about that? WouM there have been anything to have prevented wholesale dealers in coal from profiteering if they had wanted to profiteer? Mr. Gushing. You mean without the existence of the Lever bill? Mr. Ashley. If the Fuel Administration had not taken hold of the coal. Mr. Gushing. None whatever. Mr. Rubey. They couM have profiteered as much as they wanted ? Mr. Gushing. Absolutely. Mr. McLaughlin. My idea of what the witness means is that instsad of this coeJ being taken out of the hands of the wholesale dealers, distributors, owners, and so on, that the distribution should have been made through the regular channels by those accustomed to doing it, but perhaps under the direction of the Fuel Adminis- tration. Mr. Rubey. And at a specific price that would have been a reason able one? Mr. Gushing. Yes. Our association made this recommendation to Dr. Garfield : Fix your price ; allow the railroad coa 1 committee or the central coal committee to allocate the coal among the regional direc- tors; allow the regional directors to say who in a territory shall buy coal, what percentage of his normal requirements he shall te allowed to luy and!^ that, then, shall become of binding force in that entire territory, and then let the buyer exercise his ripht to buy under two conditions, first, that he present an affidavit to the man who takes his order that he must have this coal, that he is within the priority list and that the amount he demands is within the amount which he is allowed to buy under the Fuel Administration ; then let the man who takes that order,_ whether he is a wholesaler or any other dealer, support that original affidavit by an affidavit of his own saying that he has examined the facts and conditions and, to the best of his know- ledge and belief, the facts in the consumer's affidavit are correct; then go with, that affidavit to the central coal committee and have that order and that demand given a serial number, according to the classi- fication that the coal comes under. Mr. McLaughlin. You say you formulated that plan and put it up to whom ? Mr. Gushing. To Dr. Garfield. Mr. McLaughlin. And he refused to accept it ? Mr. Gushing. The machinery, in the meantime, had been set up to give to the director general the title to the entire property; every pound of coal in the United States, the moment it went on a railroad car, became the property of the director general to distribute as he saw fit, and the central coal committee told me that they were not con- sidering the question of price at all; that they had not reached that point, that they were distributing coal without regard to its value, HXTIiHSION OP THE FOOD-COBTTKOL ACT. 27 without regard to who owned it or without regard to the channel through which it normally moved. Mr. McLaughlin. If we should try to comply with your request it would make necessary the writing into this law of a direction' to the fuel administrator that he accept your plan? Mr. Gushing. Not necessarily; but that was our suggestion of a simple way to get at this. We only say that the coal business should not be taken out of the normal channels. It was not necessary to take sugar out of the normal channels. When the Food Adminis- tration knew that they could only distribute a certain amount of sugar to the people of the United States, they told the people how much sugar they could buy and at what price; it was not necessary to destroy every wholesaler and every retailer in sugar in order to distribute sugar to the people of the United States. And we do not think it is necessary to destroy the distribution function in coal in order to fix the price and see that people do not hoard unneces- sarily. Mr. Anderson. Was this same plan followed during thfe war ? Mr. Gushing. Exactly. Mr. Anderson. Do you mean to say that the Eailroad Adminis- tration during the war took over all of the coal and distributed it ? Mr. Gushing. No. But there was a distributing organization built up within the Fuel Administration called State and county fuel administrators, and those State and county fuel administrators established central offices in towns and distributed coal wholesale and retail, and announced openly that they were the competitors of wholesalers and retailers in coal. The Ghaikman. One reason given for the extension of this act, Mr. Gushing, it to regulate the price, which includes regulating the profits. Mr. Gushing. To that we have no objection whatever. The Ghairman. What assurance have we that the people will be supplied with coal at a reasonable price unless this act is extended ? The price may be put beyond the reach of the people. Mr. Gushing. That is a matter, I should say, of common sense on the part of the coal men. The Ghairman. You maintain that there is an adequate supply and that there is real competition in the coal business ? Mr. Gushing. There is tremendous competition in the coal busi- ness; there is an adequate supply; and the coal men to-day, I believe, are wise enough to know, as they have been for the last two years, that any runaway market, as we call it, on coal to-day will bring about detailed Government supervision of the coal business. We do not want detailed Government supervision and the coal men will do anything in their power to prevent any inordinate rise in prices on that account. The Chairman. It may be necessary to extend the time for this act unless we have some assuranc e that there is an adequate supply and that the people will be supplied with coal. Of course a price should be fixed which will produc.e a reasonable profit, but the coal men should not be allowed to charge a price which will put coal beyond the reach of the people, particularly at this time of the year. 28 EXTENSION OF THE EOOD-CONTKOL ACT. Mr. Gushing. I think you can rest with absolute assurance on this fact, that there is no danger of a shortage of coal or even a scarcity in the supply of coal before warm weather next year. The Chairman. Has that question been raised, the question of supply ? Mr. Gushing. A month and a half ago it was a very much ccn troverted question but those who believed the other way are quite convinced now that there is no possibility of a shortage or even the lack of a reasonable production of coal. The Chairman. Your statement is based upon reports from the operators ? Mr. Gushing. My statement is based upon a knowledge of this situation which I have acquired through 25 years of detailed ex- perience with it and calculations which I have made and continued to make for the last four months, checked up from every conceivable source. The Chairman. Has the action of the administration resulted in a reduction of the price to the consumer ? Mr. Gushing. It is too early to tell about that because there has not been any settlement of any kind and no statement of the pri^e made to anybody to indicate that sort of thing, and in some cases it has advanced the price while in other cases, espe.ially on certain high grade coals, it has undoubtedly reduced the pri^e a little. The .'Chairman. I understood you to say that the price at the mines was $4 a ton ? Mr. Gushing. That was for The Chairman (interposing). And that there had been 8 per cent added, making it $4.32, while the Government had fixed, it at $2.35. Mr. Gushing. That was for coal which was going from a field in the eastern part of the country producing a high grade of coal and whi''h was going into the export trade. I spoke about one lot of 50,000' tons that was going into the export trade, but that is an isolated situation. Mr. Jones. What is the average price of bituminous coal at the mines to-day? Mr. Gushing. It ranged just before the 1st of November, on bituminous coal, all the way from $1.35 or $1.50 a ton up to $3.75, $4, and $4.25 a ton. Mr. Jones. Why the range in price? Mr. Gushing. In one case it was a steam coal, for which there was. no particular demand. Mr. Jones. The steam coal has a particular price and blacksmith's coal has a particular price. I mean the average run of ro.ine; I am not talking about prepared coal, but the average run-of-mine coal in the bituminous region. Mr. Gushing. The low average run-of-mine price which I named was for coal to be used for steam.ing purposes. The low price was due to the fact there was no big demand for the steam coal in that territory. The highest prices I named, $3.75, $4, and $4.25, were for low-volatile coal — smokeless coal — which_ is in tremendous demand in this country for house heating and general steaming purposes, and in great demand abroad for all classes of purposes. The competition therefore has created a spread in price of somewhere about $2 a ton EXTENSION OF THE FOOD-QONTKOL ACT. 29 between the low and the high grade coal, and between the coal of one section and the coal of another.' ' Mr. Jones. Do you know what bituminous coal in Pennsylvania was sold for under the Fuel Administration during the war ? Mr. Gushing. My recollection 'i^ there were two prices: One for the western part of Pennsylvania, $2.35; and one in the Clearfield district, $2.95. Mr. Jones. What is that coal selling for now — the Clearfield district? Mr. CrsHiNG. The Clearfield coal went down and gas coal of the western Pennsylvania district went' up a little. They had a tendency to strike an average level somewherein between $2.35 and $2.95, but they nev6r had quite struck that average level because the two coals were used for eintirely difi'ere'nt purposes. Western Pennsyl- vania coal is essentially a gas coal; Clearfield coal is coal for domestic and steaming purposes. They went' into entirely different markets. Mr. Jones. Clearfield coal goes into New England ? Mr. CusHiNG. Yes. The Chaikman. In other words, how does the price fixed by the Fuel Administration compare with the price fixed before this strike ? Mr. CusHiNG. In the case of smokeless coal it was very much lower. In the case of coal from the high-volatile fields, it was some- what higher than the open-market price. The Chaikman. How about the average? Mr. Gushing. If you throw all tonnage in, the average result would be a rise in price because the low volatile coal is a very small quantity. The Chairman. How does the price fixed by the Government when taking over the coal recently compare with the prevailing price prior to taking over the coal ? Mr. Jones. Leaving out low volatile coal; just speaking about high volatile coal — the large consumption of coal. Mr. Gushing. I did not quite catch that. " The Chairman. How does the price fixed by the Government recently compare with the price fixed prior to the taking over of the coal ? • Mr. Jones. A little higher, wasn't it it? Mr. Gushing. I can not answer that question; I can not answer it at all, for this reason The Chairman. How did the price fixing by the Government during the war affect the price of coal ? Would it have been higher or lower ? Mr. Gushing. It was decidedly lower during the war. The Gov- ernment price was decidedly lower than the market price would have been during the war — decidedly lower. The Chairman. About how much ? ". Mr. Gushing. Well, the reduction at the outset, in 1917 was $1.50 a ton. Mr. Jones. Now if you were asked, as a business man — not as a coal man — whether or not you would be in favor of extending the provisions of this Lever Act for a period of six months beyond the time it expires under its terms, what would be your answer ? 30 EXTBNSIOK OF THE FOOD-CONTROL ACT. Mr. Gushing. My answer would be right now that if it could be accomplished without com'plicating the present economic situation by involving those, whose business was regulated, in bankruptcy, it would possibly be something to consider. But if we had to add to the present disturbance the world over in business, and possibly involve one part of an industry in bankruptcy or disarrangement, it would be a dangerous thing to do. Mr. Jones. Is the business world, in your opinion, in favor or not in favor of Government ownership and control of these com- modities ? Mr. Gushing. I usually hold' that a man's opinion on any ques- tion is not any better than his information. Now, my information is that the 150 business organizations which I have addressed since the.lst of last February indicated to me by their personal statements after the meetings that they are wholly and unalterably opposed to Government control of anything. Mr. Jones. Or regulation ? Mr. Gushing. Or regulation. And those business organizations have extended over a territory from Birmingham in the South to Minneapolis in the Northwest and from Montreal to Atlanta, and all of the intervening territory, and I have not found in that territory any sentiment ever in favor of control or regulation of business. Mr. EuBET. That may be a compliment to you, as it occurred after you addressed them. Mr. Gushing. I am a very indifferent speaker. Mr. Jones. This was not limited altogether to coal men's associa- tions, was it? Mr. Gushing. They were not coal men at all ; they were social clubs and business organizations, made up entirely of people outside of the coal industry. Mr. Jones. What reason did they usually advance for their position ? Mr. Gushing. Usually the reason given was that the job of con- trolling an industry was entirely too big for any man in Washington to undertake, because one man in Washington could not possibly give a program to an entire industry. Mr. Jones. There was not any significance about the "one man in Washington," was there? Mr. Gushing. No. Mr. Jones. They meant "one" man? Mr. Gushing. It was not personified. Mr. Jones. It was not because he was in Washington? Mr. Gushing. No ; it was because he was sitting in one central point and rested upon the general academic theory that one man can not possibly supply all the ideas which an entire industry can absorb and must absorb if it is going to continue to be virile. Mr. McLaughlin of Michigan. How long was the coal business,- under the control of the Fuel Administration ? Mr. Gushing. From August 21, 1917, until February 1, 1919. Mr. McLaughlin of Micbigan. I think the prevailing opinion is that the Attorney General did right in asking for the injunction, and that he asked for it under section 4 of the Lever Act, and it was a good thing that that act and that section were in force — ^there was an emergency makmg that act necessary. Now, i£ there is going to EXTENSION OF THE POOD-CONTROL ACT. 31 be or if there is danger of another emergency in any line of business that act relates to, it may be well to keep it in force. If we know there is going to be nothing of that kind, it would be safe to repeal it or let it die with the declaration of peace. You seem to think there is going to be no need of it in the coal business. Mr. Gushing. I am convinced there is going to be no need of it in the coal business. Mr. Young. Do you think these individual miners will now return to their work, since the statement has been given out by their agents ? Mr. Gushing. There is no question about that in my mind. I have spent a great many years with those men. I would venture anything I had that 70 per cent of them at least are very conservative men, who are not in any sense in sympathy with the high-handed action which was taken at Gleveland, and subsequently at Indianapolis. They were merely waiting for an opportunity to go back to work. I think they had already expressed themselves by quitting the imion fields and going over to the nonunion fields, and quitting the imion; they became outright employees of men who were opposed to un- ionism. Mr. RuBEY. Did a very large per cent of them do that ? Mr. Gushing. 'I would not attempt to express the percentage, but the number was growing every day. Mr. Jones. That has been a very strong fear among the operators, and in fact they had practically an understanding among them that they would not employ them because if the strike should stop they could not man their mines. Mr. Gushing. It happened very extensively in the West Virginia field, where the union and nonunion districts were side by side — ^just over the hill from each other — and the nonunion mines, after a few days, were really embarrassed by the offering of men who had come to them from the union fields, because they did not have working places ready for them. And the production went up sharply, remark- ably, the minute they got those men in and got the car supply to- take the coal away. The Ghaikman. Is that all? Mr. Gushing. That is all; thank you. The Ghaieman. Are there any others to be heard ? Mr. Gushing. Not from our organization. The Ghaieman. We are very much obliged to you ,sir. (The committee thereupon went into executive session.) .^./ ^ 'li A! ■r^-^f'iy^'' -'^ ?''X^ •4JCP '1^