Business & Finance: Union Blues

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In the Tennessee hills 45 miles northwest of Knoxville lies Royal Blue, a model coal-mining town. Its 300 miners' cottages, owned by the Blue Diamond Coal Co., are neat and attractive, and set in their own plots. Royal Blue has one of the county's biggest schools, a well-stocked company store, and a reputation as one of the healthiest and cleanest mining towns in the U.S. But last week the mine was closed down for good. For the town it was a death sentence, since Blue Diamond's Royal Blue is the only employer.

The closing came as a shock to Royal Blue's miners, but not to most Southern coal operators. They had expected that some mines would be shut by the $1.90-a-day hike in pay and the 10¢-a-ton boost in pension fund payments (now 30¢) promised to John L. Lewis' miners. Blue Diamond, which operates nine other mines in the South, closed Royal Blue because the new boosts would throw it into the red.

Royal Blue was not alone. A few days after it shut down, the Stearns Coal and Lumber Co., across the mountains in Stearns, Ky., told its 400 miners to start finding jobs elsewhere. The company had not signed with Lewis. Said a Stearns official, who estimated that the new contract would have cost his company $18,000 a month more to run the mine, which was already running in the red: "We just can't stand it. It's suicide."

By week's end, while several other mines got ready to close, many of Royal Blue's families were busily packing up, wondering where to go. Said the Knoxville Journal: "What Lewis has done, with the help of Government-manufactured inflation which has plagued all of us, has been to price the miners, along with the mine operators, out of many markets ... In many instances coal has given way to gas or oil ... Lewis had coal prices so high that the mine operators could not successfully compete."

The Wage Stabilization Board seemed in no hurry last week to okay Lewis' new contract boosts. The problem was that the new wages would put miners' salaries over the maximum increase allowed under WSB regulations. But thousands of miners, irked at the delay, started to walk out.