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The CHAIRMAN. What is the price of coal determined by? Is it by demand and supply
Mr. HICKEY. No; it is determined by the combination. You have only to read the newspapers to see their announcements that from and after such a day coal will advance to such a price; that it will be held at that price for such a length of time, and will then be advanced to another figure.
The CHAIRMAN. I am familiar with the facts of the case. I am asking these questions simply for the purpose of drawing out your answers. Now, you say that the companies tix the price of coal ? Mr. HICKEY. Yes. The CHAIRMAN. Do they also fix the quantity ? Mr. HICKEY. Yes. If you call any of the leading private coal operators interested in collieries here, they will tell you that they would work their collieries every day if they could get cars. The combination fixes both the quantity and the price of coal. That is my belief. Of course I am not in the coal ring, and am not prepared to give you any specific information.
The CHAIRMAN. Who regulates the price of transportation from the mines to the market?
Mr. HICKEY. The railroad companies.
The CHAIRMAN. Then if the companies fix the price in the market and fix the price of transportation, has the individual coal operator in this region a chance to live except by their consenti
Mr. HICKEY. None. They can squelch any private operator, and they have done it in nearly every instance.
The CHAIRMAN. Suppose the mines were worked by individuals, and the railroad companies were confined to the business of transportation, do you suppose there would be any more coal sold than there is now?
Mr. HICKEY. Yes; because there would be competition. For instance, Mr. Germon owns two mines; now, suppose that instead of being interested in a colliery in Schuylkill County you had a like amount of capital invested in some manufactory which would consume a given quantity of coal, Mr. Germon and every other private operator would be anxious to supply you with coal, and they would compete with each other, and so the price would be reduced, and there would be more coal sold; but as it stands at present the private operators have nothing to say as to whether they shall sell you coal or not. They simply go to the combination and get their figures. The agents of the combination buy all the coal from the private operators, unless it is sold within a given distance, ten miles in some instances. A manufacturer came to this town some time ago and asked an operator what he would sell him coal for. The operator named his price. The manufacturer said, “That is much better than I can do with the coal company that I am buying coal from now, and I will take so many tons a month from you and pay you cash." Said the operator, “I do not believe it is any use for you to try to make a bargain with me, because we cannot get the coal shipped; the company regulate that." "Well," said the manufacturer, “Ï will step around and see the officers of the railroad company and try to arrange it.” “All right, if you can arrange it," said the operator. That manufacturer has not come back yet. He has not succeeded yet in making it all right with the railroad company.
The CHAIRMAN. Is not all the coal that the country will consume supplied at present? Is there not actually a surplus on hand that cannot find a market?
Mr. HICKEY. All the coal is supplied that the country will consume at the combination's rates; but if the coal were sold or transported cheaper, there would be a larger consumption.
The CHAIRMAN. In the history of the coal trade, has coal ever been sold cheaper than it has been sold this year?
Mr. HICKEY. Not since war time.
The CHAIRMAN, I think that coal has been sold this year as low as it has ever been sold at any time. Now, you say that the workmen are making no money, the operators are all suffering, the coal companies and the railroad companies are making no dividends; therefore the business seems to have got down to a point where it is unprofitable to everybody concerned. Now can you suggest any remedy?
Mr. HICKEY. I do not believe that your statements are correct, Mr. Chairman. I believe that the railroad companies are making money; or if they are not, it is because it has been stolen from them. You have only to look around you here to see instances of that. A railroad official is elevated to the position of director or superintendent. He is absolutely poor. He works in that position for a salary of from five to ten thousand dollars a year. He lives in a style that would cost you or me the whole amount of his salary, and yet in ten years that man is a millionaire.
Mr. THOMPSON. You say that the members of this combination have power to put up the price of coal as they please ?
Mr. HICKEY. Certainly.
Mr. THOMPSON. Is the object of the combination to make money? Is that what they are mining and shipping coal for, or is it merely to give employment to laborers ?
Mr. HICKEY. Their first object is to make money for themselves, they are not philanthropists.
Mr. THOMPSON. Then if they can fix the price arbitrarily, why do they not fix it high enough to enable them to make twice as much money as they do make i
Mr. HICKEY. You have heard of fixing the price so high as to destroy the demand.
Mr. THOMPSON. But they don't do that; because you say that coal is lower now than it was some years ago.
Mr. HICKEY. No; not really lower. It is lower in dollars and cents, but higher in proportion to earnings.
Mr. THOMPSON. But if this combination have the power to fix the price of coal without regard to supply and demand, why don't they fix it high enough to enable them to make more money, and at the same time to pay their laborers higher wages? Mr. HICKEY. I am not in the combination, and I cannot answer that. Mr. THOMPSON. Is there anything in the way to prevent them from doing it?
Mr. HICKEY. There is this to prevent it: If the price of coal were raised to twice what it is now, those who are using coal would be compelled to substitute some other fuel for it.
The CHAIRMAN. Or else to stop working. Mr. HICKEY. Yes. Mr. THOMPSON. Well, wouldn't it be better for the company to sell half as much coal and make twice as much money?
Mr. HICKEY. No; I do not see that it would be better. Many of the mines here are run on leases and some of them under peculiar contracts. The agreement is in many cases like this: “We will give you so much for every ton of coal that we take out of this mine, but at all events we will give you so much, or we will bind ourselves to take out so much."
Mr. THOMPSON. What would you suggest as a remedy for these troubles ?
Mr. HICKEY. I would suggest this : Let the State legislature first appoint a committee of men competent and disposed to inquire into this whole matter diligently so as to find out the actual cost of building and equipping a railroad, keeping it in running order, paying the men who run the trains and the officials an honest rate of wages for an honest day's work, and pay a fair dividend on the money invested; and then say to the railroad company, “Gentlemen, you must carry this coal and all other freight without any unjust discrimination; you must take it promptly, carry it carefully, and deliver it promptly in a business-like way.”
A very good illustration of this was given during the strike of the miners in the Schuylkill region in 1871. At that time, in that region, there were a great many small operators. Their miners were on a strike. The operators said to their men, “We are willing to go to work and pay you the price you demand”; but the Reading Railroad Company stepped in and said, “No; you shan't do that unless you pay us double the present freights.” A committee of the coal operators and miners called the attention of the senate of Pennsylvania to the grievance, and a committee was appointed to investigate the question. The miners and operators went before the committee and stated that the men were ready to go to work and the operators were ready to set them at work, but that Mr. Gowen and the Reading Railroad Company had raised the freights upon them so that it cost them more to ship a ton of coal to tide-water than the coal would bring when it got there. Mr. Gowen in behalf of the company stood up before the committee and said, “Gentlemen, we have so much money invested in the Reading Railroad Company; it costs so much to equip it; we have to keep so many telegraph operators, and about the same number of track-men, as if we were carrying 25,000 tons a week, which is the capacity of the road, but we are now shipping only five or ten thousand tons a week; the road is there, the round-houses are all built, the interest on the money invested in the road and in the rolling-stock goes right on; my salary and the salaries of all the other officials of the company go right on, and therefore we must have as much money for shipping those five or ten thousand tons as if the road were working to its full capacity. The only difference in the expense is that the wages of the train-men are less." Mr. Gowen even claimed that the rolling stock would wear out about as fast standing idle as if it were in use. The result was that the railroad company gobbled up the large majority of the mines in Schuylkill Connty at their own price, and drove nearly all the small operators out of the business. Another instance of the same kind was in Pittston last summer, when the Lehigh Valley Railroad Company took a similar position.
The CHAIRMAN. Then your remedy would be to have the legislature regulate the rates of freight on railroads ?
Mr. HICKEY. Yes; the legislature, where the railroad lies wholly within one State, and the Congress of the United States where the railroad extends through different States.
The CHAIRMAN. Would you have one definite rate fixed, or would you have some regulating power which might change the rates from time to time
Mr. HICKEY. I would not have one rate fixed. You know they have a law now in Illinois, which is known as the granger's railroad law. A law somewhat like that would probably answer the purpose, although there is a good deal of complaint made that they have been overdoing the thing, and have driven the railroads into bankruptcy, and all that sort of thing. The matter is one that would have to be inquired into very diligently, so as to get at the real cost of constructing and maintaining the railroads.
The CHAIRMAN. You would not confiscate the railroads, then?
The CHAIRMAN, Now, suppose it should be shown that the price of coal in the market would not warrant the companies in paying higher rates for mining, and that the railroads could not afford to carry the coal for lower rates of transportation, so that the practical result would be to stop the roads from running, what would you do about it then? No matter about the interest on the capital invested; that can stop, and does stop very often. Mr. HICKEY. The interest never stops.
The CHAIRMAN. O, yes. There are several railroads now in the hands of receivers. I am the receiver on a road 400 miles in length. I suppose you know that about 75 per cent. of all the railroads in the United States have gone into the hands of receivers or become bankrupt from some cause or other, and are not now able to pay anybody. Now in that state of things, how could you have Congress or a State legislature intervene with advantage to anybody
Mr. HICKEY. I do not believe that those railroads have gone into bankruptcy for the cause you assign. I believe it has come about in a large majority of cases through the dishonesty of their officials.
The CHAIRMAN. In a very large number of cases the railroads went into the hands of receivers because they could not earn enough to pay their running expenses. That was the case of the New York and Oswego Midland Railroad, of which I am the receiver. It was earning $2,000 a day less than expenses, and now it earns just about enough to keep it alive. There are other railroads in the United States in the same situation.
Mr. HICKEY. Well, take that very New York and Oswego Midland Road. I happened to be acquainted with a couple of contractors who were engaged in the building of that road; they had the building of twenty miles of it, I think, and I know that they and their friends reported that they made $100,000 clear profit out of that job in one summer. Now, why could not the company have built the road and got the benefit of that profit instead of the contractors ?
The CHAIRMAN. That is not the point. Here is a road completed, no matter now at what cost, and, after the work is done and the road is in running order, it does not earn enough to pay the expense of operating it.
Mr. HICKEY. This profit that I speak of that these contractors made was simply robbery of the company.
The CHAIRMAN. But that does not affect the question of the power of the road after it is built to earn its running expenses.
Mr. HICKEY, I know of a coal mine in this State which was formerly the property of an individual operator. He sold it for $95,000, and the parties who bought it immediately afterward issued $500,000 worth of stock based upon it. Now, it is not to be wondered at that that coal mine should not pay dividends on stock to the amount of more than five times its real value.
The CHAIRMAN. But that would not have anything to do with the cost of keeping the mine in operation. Mr. HICKEY. But the stock would be unprofitable to the stockholders.
The CHAIRMAN. Granted; but couldn't the mine produce just as much net money's worth as it produced before? Mr. HICKEY. But the stockholders would be swindled.
The CHAIRMAN. That is not the question here. The question here is, whether coal can be cheapened to the purchaser so as to enlarge the demand for it, and so to increase the demand and the compensation for the labor employed here in its production. Now, whether you call the capital of a mine five hundred thousand or five millions, it does not affect that question.
Mr. HICKEY. It affects it in this way: You three gentlemen go to work and buy a coal mine for $100,000, and immediately afterward you get a company incorporated and issue stock to the amount of half a million, and sell that stock at its face value to whoever has the money to pay for it. You, Mr. Chairman, are president of the company, at a large salary. Each of these gentlemen beside you is a director at a similar salary. The stockholder who buys that stock at its face value of course does not make any money, but it is a good thing for you gentlemen. The stockholder, making no money, naturally desires to increase the price of coal and reduce the wages of the miners so that he may get dividends. He will say, "I paid for this stock at par, but it has not paid me any dividend; so we must reduce wages to enable me to make some money." Take the case of the Midland Road that you have mentioned ; the contractors made money out of the road, while the stockholders have made none.
The CHAIRMAN. The men who built the road no doubt made money out of it, but that does not affect this question of transportation when the road actually does not earn money enough to pay its current expenses.
Mr. HICKEY. Well, the money paid those two contractors I told you about, had to be borrowed, and bonds were issued to raise it.
The CHAIRMAN. Certainly ; but not a dollar of interest was paid upon those bonds. Now, I want you to come to the practical question, whether any legislation could he recommended to provide a remedy for the difficulty in a case where the road does not earn enough to pay its current expenses. Your idea seems to be that the State legislature, or Congress, should regulate the price to be charged for transportation.
Mr. HICKEY. Yes. Mr. THOMPSON. Do you mean that they should regulate the actual tariff, or simply to provide that they should be uniform rates!
Mr. HICKEY. I want the rates made uniform, so much per ton per car per mile, so that there may be no favoritism.
The CHAIRMAN. Do you think there is favoritism now!
The CHAIRMAX. You think that some people have better terms for transportation than other people? Mr. HICKEY. Yes; else why these “special rates"?
The CHAIRMAN. And you think that there are some operators in this region who get better rates for transportation than other operators do ?
Mr. HICKEY. The great inajority of the operators here have no rates at all. They cannot ship. They have to sell their coal to the railroad companies.
Mr. RICE. Are there any operators who do not have to sell their coal to railroad companies?
Mr. HICKEY. Those fellows at Pittston ship their coal, as I understand. Mr. RICE. At special rates ? Mr. HICKEY. At rates agreed upon between themselves and the company; but I do not know of a coal operator in this Lackawanna field who is at liberty to ship his coal at all,
The CHAIRMAN. But you know the operators are at liberty to sbip their coal in the Schuylkill region ? Mr. HICKEY. Yes; at the railroad companies' rates. The CHAIRMAN. But the rate is the same to everybody, I suppose ? Mr. HICKEY. Some operators in that region charge that it is not.
The CHAIRMAN. I have not heard of late years that there was that difficulty there. The difficulty is that the rate is so high.
Mr. THOMPSON. Do you mean to say, Mr. Hickey, that the operators here cannot ship their coal at all ? Mr. HICKEY. I mean that, and nothing else.
Mr. THOMPSON. That the railroad companies publicly and persistently refuse to carry coal for private operators!
Mr. Hickey. O, no; they don't do that. They say, “We have not got cars," or “we cannot ship it;" or something to that effect.
Mr. THOMPSON. Has any person here attempted to compel them to ship ?
Mr. HICKEY. Because the company would crush the life out of them. I have asked coal operators here to go down to the legislature, but they were afraid.
Mr. THOMPSON. Why don't they go to the courts?
Mr. HICKEY. Going to the courts is an expensive affair when the plaintiff in the case has all his means invested in one coal breaker worth, perhaps, $100,000 altogether, and against him is pitted a railroad companywith capital running into the millions
Mr. THOMPSON. But it is not necessarily expensive to test the question whether a common carrier is not compelled to discharge his duties.
Mr. HICKEY. I have urged that very view on operators here, and they have invariably told me that it would be the death of them; that the railroad company woull crush them ont.
Mr. THOMPSON. But the very purpose of the law is to prevent the companies from discriminating against them or injuring them. Why, then, don't they attempt to have the law enforced I
Mr. HICKEY. O, they daren't do it.
Mr. HICKEY. Well, I don't want to be impertinent to you, but the ordinary driving boy here understands it.
Mr. THOMPSON. Here is a railroad company incorporated by the laws of Pennsylvania; it has certain public duties to perform as a common carrier, and among them is to transport the coal or any other commodity that any patron chooses to offer for transportation. Now, do you say that such a railroad company, incorporated under the laws of this State, dares to say to a patron who offers it coal for transportation : “No, sir; we are not shipping for operators; we will buy your coal, but we won't ship coal for anybody ?"
The CHAIRMAN. The witness's point is, that they do not refuse to ship, but that they ship only at a price which makes a loss to the operator.
Mr. HICKEY. I say that coal operators tell me that they cannot ship coal, and I do not see what difference it makes whether the refusal is direct or is put in the form of charging so high that it won't pay to ship.
Mr. THOMPSON. The law is that the railroad company, as a common carrier, is compelled to ship for every person who offers it freight for transportation, and to do it at equal rates without discrimination. Now, if that is not done, is it not the fault of the men themselves, who permit the railroad companies to impose upon them? The law is explicit enough and strong enough to compel the railroad companies to obey it if the men who are aggrieved would only invoke its aid.
Mr. HICKEY, The law is not strong enough. One of our railroad magnates in this State has been known to boast that he could drive a railroad locomotive through any law on our statute-book.
Mr. THOMPSON. I know that the poorest man in this valley can compel the strongest railroad company in this State to do its duty if he will only invoke the aid of the law and insist upon its enforcement.
Mr. HICKEY. He cannot do anything of the kind. Are you an attorney! Mr. THOMPSON. Yes, I am. And let me tell you now that in the oil region, where there has been far worse discrimination than in your coal region, the oil-line companies and the railroad companies are now in court on this very question.
Mr. HICKEY. But you would want a large fee to go into court with a case of that kind, and a man on the verge of bankruptcy here would not have the money to pay you, and so he would rather "endure the ills he knows than fly to others he knows not
Mr. THOMPSON. But this discrimination has been continued for years, I understand?
Mr. HICKEY. Yes, and I have urged upon operators to go into court, but they have said that they could not do it.
Mr. THOMPSON. Then what is the use of passing more laws on the subject if those which are now on the statute-book cannot be enforced ?
Mr. HICKEY. I want the State to enforce the law which I want passed.
Mr. THOMPSON. Yes; but the citizen who wants the protection of the law must help himself first. If I fall in the streets of Scranton and break my leg, owing to negligence on the part of the corporation, the law gives me remedy against the city, but it does not commence a suit for me. Just so in the case of a common carrier. The State makes the law giving protection to all, but it does not bring a suit for the aggrieved operator whose coal is refused by the railroad company. It makes the law and opens the doors of the courts, and if the operator does not go there for relief it is his own fault. Now, if the operator will not do this, and if the laws which already exist are permitted to be disregarded as you say, then I ask what is the use of passing more laws for the same purpose ?
Mr. HICKEY. You say that every man has a right to have his goods, whether coal or anything else, shipped by a railroad company at equal rates with anybody else? Mr. THOMPSON. That is the law.
Mr. HICKEY. Well, here is a combination of merchants known as the board of trade, and a merchant belonging to the board gets his goods transported cheaper than another merchant who does not belong to the board of trade gets his.
Mr. THOMPSON. Then why does not the merchant who is discriminated against bring a suit?
Mr. HICKEY. He is not able.
Mr. THOMPSON. But the State does not enforce its own laws. That is not the system of government under which we live.
Mr. Rice. Suppose the State appointed a board to look after the railroads; to receive and consider the complaints of merchants and shippers; the board to be authorized, in case a complaint proved to be well founded, to bring, in the name of the State,