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UNITED MINE WORKERS OF AMERICA

By W. A. BoYLE, PRESIDENT

We appreciate the opportunity to present the views of the United Mine Workers of America on the state of the U.S. economy.

We believe that the objective of governmental policy in the economic sector should be the fullest development of the human and material resources of the United States. This development should be carried on within the framework of our social and political institutions and should reflect the dedication of our Nation to the cause of human dignity and justice.

President Johnson, in his economic message this year, stated the objective of governmental policy very well when he said:

"I regard achievement of the full potential of our resources— physical, human, and otherwise-to be the highest purpose of governmental policies next to the protection of those rights we regard as inalienable."

We share these views. Our remarks are aimed at helping to create policies which will further their implementation.

We would like to comment in this paper upon three areas which are in need of governmental action in order to insure the fullest development of our human and material resources. There areas are: (a) Research and development.

(b) Import programs.

(c) A national energy policy.

Research and development is perhaps the single most effective means to achieve national economic growth. Unfortunately, in our view the current status of research and development is such that it does not contribute all that it could to such progress.

When considering the efforts made by the Government in the field of research, we should not confine ourselves only to dollars. It may be argued that we have an almost unlimited fund of dollars. But, it is obvious to even the most uninformed that we do not have an unlimited number of men of science. Thus, when we commit a part of that human resources to one project, we forgo its application in other areas where such talent might be used to better advantage.

As it now stands, the bulk of the money for energy research is being spent in the atomic energy field. For the fiscal year 1970 the Atomic Energy Commission has budgeted more than $700 million to this area. This compares with the total request for the Office of Coal Research of $13,300,000.

The discrepancy is obvious. It is all the more apparent when we consider that the Atomic Energy Commission has spent more than $3 billion to develop the civilian atom since 1946 and that the Federal Government has granted to the atom privileges accorded to no other agency of government in our history.

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There are many arguments that can be made against the disproportionate share of research resources going to atomic power. There are many arguments that can be advanced that coal is being shortchanged. In the final analysis, however, coal research should be expanded because coal research holds the brightest promise of future benefits to the American people, benefits that can be measured in terms of economic progress and human welfare. Consider some of the following facts:

(a) Coal is the most abundant energy resource available within the continental United States. It is estimated that coal reserves form more than 80 percent of our total energy resources.

(b) Coal is well situated geographically with reserves located throughout most of the United States. Coal is mined in 26 of our States.

(c) Coal mining is a well-known and highly efficient technology. (d) Coal miners are the most productive workers in the world. (e) Coal is the mainstay of the American industrial economy, fueling more than 50 percent of the electric generation in the United States. It is also vital to the manufacture of steel and is an important contributor to the making of cement and many other industrial products.

(f) Coal is the "mother" fuel and as such is capable of producing most of the hydrocarbons upon which America depends.

(g) Coal, in its production, transportation and consumption, is one of the major American industries and contributes directly and indirectly several billion dollars to the U.S. economy each year.

To say that coal is important is to state the obvious. It is apparent that coal will be needed for many decades and even centuries to come. From this it is easy to reach the conclusion that the Federal Government would be wise to provide for an adequate coal research program. With coal research the following results can be accomplished:

(a) The efficiency of electric generation can be increased to a sig nificant degree, with the resultant economy in fuel utilization, a lowering of thermal pollution and a wiser utilization of our national energy

resources.

(b) Many of the problems of environmental pollution incident to the burning of coal would be reduced and eventually eliminated.

(c) The conversion of coal to liquid and gaseous fuel would be made a reality with a fuller development of our coal resources and an increase in industrial activity in coal mining areas.

(d) America could once again become self-sufficient in energy. In short, we are suggesting that the application of research dollars to coal would be beneficial to the economy and would foster economic progress out of all proportion to the actual money expended.

Finally, research in the fields of coal mine health and safety is vital to the national effort to reduce death and disease among our Nation's miners. For too long research in this area has been given short shrift by the Government. But, it is now obvious that unless new methods are developed to permit a safe and healthy environment in our Nation's coal mines, America will refuse to accept the cost in human lives that is now a tragic part of coal mining.

Over the past several years the American coal industry and many others have staggered under the burden of unfair foreign competition. At the same time, American industry has been prevented from enter

ing foreign markets by a variety of controls imposed by foreign governments to protect their own industries. This situation has reached a point of crisis.

Last year, approximately 93 million tons of residual oil in coal equivalent entered the United States. This total represents a 12.1percent increase from 1967 and a 125-percent increase from 1959 when import controls were first introduced.

Because of the policies surrounding the administration of the residual oil import program, there is in fact no program. The result has been the accelerating loss of markets for coal along the east coast of the United States. Each day we hear of other consumers who have switched from coal to imported residual and each day the danger of even more conversions becomes more and more acute. The result of this invasion has been twofold:

(a) It has reduced the ability of coal to compete along the east

coast.

(b) The east coast is fast becoming a captive of foreign nations for its fuel supply.

But, there is another and perhaps more dangerous implication behind the increase in foreign oil imports. That is the effect which such imports have on the over-all oil import program and thus the fullest development of our own national resources, especially our coal

resources.

It is well known that coal is the basic energy reserve in the United States. It is also well known that coal can be made into oil and other hydrocarbon products.

However, we are at the moment of decision in this area. We can proceed to develop our coal resources for such uses and reap all of the advantages of such development. Or, we can kill the fledgling coal-to-oil industry by overdependence upon cheap foreign oil.

America in her infancy faced a similar dilemma. At that time she chose to develop her own industries rather than to rely solely upon the good will of foreign nations. Such a choice must be made today and the same decision should also be made.

Other nations have learned this lesson well. In nation after nation restrictions have been raised against the import of American goods in favor of domestic industries. To prove our point, we have only to look to the experience of coal which is barred from at least one major industrial nation and restricted in many others. The moral is obvious. We must protect ourselves as other nations are doing, or we will soon lose that strength which flows from our industrial economy. Finally, there is the question of energy policy.

energy.

America is both a major producer and a major consumer of Coal, oil, natural gas and electric energy constitute four of the major industries in our Nation. Each are expected to continue to grow as the energy demand of the nation expands.

America consumes tremendous amounts of energy. The United States consumed in 1967 (the latest year for which figures are available) 2.2 billion tons of energy in coal equivalent. Of that total, 21.9 percent was in the form of coal. The bulk of the energy consumed in this country is produced within our borders. But, in recent years an ever-increasing amount has come from abroad.

The atom is now a force in the American industrial scene, due largely to Federal subsidies and a favorable climate created by the Federal Government.

Laws covering the energy industry are a crazy patchwork which are often in conflict and which rarely complement each other. Government agencies view a sector of energy from a particular standpoint, but no single agency has the authority or the mandate to view the subject of energy in a rational, overall sense.

For example, the Atomic Energy Commission promotes the development of atomic energy as a competitor of coal. The Interstate Commerce Commission makes freight rates which have a direct impact upon the competitive ability of coal but that Commission has no responsibility for the health of the coal industry. Policies bearing on energy are made by several committees of Congress. Yet, no one committee looks at the question from the overall national view.

There are serious questions concerning the national welfare which can be answered only from this standpoint. There are questions relating to research and development. There are questions on imports and questions on the phasing in of the very large quantities of oil currently being discovered in Alaska and elsewhere. There are questions relating to the impact on the environment and the quality of life caused by the large-scale production of energy. Finally, there are questions regarding the competition between different segments of the energy complex and, indeed, between the parts of any single segment. There is the question of the desirability of mergers in the energy industry. We have seen this trend with the coal industry and, more recently, we have witnessed the gradual takeover of coal by major petroleum interests. There is a similar development in the atomic field, with the emergence of a virtual duopoly in that area. There is the beginning of a similar trend in the electric utility field where cooperation can easily generate an atmosphere conducive to corporate concentration. The outcome is not yet clear, but the course of the events is ominous indeed.

Such disarray is not conducive to the national welfare, nor to the long-term value of our energy resources. We have suggested for many years that a national energy policy is required in the interest of the people of the United States. We suggest that such a policy is more important now than it has ever been before. We hope that the Congress will begin the task of developing a national energy policy without further delay.

We view the future of the U.S. economy with confidence. It is within our power to continue the long record of our Nation for economic progress within the context of social justice. With wisdom and a rededication of ourselves to this end, we will continue to forge ahead.

JERRY VOORHIS, PAST EXECUTIVE DIRECTOR,

COOPERATIVE LEAGUE OF THE U.S.A.

ECONOMIC PROBLEMS FACING THE UNITED STATES

These comments will be limited to one problem area: that of the extortionate interest rates now prevailing in our economy with particular reference to the effect of those rates upon the shelter of the American people.

Prevailing high interest rates are economically indefensible, dangerously inflationary, and destructive to the supply of homes for the American people.

A few facts about past experience will be helpful. In May 1920 the Federal Reserve Board increased its rediscount rate substantially and advised banks to raise their prime rate to 7 percent, which the banks promptly did. The result was a decline in the total cash income from all farm products from $14,600 million in 1919 to $8,150 million in 1921. American agriculture was plunged into a state of depression from which it did not recover until the middle of World War II.

During the years 1941-46-war years, it will be remembered-the U.S. Treasury was paying as little as three-eighths of 1 percent interest on short-term borrowings. In 1967 the Treasury was paying more than 5 percent on similar borrowings. What these figures mean is that it cost American taxpayers $3,750 a year to borrow $1 million in the 1940's, whereas in 1967 it was costing them more than $50,000. Each one-fourth percent increase in the interest rate adds about $1 billion to the annual interest which the American people must pay on the national public debt.

During the years of the Roosevelt and Truman administrations average interest rates on Government securities were held at about 22 percent. If this could be done against the tremendous pressures of the most terrible and costly war in history it is obvious that the same policy could be followed under any conceivable circumstances— given the will and the policy on the part of the Government and the Federal Reserve to do so.

But this has not been done. Today the U.S. Government is paying more than twice the rate of interest on its borrowings that it paid during the 1940's and very early 1950's.

The result is that interest on the national debt is, next to military expenditures, the largest burden the taxpayers must meet in the entire national budget-amounting at present to about $15 million a year. At the rates prevailing in 1951 that figure would be less than half what it is today.

In August 1967 Chairman Patman reported to the Congress that the American people had paid $43 billion in excess interest charges on the national debt alone since 1951.

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