Evening star., 1937-04-27

Thus does an
important section of the coal indus
try pass from the field of free COM
petition to the domain of monopoly
under Government control
The success of the scheme embodied
In what is now known as the Guffey-
Vinson law depends on whether the
public-the consumer-Will accept the
higher prices or else turn to SubSti-
tutes. II on turning to other forms
of fuel, the latter become competitors
Of coal, will John L. Lewis, on behalf
of the coal miners and the big coal
companies. be able to swing the Gov
ernment into control of other basic
industries? And if the Government
starts fixing the prices of Oil and gas,
will it not be compelled to fix the
prices of steel and copper and metals
and all other ingredients entering
into the productive processes of the
Nation?
The bituminous coal industry is
law, but most of the producers have
resigned themselves to submission
They hardly can do otherwise, for any
coal producer who doesn't join the
proposed code subjects himself to a
heavy Federal tax, which is sufficient
penalty to put him out of business.
Question of Legality.
Is this constitutional? The so-called
Guffey case which was decided last
year by the Supreme Court merely
held the labor provisions of the exist
ing act to be Unconstitutional. There
is no way from reading of the
opinion to know whether the price
fixing provisions would or would not
be upheld in another and separate
lawsuit.
What has happened is that the
power of John Lewis over Congress
has been demonstrated to such an
extent that the second measure, a
substitute for the one declared in
valid, went through Congress with
only few hours debate in both
houses The new law differs some
what from the old one in important
details, but the principle is about
the same.
Union labor, having virtually closed
shop in the coal industry, now compels
the employers to deduct from the
miners pay envelope certain amount
for dues The collection problem Nf
the union is facilitated and Mr.. Lewis
now has the biggest dues-paying or
ganization he has ever had. This has
been achieved with the assistance of
the Federal Government.
Effect of Consumer COunselS.
The producer companies used to
complain that they could not pay the
wage increases demanded by MIR. Lewis
unless they passed them on to the
consumer. Now the passine-on proc
ess has been made legal by Govern
ment approval. 1t is true that the
matter cannot be carried to extremes
and provisions have been made for
consumers counsel which is supposed
to have the right of protest. But
consumers counsels have never been
effective around here, as the expert
ence with N R. A. codes amply dem
OnSrated.
So the coal operators ought to be
happy-at least some of them who
produce at low cost For the Gov
eminent will not prosecute any of
ly help them pass on their higher
labor costs to the consuming public.
What will the public say about
this? Public utilities are large users
of coal So are railroads and manu-
featuring enterprises. They, too, will
attempt to pass on the costs.
Will the coal operators make more
or less money? 1t depends on their
capital structures and operating plants
and methods. The price is to be an
average for coalproducing area.
The law specifies how the costs shall
be figured. The price is to be fixed
80 as Ito yield return per net ton
equal as nearly as may be to the
weighted average of the total costs
net per ton of the tonnage of the
minimum price area"
There are to be % minimum price
areas described geographically in the
law itself. Here is how the law reads
on costs:
The computation Of the total costs
shall include the cost Of labor, sup
plies, power, taxes, insurance, work.
mems compensation, royalties, depre-
citation and depletion (as determined
by the Bureau of Internal Revenue)
and all other direct expenses of pro-
duction, coal operators association
dues, district board assessments for
board operating expenses only levied
under the code and reasonable costs
of selling and the cost of administra-
ton"
What are reasonable selling costs
and the cost Of administration" A
group of competitors is to determine
this and a Government commission
is expected to have the wisdom to
question their conclusions when they
are not in the public interest. In an
other place the law says the COM
mission may fix maximum price 'in
order to protect the consumer of coal
against unreasonably high prices" but
IlO IlldhuuulH pIlCc Slldl NC CSldU-
lished for any mine which shall not
yield a fair return on the fair valoe
of the property"
What's fair return? One COM
pany recently organized buys at a
receivers sale some mines. Its interest
charges are low. Another company
which has weathered the depression
and owes money on its bonds and
notes must earn these fixed charges
and get them out of its gross income.
To protect the high-cost company a
maximum price is then established,
which gives the low-cost producer a
handsome and unreasonable profit.
The public, as usual, bears the burden.
And when the public outcry is loud the
way will be opened for Government
control of profit in coal and competing
industries and the cycle of fascism be-
comes complete.