Business & Finance: Lump, Egg, Pea

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There are 6,315 bituminous coal mines in the U. S. and last year they produced 430,000,000 tons of soft coal. On each of these tons producers lost an average of 11¢. This state of affairs in the $3,500,000,000 coal industry was no 1936 phenomenon; save for a brief respite under NRA it has been the normal condition of coal since 1923. After NRA came the Guffey Coal Act (also found unconstitutional) and finally last spring the Guffey-Vinson Act creating a seven-man National Bituminous Coal Commission. This body, with powers much like those of an NRA code authority (minus jurisdiction over labor practices), had as its first big job to fix minimum coal prices. Last week it gave birth to its first set of minima, to the outspoken approval of almost all coal men, the bitter disapproval of coal's best customers—industry and railroads.

The Guffey-Vinson Act split the U. S. into 23 coal-producing districts, each with a branch office supervised from Washington by the B. C. C. Also created were ten minimum price areas. Nos. 1, 2 & 3 (covering Iowa and all the U. S. east of the Mississippi), which produce 80% of all U. S. soft coal, are those affected by last week's price setup. The rest of the U. S. will be put under a similar price code in a few weeks. In each of the 23 producing areas each quality and size of coal is classified according to production costs. Sizes include lump, egg, pea, nut, run-of-mine, industrial slack and stoker. Qualities range from "A" through "G" or further, depending on sulfur and ash content, b.t.u. rating, etc. Result of such complications is that the B. C. C. has had to work out 30,000 different minimum coal prices.

In figuring out these prices the Commission considered not only actual production costs but also its belief that rebate practices almost universally favored railroads and industry at the expense of the home consumer. B. B. C. asked producer boards (one in each district) to suggest their own minimum price schedules. Then, B. C. C. arbitrarily raised the minimum suggested by the producing boards 5¢ to 20¢ per ton for coal sold to industry, lowered their recommendations 5¢ to 15¢ per ton for coal sold to home owners.

To enforce its minimum, B. C. C. signs up producers to a code whereby each agrees to pay 1¢ per ton excise tax. Any producer who refuses to sign the code must pay a prohibitive tax of 19½% on his gross sales. So far 6,108 of the 6,315 U. S. bituminous mines have signed up, for coal producers, desperate after their many lean years, are nearly unanimous in favor of price fixing.

To guard against regimentation and bureaucratic unfairness, the Guffey-Vinson Act established a Consumers' Counsel (at present Senator Couzens' onetime Secretary John Carson) whose duty it is to protect the public. So far he has had about 200 complaints to present to the Commission. Most publicized came from the Association of American Railroads which last week asked that the new price schedules be delayed for further study because they mean a $20,000,000 added annual burden to the greatly depressed U. S. railroads. B. C. C. refused. In case coal prices begin to get out of hand in the other direction, B. C. C. has power to establish maximum price levels.