# Appendix — United States v. General Dynamics Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0099%3A01 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1974 - **Citation:** 415 U.S. 486 ## Text Volume I—Pages 1464 | MICHAEL Bonk Jn Supreme Court of the United Staten OcTOBER TERM, 1973 No. 72-402 UNITED-.STATES OF AMERICA _ Appellant V. GENERAL DYNAMICS CORPORATION, THE UNITED ELECTRIC CoAL COMPANIES, AND FREEMAN ~ CoAL MINING CORPORATION ON APPEAL FROM THE UNITED STATES DISTRICT COURT | FOR THE NORTHERN DISTRICT OF ILLINOIS 2 JURISDICTIONAL STATEMENT FILED SEPTEMBER 8, 1972 PROBABLE JURISDICTION NOTED DECEMBER 11, 1972 Supreme Court of the Anited States OcTOBER TERM, 1973 No. 72-402 UNITED STATES OF AMERICA Appellant — 0 GENERAL DYNAMICS CORPORATION, THE UNITED ELEcTRIC COAL COMPANIES, AND FREEMAN * CoaL MINING CORPORATION * ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS INDEX Page Relevant Docket Entries 1 Complaint by the United States filed September 22, 1987 10 Excerpts from Deposition of Frank Nugent, taken September 10-11, 1968 18 Excerpts from Deposition of Nicholas T. Camicia, taken September 17, 1968 74 Excerpts from Deposition of John M. Morris, taken Septem- ber 25 & October 1, 1968 99 from Deposition of Frank Frederick Kolbe, taken October 10, 11, 15, 17, 18, 22, 24, 28, 29, 30, & 31, 1988 126 from Deposition of Robert H. Inman, taken No- vember 4, 1968 184 Excerpts from Deposition of Joseph C. Tabor, taken Novem- } ber 8, 1968 214 Excerpts from Deposition of Thomas J. Tarzy, taken No- vember 14-15, 1968 : 215 II INDEX Excerpts from Deposition of Burl Charles Jensen, taken November 21, 1968 Excerpts from Deposition of Thomas H. Latimer, taken December 3, 4, & 5, 1968 Excerpts from. Deposition of Joseph J. Gallagher, taken De- cember 12, 1968 man from Deposition of William I. Kurt, tale Do- cember 12, 1968 Excerpts from Deposition of Martha Terleke, taken Decem- ber 16, 1968 Excerpts from Deposition of Charles W. Stadell, taken De- cember 16, 1968 Excerpts from Deposition of Harold K. Pedersen, taken De- cember 18, 1968 from Deposition of John P. Maguire, taken De- 23, 1968 Excerpts from Deposition of B. H. Sloane, taken March 7, 1969 Excerpts from Deposition of Hugh E. Petersen, taken March 18, 1969 __. Excerpts from Deposition of John T. Middleton, taken March 18, 1969 - Excerpts from Deposition of P. W. Dorrane, taken March 20, 1969 2 Excerpts from Deposition of Leon King, taken March 25, 1969 Excerpts from Deposition of Josephine C. Burton, taken April 14, 1969 Excerpts from Deposition of John P. Nix, taken April 14, 1969 Excerpts from Deposition of Aldo P. Brazzale, taken April 14, 1969 Excerpts from Deposition of Clarence V. Beck, taken April 16, 1969 291 m INDEX “i Excerpts from Deposition of Winford C. Peterson, taken April 18, 1969 Excerpts from Deposition of Harold S. Walker, Jr., taken Aprii 18, 1969 Excerpts from Deposition of William J. Stanley, taken An 24, 1969 — Fes. ee Oe ee 1 : Excerpt from Deposition of William D. Stiehl, taken May 20, 1969 7. Excerpts from Deposition of Reuben A. Redard, taken June 10, 1969 „„ Gaunt, taken June 3, 1 Excerpts from Deposition of Gordon J. Morrison, taken June 20, 1969 Excerpts from Deposition of John Samuel Moore, taken June 20, 1969 a P June 23, 1969 Excerpts from Deposition of Leroy M. Abrahamson, taken June 26, 1969 a Gamble, taken June 1969 Excerpts from Deposition of Jack A. Simon, taken July 31, 1969 Excerpts from Deposition of John E. Organ, taken August 1, 1969 Excerpts from Deposition 1 John Paul Weir, taken August 5, 1969 trom Deposition of S. Smith Griswold, taken August N — 19, 1969 675 678 Excerpts from Deposition of Bruce C. Netschert, taken Au- gust 20, 1969 731 Excerpts from Deposition of Abraham Gerber, taken Au- gust 21, 1969 764 Excerpts from Deposition of Peter O. Steiner, taken October 7-8, 1969 781 The Stipulated Testimony of C. C. Smith, dated December 4, 1968 ’ 832 The Stipulated Testimony of J. R. Sinclair, dated July 9, 1969, and attached exhibits 1-4 838 The Stipulated Testimony of George H. Shipley, dated July 10, 1989 848 The Stipulated Testimony of George B. Knecht, dated Sep- tember 3, 1969, and attached exhibits 1-10 851 The Stipulated Testimony of David G. Hemminger, dated September 17, 1969 869 The Stipulated Testimony of John Sant, dated September 17, 1969 870 Excerpts from Transcript of Proceedings before Hon. Edwin . A. Robson, United States District Judge for the Northern District of Illinois, Eastern Division, on October 3, 1969... 872 Motion of Frank F. Kolbe to be excused from testifying at trial, and attached letter dated March 4, 1970 875 Defendants’ Proposed Findings of Fact and Conclusions of Law filed October 27, 1970 880 Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson, United States District Judge for the Northern District of Illinois, Eastern Division, com- mencing March 30, 1970: Appearances . 1017 Testimony of Jack A. Simon —cross 1018 —redirect 1037 —direct V INDEX Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on March 31, 1970: Appearances Testimony of John M. Morris —direct Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 1, 1970: Appearances Testimony of John M. Morris (resumed) —cross Testimony of Louis R. Tomey —direct —redirect —recross 1044 1098 1105 1116 1128 1132 Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 2, 1970: © Appearances Testimony of John M. Morris (resumed) —cross —recross Testimony of Reuben Thorson . —direct Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 3, 1970 : Appearances Testimony of Victor H. Wood —direct _- 1134 1135 1164 1164 vi INDEX Page Excerpts from Transcript of Proceedings held before the CCC Testimony of A. H. Davis (resumed) —cross 1219 i —redirect 1227 —recross 1229 i —cross 1250 Testimony of Reuben Thorson —cross 1255 Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 7, 1970: Appearances 1262 | Testimony of Robert W. Steele | —direct 1263 — 1269 redirect 1279 Testimony of Thomas H. Latimer . —direct 1282 —cross 1284 Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 8, 1970: Testimony of E. C. Hill —direct de 1290 —cross 4 1305 Testimony of Richard Drollinger Vil INDEX Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 9, 1970: Appearances Testimony of George Gamble —direct —cross 2 —recross . Testimony of Thomas Latimer (resumed) —cross Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 13, 1970: Appearances Testimony of Nicholas T. Camicia —direct : —cross . redirect Testimony of Samuel F. Sherwood —direct —cross - A. —redirect Testimony of Norman W. Moser —direct —cross 2 Excerpts from Transcript. of Proceedings held before the Hon. Edwin A. Robson on April 14, 1970: Appearances Testimony of Norman W. Moser (resumed) —cross —redirect Testimony of Gordon R. Corey —direct 4 Page 1328 1351 1354 1355 1362 1370 1372 1377 1384 1385 1391 1398 1399 1402 1404 1421 1443 1444 1446 INDEX Page Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robinson on April 14, 1970:—Continued Testimony of John D. Ames from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 15, 1970: Appearances 1456 Testimony of Daric N. Miller direct 147 Testimony of Frank Nugent Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 16, 1970: Appearances 1487 Testimony of Hollie Hopper —recross 1514 Testimony of Frank Nugent (resumed) —direct 1515 Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 17, 1970: Appearances 1540 » Testimony of Thomas L. Craig Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 20, 1970: INDEX Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 20, 1970:—Continued Testimony of Peter O. Steiner 7 — 1862 Testimony of Robert H. Quig direct 1593 —cross 1598 —redirect 1599 Testimony of Peter O. Steiner (resumed) —direct 1601 Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 21, 1970: Appearances 1630 Testimony of Peter O. Steiner (resumed) —cross 1631 —redirect 1672 —recross 1677 Excerpts from Transcript of Proceedings held before the Hon. Edwin A. Robson on April 22, 1970: Appearances 1678 Testimony of James M. Folson - —direct 1681 —cross 1695 —redirect . 1711 *Decision on the Merits entered by the District Court on April 13, 1972 JS. 1 Notice of Appeal to the Supreme Court by the United States dated June 7, 1972 1717 Order of the Supreme Court noting probable jurisdietion. dated December 11, 1972 1718 * Not reprinted in Joint Appendix. Citation is to appendix of Jurisdictional Statement. 1° UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS Civil Action No. 67 C 1632 UNITED STATES OF AMERICA, PLAINTIFF V. GENERAL DYNAMICS CORPORATION, THE UNITED ELECTRIC COAL COMPANIES AND FREEMAN COAL MINING CORPORATION, DEFENDANTS RELEVANT DOCKET ENTRIES Date 1967 September 22 Filed Complaint and 8 copies October 17 On stipulation order time for defendants to answer, move or otherwise reply to complaint hereby extended to and including Nov. 20, 1967. DRAFT-Robson, J. 1968 March 21 Filed letter re interrogatory No. 54 from | attorney for plaintiff. July 16 Enter Pretrial Order No. 1 (DRAFT). En- ter Protective Order with respect to defend- ants documents (DRAFT). Enter Order with respect to defendants Claim of Attorney- Client Privilege (DRAFT). ROBSON, J. September 9 Filed Stipulation and Protective Order cover- ing disclosure to defense counsel of informa- tion received by Plaintiff from Coal Com- panies and Coal Purchasers Knecht with exhibits 1 through 10 attached. Pre trial conference held. Order proposed findings of fact, etc., to be submitted by No- vember 17 and cause set for further pre-trial conference on December 5, 1969 at 2 p.m.— Robson, J. March 31 April 1 April 1 April 2 April 3 April 6 April 7 April 8 Filed Plaintiff's pre-trial brief. Cause called for trial. Opening statements made. Evidence heard for government. Gov- ernment rests. Order any motions to be made by defendant to be entered and considered with case itself. Evidence heard in part for March 31, 1970—Robson, J. cause adjourned until April 1, 1970—Robson, J. Filed defendant’s motion to dismiss at the close of plaintiff's case Further evidence heard for defendant—order cause adjourned until April 2, 1970—Robson, J. Further evidence heard for defendant. Order cause adjourned until April 3, 1970 at 9 a.m. —Robson, J. Further evidence heard for defendant—order cause adjourned until April 6, 1970—Robson, J. Further evidence heard for defendant. Order cause adjourned until April 7, 1970—Robson, J. Further evidence heard for defendant—Order cause adjourned until April 8, 1970—Robson, J. Further evidence heard for defendant order cause adjourned until April 9, 1970—Robson, J. April 13 April 14 April 14 April 14 April 15 April 16 April 17 April 20 Further evidence heard for defendant— Order cause adjourned until April 13, 1970 Robson, J. Further evidence heard for 8 Order cause adjourned until April 14, 1970—Rob- son, J. Further evidence heard for defendants. Or- der cause adjourned until April 15, 1970— Robson, J. Filed Defendants’ response to plaintiff’s mem- orandum request that it be allowed to call rebuttal witnesses for purposes other than those originally W to the defendants. Filed Plaintiff's reply to defendant’s objec- tion to the expended scope of questions possi- bly to be asked of two of plaintiff’s rebuttal witnesses. Court rules orally from bench—Order plain- tiff's motion to expand rebuttal testimony hereby granted—Further evidence heard for defendant—order cause adjourned until April 16, 1970—Robson, J. Further evidence heard for defendant. Order cause adjourned until April 17, 1970—Rob- son, J. Rebuttal evidence heard in part for govern- ment. Order cause adjourned until April 20, 1970—Robson, J. Evidence heard in part for defendants. Evi- dence heard in part in rebuttal for govern- ment—Order cause adjourned until April 21, 1970—Robson, J. May 12 May 12 May 12 May 20 May 20 June 8 June 15 June 15 August 3 August 28 until May 1, 1970 at 11 a.m. to rest formally and to set briefing schedule on the merits— Robson, J. Filed Subpoena ad testificandum returned served on Glen W. Beeman—$2. Filed Subpoena ad testificandum returned served on M. A. Shumate. $2. Filed Defendants’ motion to strike certain Government exhibits. Filed Notice Filed Government’s memorandum in opposi- tion to defendants’ memorandum in support of its motion to strike certain Government Exhibits defendants’ motion to strike certain Govern- 5 ment Exhibits. Filed Notice Filed Response to Defendants’ Reply to Gov- ernment’s memorandum regarding objections to Government Exhibits Filed Government’s post trial brief, (findings of fact and conclusions of law). Filed Corrections to Government’s post trial brief, findings of fact and conclusions of law filed August 3, 1970. April 18 June 7 October 27 presentation of a certified copy of this Order Filed defendant’s reply to plaintiff’s proposed findings of fact and conclusion of law. Filed Defendant’s Post-Trial Brief. Filed correction to defendant’s reply to plain- tiff’s proposed findings of fact and conclusion of law. Filed Government’s response to Defendants proposed findings of fact and conclusions of law. Filed Plaintiff’s Post Trial Reply Brief. Enter agreed order permitting sale of one- half interest in Midwest Towing Company, Inc., with proceeds of sale to be placed in escrow—Robson, J. (DRAFT) It is ordered that judgment be and it is here- by rendered for the defendants. It is further ordered that the complaint be and it is hereby dismissed. It is further ordered that costs be assessed against the plaintiff. (Draft) Rob- son, J. Filed notice of appeal to the Supreme Court of the U.S. by the United States of America. It is hereby ordered that all funds presently deposited under the terms of Escrow Agree- ment dated March 11, 1972 between United Electric Coal Companies and the First Na- tional Bank of Chicago are to be released to the United Electric Coal Companies upon 1972 December 18 Filed depositions of Frank Frederick Kolbe in 12 volumes. Filed deposition of Harold S. Walker, Jr. Filed deposition of P. W. Dorrance Filed deposition of George P. Gamble Filed deposition of Bernard W. Schotters. Filed deposition of Leroy M. Abramson. deposition of Abraham Gerber. Filed deposition of John Paul Weir. Filed deposition of Leon King. Filed deposition of Jack A. Simon. Filed deposition of John P. Nix. Filed deposition of Aldo P. Brazzale. Filed deposition of Josephine C. Burton. Date 1973 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 February 5 Filed deposition of William J. Stanley. Filed deposition of William D. Stiehl. Filed deposition of Thomas N. Ward. Filed deposition of John Samuel Moore. Filed deposition of Joseph J. Gallagher. Filed deposition of William L. Kurtz. Filed deposition of Reuben A. Redard. Filed deposition of Harry B. Gaunt. Filed deposition of Winford C. Peterson. Filed deposition of John E. Organ. Filed deposition of Gordon J. Morrison. Filed deposition of S. Smith Griswold. Filed deposition of Hugh E. Petersen. Filed deposition of Bruce C. Netschert. Filed deposition of Peter O. Steiner in two volumes. Filed deposition of Thomas H. Latimer in two volumes. Filed deposition of John M. Morris in two volumes. Filed deposition of Robert H. Inman. Filed deposition of Joseph C. Tabor. Filed deposition of Thomas J. Tarzy in two volumes. Filed deposition of B. H. Sloane. Filed deposition of John P. Maguire. Filed deposition of Harold K. Pedersen. Filed deposition of Charles W. Stadell. Filed deposition of Martha Terleke. Filed Plaintiff’s Exhibits in Twenty (20) Volumes. Clerk’s file copy of transcript of proceedings had before Hon. Edwin A. Robson, on 26, 1969, May 1, 1969 in 2 volumes, July 8, 1969, July 14, 1969, September 4, 1969, Oc- tober 8, 1969, November 5, 1969, January 30, 1970, February 13, 1970, March 4, 1970, March 13, 1970, March 30, 1970, April 7, 1970 in 2 volumes, April 8, 1970 in 2 volumes, April 9, 1970 in 2 volumes, April 18, 1970 in 2 volumes, April 14, 1970, April 15, 1970 in 2 volumes, April 16, 1970 in 2 volumes, April 17, 1970, April 20, 1970 in 2 volumes, April 21, 1970 in 2 volumes, April 22, 1970 in 2 volumes, May 1, 1970, March 30, 1970 in 2 volumes, March 31, 1970 in 2 volumes, April 1, 1970 in 2 volumes, April 2, 1970 in 2 vol- umes, April 3, 1970, April 6, 1970 in 2 vol- umes, June 30, 1970 and June 8, 1971, Filed by the Official Court reporter in 48 Volumes. Filed Defendant’s Exhibits in 21 Volumes. 10 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS ; EASTERN DIVISION Civil Action No. 67 C 1632 UNITED STATES OF AMERICA, PLAINTIFF v. GENERAL DYNAMICS CORPORATION, THE UNITED ELECTRIC COAL COMPANIES AND FREEMAN COAL MINING CORPORATION, DEFENDANTS Equitable Relief Sought Filed: September 22, 1967 COMPLAINT The United States of America, by its attorneys, acting under the direction of the Attorney General of the United States, brings this action against the defendants named herein, and complains and alleges as follows: I JURISDICTION AND VENUE 1. This complaint is filed and this action is instituted under Section 15 of the Act of Congress of October 15, 1914 (15 U.S.C. § 25), as amended, commonly known as the Clayton Act, in order to prevent and restrain the violation by the defendants of Section 7 of that Act. 2. Each of the defendants is found and transacts business within the Northern District of Illinois, Eastern Division. II DEFENDANTS 3. General Dynamies Corporation (hereinafter referred to as GD“) is named a defendant herein. GD is a corp- manufacture and sale of a wide variety of products sociated with, among others, the defense, space, nuclear, and electronic industries. GD, through subsidiaries, is also engaged in the mining and sale of coal. For the year ended December 31, 1965, GD had net sales of $1,472,785,000 and net profit after taxes of $49,269,000. 4. The United Electric Coal Companies (hereinafter ‘referred to as “UEC”) is made a defendant herein. UEC is a corporation organized and existing under the laws ended December 31, 1965, 20 had net sales of $21,808,- 576 and net profit after taxes of $2,467,744. 5. Freeman Coal Mining Corporation (hereinafter re- ferred to as ‘ ”) is made a defendant herein. Freeman, an Illinois corporation with its principal office 4 ines, all of which are located in the State of Illinois. In 1965 Freeman had net sales of $81,665,837 and net profit after taxes of $1,114,220. III DEFINITIONS 6. The Eastern Interior Coal Province is defined as the bituminous coal field which blankets sixty-seven per cent of Illinois and much of southwestern Indiana and western Kentucky.. This bituminous coal field constitutes a single, large bituminous coal region which is geologically united. 2 The Eastern Interior Coal Province sales area is TRADE AND COMMERCE 8. Bituminous coal represents one of the F most 215 112 Ine A es 75 eel 17725 al hia THe 1 : A 8 itt gif 1114474 17 Lilli He nL 1 e 11 41117 e 8112711 1211141 222 15 15 HE Vv OFFENSE CHARGED 21. Material Service Corporation, as of December 30, Riera ae 11 ae 15 rt) 211 sa 4 1 8 i 77 1167 2 a i at i 5 8 333 1 15 10 U 145 1 1 ali | 1 0 7 i ial iat 1 1 il : i 1 1 1 Bs 0 175 16 (a) Taking any further action to change, directly or indirectly, the operation of the business of UEC or the personnel connected with such operation; and (b) Shifting sales, personnel, or equipment or any as. sets whatsoever UEC to any of the mines and facilities of GD and Freeman. 3. That GD be required to divest itself of all the stock nt UN ee tion. 4. That GD and Freeman be enjoined from acquiring stock or assets of any other firm engaged in the produc- tion or sale of bitmuinous coal in the State of Illinois or in the Eastern Interior Coal Province. 5. That the plaintiff have such other and further relief which the Court may deem just and proper. 6. That the plaintiff recover the costs of this suit. Dated: /s/ Ramsey Clark RAMSEY CLARK Attorney General /s/ Donald F. Turner DoNALD F. TURNER Assistant Attorney General /s/ Baddia J. Rashid Bao J. RASHID JOHN E. SARBAUGH BERTRAM M. LONG Attorneys, Department of Justice EDb wan V. HANRAHN United States Attorney Joun T. Cusack Attorney, of Justice Room 2634 United States Courthouse AFFIDAVIT STATE OF ILLINOIS ; 88 COUNTY OF COOK ) JOHN T. CUSA i sworn, t States Department of Justice; that he has ig if engaged in the preparation of this proceeding ; that he has read the foregoing Complaint and knows the contents and is familiar with the subject matter thereof; that he is informed and believes that the allegations of fact contained therein are true; and that his information con- Subscribed and sworn to before me this day of » 1967. Ka M. Rei 2 My commission expires March 22, 1969. 18 {8] EXCERPTS FROM DEPOSITION OF FRANK NUGENT, TAKEN SEPTEMBER 10-11, 1968 FRANK NUGENT, called as a witness by the plaintiff herein, having been by me, the said Frances B. Spina, as Notary Public aforesaid first duly sworn, was examined upon oral in- terrogatories and he did thereupon depose and testify as follows: DIRECT EXAMINATION BY MR CUSACK: Please state your full name. Frank Nugent. What is your home address? 1630 Sheridan Road, Wilmette, Illinois. By whom are you employed, Mr. Nugent? General Dynamies Corporation. And what is your position at General Dynamics? Group Vice-President. And where is your office located? 300 West. Washington Street. Could you give us a little something about your educational background, Mr. Nugent? [4] A Evanston High School, a good many years ago, and I can’t tell yeu the year, plus night school work, and so forth; private tutoring, I guess you could say. Q When did you first go into business? A I went in the coal business in 1920 with the Rock Island Coal Mining Company. I remained there for a short period of time, and then went to work for the Freeman Coal Mining Corporation on November 14, 1921. Q Was Freeman at that time headquartered in Chi- OPOPO PO PO Po A Yes. ; 19 V 12 1 11 ii a 3] 2 Hee al HE i! : a eee) 11 4181 151. 31 : 75 Fi 1 ljittee ig hig l 17537 ie 111 is +? 16113 11 22172127 ul 1 114442 5275 iger seg, 1 ff J 821 Hi 11 41 1 1 1 1 rE 1 1 if 375 45 32 5 4 Ar 1 giles 127 i 773 MeL shade 155 145TH f igs 85 Q That is, both by UEC and Freeman? 1109] A Yes. | ‘ Q Would you have an idea of what percentage of the mines’ production is sold in the district where each mine is located? A Are you talking about districts or are you talking about— 8 Freight Rate Districts. A Freight Rate Districts? Q Yes. A It would be small. I would have to look at a map, if I may. Q_ I am going to show you a document which has previously been identified as t Deposition Exhibit 38, I believe. . A Ves. (There was a short interruption, after which the taking of the deposition was resumed as follows:) THE WITNESS: Now, if you will repeat the ques- tion for me, concerning Freight Rate Districts, I think I understand it, but I would like to have it repeated. MR. EISEN: Would you read the question, please, Mr. Reporter. * * * * [126] MR. HEDLUND: What is the question pend- ing? Is there a question pending? MR. EISEN: Yes, there is . * HEDLUND: May I have that, please, Mr. Vou- me 5 Q (Read by the reporter.) BY THE WITNESS: | A That is a natural understanding of competition, rivals. N BY MR. EISEN: Q That is the way businessmen use the expression every day, isn’t that right, in the conduct of their busi- A Yes. | Q So in that regard, does the Peabody mine in the 86 Fulton County area compete for Commonwealth Edison business with the Crown mine? A I do not know that you would call it competition. Insofar as Commonwealth Edison can get their coal from Peabody, Crown would not be competition at all. You can call them competitors only to the extent that the supply of coal in Fulton County is not sufficient to meet the needs of Edison, so they [127] have to go be- yond that area someplace to get the coal. Q Does Commonwealth Edison pay a premium, do they pay more per BTU to Crown than they do to Pea- . body? A I don’t know what they pay Peabody. Q Do they pay more for Crown mine coal per BTU than they do for Buckheart coal per BTU? MR. KEMPF: Just a minute, please. May I have the question read, please, Mr. Youker? Q (Read by the reporter.) MR. KEMPF: Are you talking about their end cost per BTU delivered, through their own facilities and things like that, or are you talking about F.O.B. mine, or what? MR. EISEN: The witness has the question. MR. KEMPF: If the witness understands the ques- tion, he may answer. BY THE WITNESS: A I do not recollect what the prices are. My recol- lection is that the F. O. B. prices are similar on a BTU basis. I do not know about the delivered prices. BY MR. EISEN: [128] Q Would you say that they were the same? A Similar; almost the same. 2 Py “almost”, you mean what? One or two cents a ton , A Within a few cents, yes. Q Could you describe how the location of present and potential customers of UEC affects its ability to compete? MR. KEMPF: Will you read the question, please, Mr. Youker? Q (Read by the reporter.) 87 BY THE WITNESS: A I do not exactly understand what you are at, but if you mean the potential customers that UEC could possibly serve, any utility with a plant in the fu- ture that may be near the location of the Fulton County area, naturally UEC would be in a better position to compete for it, if they had the reserves to do so. I do not know if that fully answers what you are driving at. * > o * [129] Q What advantages does that coal have now, in the light of its transportation cost factor, with regard to existing customers? near the Illinois River. 2 Do they go down the river as well as up the river? es. Q How far down do they go? A Their present customers? 2 Yes. I don’t know how far. [154] Q Yes. A Yes, sir. Q What does “control by location” mean? A If I understand what you are asking, it means that certain reserves, by the nature of the location of them, control other reserves that are not readily available to someone else, what we call checkerboarding. 88 Q With that explanation, does Freeman control any reserves by location? A Yes, they do. ls that in the area of each one of the Freeman mines? A In the case of Freeman it only applies to one loca- tion, and that is the Crown acreage, the so-called Crown acreage. | Q Is that in addition to the mining properties which we have previously discussed? A I don’t follow the question. Q The previous figure you have given was 236,501,- 720 tons, plus 360,000 tons recently acquired. A Oh, yes. It is in addition to that. There are addi- tional acres that we consider [155] are controlled. [160] Q Is there a rule of thumb that coal mining [161] companies follow in this regard? A You mean as to the price they would pay? Q No. to the amount of money budgeted for that purpose. 0 — 5 money budgeted for that purpose? es. A There is no rule of thumb. In the case of United Electric, we have an open bank account, and if we can find reserves that can be mined at a redsonable price, we can go get them. I do not think we would have any trouble. Q Do you have somebody out looking? A Oh, yes. Q Who is out looking? A We have a geologist who spends his full time, a fellow by the name of Bill Jensen. We have a land man named Tom Latimer, who spends all of his time trying to acquire additional reserves. We have a Western representative who is looking at all the Western coal reserves, who is trying to find suita- ble reserves for stripping, that is, find reserves suitable for stripping for a proper customer. Q What is your Western man’s name? [162] A Tom Tarzy. 89 Is he an executive of the company? A Yes, he is. He is a ice president, of the Western operations. Q Are you spending money at Freeman looking for reserves also? A When you say “spending money”, I do not know what you mean. Q Well, do you have people out in the field? A Yes. We are constantly looking for reserves for Freeman also. a f Q Who are the gentlemen at Freeman who are out looking for reserves? A Bill Mullins, who is our chief engineer at the prop- erty, and then I look a lot myself, not physically, but I am always searching, to keep tab on any reserves that I hear about that may be available. Q Have you increased the amount of money allocated for searching for and acquiring reserves at UEC over the past five years? MR. KEMPF: I think the witness has already testi- fied that they have, I think in his words, an open bank account. I do not know how you [163] can increase that. BY THE WITNESS: A Is that the question you asked, if we have spent more money? MR. EISEN: If you know, yes. BY THE WITNESS: A I would say that we are—I do not know how dili- gently they were searching beyond five years ago, but I know that within the last two years we have made an extraordinary effort to try to find reserves for UEC. BY MR. EISEN: Q It is a fact, is it not, Mr. Camicia, that there is coal being mined today that was considered unrecover- able, strip coal, twenty years ago? , A Yes. That is true. Some writers have estimated that Illinois is the leading state in btuninons coal reserves. A Les. \ 90 Q Have you seen that in coal magazines and so on? A Yes, I have. Q Would you say that certain underground coal re- serves not thought to be commercially re- [164] coverable today will in fact be commercially recoverable five years from now? A If you put a limit of five years, I would say no. Q Ten years? A Perhaps some underground coal would be minable, simply because the prime reserves have been mined out and you have 2 else, and you must go to it at a higher price. Q With reference to the Denmark reserves, are they about the last of the prime reserves in Illinois? A As far as I know, in Illinois, yes, that are uncom- mitted. - Q Have you tried to buy some of those Denmark re- serves? A Well, I understand that Mr. Nugent recently told me that he had tried to buy the Denmark reserves, and he has handled that himself. Q What did he tell you? N A He just told me that he tried to buy them, without success. N ö 2 3 said that he approached certain individuals? es. [165] Q Whom did he approach? A Ayrshire. Q Did he name the man? A I don’t recall who it was. He told me he had writ- ten a letter. Would it be Norman Kelb? No. It would not have been Norman Kelb. I think you said they had about 200,000;000 tons. Yes. That was my estimate of their reserves. 0 Is it possible for them to mine out all 200, 000, 000 tons without construeting new mines? A Oh, no. They would have to construct a number of new mines. They have no mines in the area. Q Oh. They don’t? A No. It is a virgin piece of property. PO PO 91 Q Based upon your knowledge and experience, what would you predict ten years from now will be the factors, the feasible factors in so far as depth of coal and thick- ness of coal, seam ratio and so on, as far as strippable coal reserves? A There are really two questions there. In so far as the technical ability to remove overburden [166] is con- cerned, I think that the limit is pretty well established, and that is possibly up to 120 feet, and that is by reason of the spoil banks, the angle of repose of the material that you dump behind you, that would incline to come in tg your coaP bearing -pit. 5 * * * 11711 BY MR. EISEN: Q Have you ever talked to Mr. Simon and asked him where he got these figures? A No, I haven’t actually talked to him. I don’t have to ask him, because I know. Anybody in the coal busi- ness knows that that kind of reserves are not in Illinois or any place else. Q Is there long wall mining in IIlinois? A There is one installation in Illinois. Q Where is that located? A Old Ben 21 mine. Is it possible to use the long wall method at Round Prairie? A No, absolutely not. Q Why is that? Pa We are going to get back into that pillar mining again, but Round Prairie has several reasons that you could not use long wall. One is because the limestone comes down right on top of the coal and will not fracture or break behind mining. Secondly, there is not enough over- [172] burden to cause enough pressure on the coal so that you can prop- erly cut it. It has to be deeper also, then? A Yes. . Q What is the ratio of—first, could you describe for 7 — means in terms of overburden to depth seam | 92 A Ratio is a cubic yard of dirt to a ton of coal. Q In other words, the cubic yards of overburden to a ton of coal? A Yes. A rougher way to say that is the number of feet of overburden in relation to the number of feet of coal. For example, if you had 100 feet of coal—I mean, 100 feet of overburden and 10 feet of coal, you have a ten-to- one ratio. Q So the two things are about the same? Is that what you are saying? A Yes, except that the previous definition I gave you is more technical. Q Which definition do you use in your business, in correspondence and so on? A We use the footage definition, but [173] in our engineering studies we use the other method. * * * * [174] Q When the prime reserves of Denmark are out, then the feasibility of the higher ratio [175] becomes possible, or it becomes feasible, really? A Up to a point, but you have to realize then that you are getting closer to the costs of underground min- ing, and your competition there narrows. There are plenty of good underground reserves around, that it? A Not available, no. There are some underground reserves, some good underground reserves, but everybody has got them. Somebody has got them all. Q I don’t know. It seems to me that if atomic energy poses a possible serious problem to coal companies with all these underground reserves around, or even strip reserves, in spite of the fact that they are all taken up, is it not possible that some of these companies who have these reserves might want to take a short term profit? MR. KEMPF: If counsel knows of any availability of any such reserves which he wislies to submit to us for appraisal, we will be happy to do so. * * [189] Q That coal, as we understand it, is not part of the same geological layer, or something like that. 93 A It is the same seam of coal. e 2 It is the same seam as the Round Prairie seam A Yes. ; Q Is it the same quality as the Round Prairie coal? A No, it is not. Q When do yon expect or anticipate that you will use the Round Prairie reserves? Q Has UEC ever sought or acquired any reserves on behalf of Freeman? A No, they have not. Q You have separate staffs out lookin g for reserves, one for Freeman and one for UEC? a A Tes. However, on some occasions they [190] work together, where a property may be strippable and deep mine. : , 0 * * * 4 / g Has Freeman undertaken to aéquire strip [191] reserves at any time, do you know? * MR. HEDLUND: At any time? I am sorry. Is that what you said? BY MR. EISEN: A Within my knowledge? ö there 2 ae If UEC found deep re- commercially recovera e, would they mine it? A No, they would not. They are not able to mine it. — read the question, please, Mr. — — 1 883 I 1 og 7 46 (Read by the Reporter) BY THE WITNESS: A UEC has not found any deep reserves and none i 3 MR. EISEN: Will you please. Youker. Q A No, they do not. insofar as acquiring reserves is concerned. Was that your testimony? A Such reserves would have to be satisfactory re- serves, minable and merchantable, and capable of mak- ing a Q ith that in mind, what have you done, or any- one under your direction, to acquire reserves for UEC which would answered that 96 Q Did Mr. Nugerit tell Ayrshire that he had a blank check? A Certainly not. He would not tell them that. Q Well, I mean— A You don’t go to buy something and say, “I'll pay you ibe ! 17 i i i Assisi ay bert =f i l get Foal begat atk questions. I ‘he understood Mr. Nugent had written a letter, and I did not go into it any further than that. [199] MR. HEDLUND: He has testified, Mr. Eisen, that he is not familiar with the transaction, that it was handled by Mr. Nugent. Why don’t you just ask him all he knows about it? BY MR. EISEN: Q Mr. is this all that you have done, to your knowledge, in attempting to acquire additional reserves five Q Does the price specified in the contract remain constant throughout the duration of the contract? A No, it does not. It has provisions for escalation wage increases or contract increases and supply in- cost of production at this mine”, and we have to prove our point, and we are allowed that increase. 12171 C ent Goes the contract provide in the event of a di t A Each of our contracts are written differently, and 1 4 4223 8 85 858 ‘ii ok BE 32 0 sa" 8 ‘i ab „ 1 panies? PANG SAMPLE Mp ae i B 115 mir aw es 1 pia 4 fr 11 322 6475 8 288 2 11247171 25 2 32 5 37 925355 155. 1132 ie 2117585 12 111177 i ASEH IF 1272 f Be 723517 Baie erie 12. 11 sf 1. Wei He ee 100 I went to work for the Electric Coal Company, which was purely a sales company, partially owned by United ies, with an exclusive sales con- tract to sell all of United [7] Electric’s coal. That company went out of existence, or was dissolved probably in 1931 or 1932, and United Electric moved their general offices to Chicago from Danville, Illinois, and established their own sales organization, and I be- came a part of that in—i init must have been 1931 or 1932, I guess. I cannot give you the exact date. I continued in that 3 until they made me Sales Manager, I think, but I cannot tell you when. They had a vice-president in charge of sales and I worked di- reetly next to him as his assistant, more what it was. i His name was M. M. Soule. ge made vice-president in 1954, when he retired, and nt that time. He had been on In 1959 I was made president of United Electric Coal Companies, and retired as I told you. Q Who was your boss when you were vice-president in charge of sales? A Well, when I was vice-president in charge of sales, Kolbe was president of the company and [8] I reported to him, Frank Kolbe. * * * „ [14] The two things combined can’t tell you how much of each—had the effect of increasing the de- preciation. Q What was the new IRS guideline for taking de- preciation, if you recall? MR. HEDLUND: I am going to object to that ques- tion. I do not see what materiality that has with re- spect to any issue in this lawsuit. MR. EISEN: I will withdraw that question for the time being. BY MR. EISEN: Q If in 1964 the 1959 IRS regulations were still in effect, wouldn’t the earnings per share of UEC in 1964 be substantially higher? 101 A Will you ask that question again, please, sir? MR. EISEN: Will you read the question, Mr. Youker. Q (Read by the Reporter.) BY THE WITNESS: A Yes, they would. The earnings would have been higher. Your taxes would have been higher and your depreciation would have been [15] less and your cash generation would have been less. I think I said that in this memorandum. I reversed it. If you will look at paragraph 3 on page 1C—do you see that? ‘ 1 5 3 [31] Murray was Treasurer before 1959 and remained. Utterback was made Secretary. I [82] think the same, practically—I do not know of any officer, outside of Kolbe who became chairman of the board and then when he reached seventy he was retired, but all the rest of them were the same after 1959 that they were prior. I think your annual reports will be a better guide to that than what I can tell you. Q What advantages, if any, accrued to United Elec- tric by virtue of being part of or associated with Gen- eral Dynamics? contracts ran out or when they asked for new bids, and — started to develop very strongly in about 1958 or 1959. The first indication I had of it, or one of the first, was when Central Illinois Light Company refused to extend their contract, and when other utilities, when they had tenders they were putting out for bids over long term [88] contracts, they just didn’t send us any. Q Where is Central Illinois Light Company? A Peoria, Illinois. BEE ep opops i 3 ＋ 8 ae itis 527111 E : 2 3 5 ~ 3 Bs & Hele = 2 me t your experience that in order to fulfill a as the example we [55] covered here with to Vipco plant, there is always a little cushion when you think you are running out of a seam, always a little more coal that you can always of there? can go either way. You can make a big error „particularly in a strip mine. ow much additional tonnage, if you recall, did e out of the Mary Moore mine after June of cannot tell you. The record will show it. id you supply anybody besides— No. A hundred per cent of it went to Vipco. 1 75 K Eb 5 1 25 — pops mE 2 Q Where are they located? A St. Louis is their headquarters. Q You had a conversation or a letter [56] from some- one from that company, where they told you— A I had conversations with them. 103 was subject of this conversation? Well, they were coming up for some bids for new r think it was worth while to send us a tender because we could not bid on it anyway under the length of time and tonnage, and so forth. Had you been supplying him prior to [57] that I rom Q A I have a contract with him now. Q F which mine? A From Fidelity. Q What did you say to him at that time? A Well, he had a map of all of our reserves and all our acreages that we had to supply him when he made his existing contract, and there wasn’t much that I could say to him. He knew it. I did tell him about our relationship with Freeman and that we might be able to work out a joint arrangement some way so that ity could be supplied until it ran out and Freeman take over beyond, but apparently that was not suitable to him because he didn’t send us 3 tend. er, as I recall, on that particular bid. Q You said, however, that you did continue to sup- ply him? | A We are on a contact that will expire in—well, it shows in the record, I don’t know, in two or three years, I think. This contract was made about seven or eight years ago. Q What did he say when you said that [58] Freeman reserves could back up your reserves? A I don’t recall now. I don’t recall every part of the conversation. I don’t remember what he said. 104 Q Did you submit a bid on that contract despite his statement? A We couldn't, under the terms of the bid. I would ee ee but we pti For one thing, I remember, that bid required fast load- ing for unitized train movement, which meant we would have had to put in that type of facility at Fidelity to ac- commodate it. Q So that—excuse me. A That was one thing we did not have. Q So this was one thing that would have prevented you from taking the contract, regardless of the amount of coal you had left available? A That was one thing, unless we decided to spend the money riecessary to build that sort of a device, which we might have had to consider seriously from the stand- point of our [59] reserve position, as to whether or not we would be justified in spending the money for it. Q Were there any other customers with whom you communications or conversations— Let me finish the question. I am (Continuing) —communications or conversations in which they have discouraged you or refused to accept !! hiamin tek themed yon hot insufficient reserves? A Central Illinois Light at Peoria. © Sex tat n here before? A Yes. Q Who did you have the conversation with there? A Mr. Wellington, Q. W. Wellington. Q Is that “Q” or “Hugh”? [60] A Q. We called him “Duke.” Q What is his name, Quincy? A I think so. He didn’t like it. MR. EISEN: Off the record. 105 (There was a discussion off the record after which the taking of the deposition was resumed as follows:) MR. EISEN: Back on the recofd. BY THE WITNESS: A He is vice-president, and we not only talked about it, but he wrote me a letter which I believe is part of these documents you have. BY MR. EISEN: A They had not backed me up. I said I figured that they were a complement to us and [61] that would de- velop in the years to come, when we did run out of coal, and I was using it as much as I could to preserve our position with the customers we had, as an indication of the future. Q ne af that imine were you supplying—what was t. 4A Tes. s „ what mine were you supplying that com- pany How much coal is left at the Cuba mine? I don’t know as of today. Back in 1965, when I left, I figured that if we were able to get some acreages we were trying to get right around us, I think at from 8 Jes, and will until the mine runs out of coal. 4 106 A Well, I didn't have any conversations with them, but I think our sales people have, and they reported to me that that was a matter of concern. Q Which sales people and what companies? A I can’t remember now—well, I can remember that Commonwealth Edison is concerned with our reserve position, yes, but I had no conversations with them. Who sg bg man at mia gn 1 reported to you by your sales people, who was concern A That would have been whoever was in charge then. They change so much. I think it would have been Glen Beaman. Q You said “then.” A No. “Glen”, Glen Beaman. ~ Q No. You said whoever was in charge “then.” When is your recollection as to when this was? a A I would say three or four years ago. * * * * 1751 Q Where was that located? A Near Madisonville, Kentucky; east of Madison- ville, Kentucky. Q Yes. A In their coal ownership or coal leases they had underground coal adjacent to it—I forget the amount, it was not too big—and when they quit mining they would have to get a place to sell it, and the only place P go with it would be to put in a bid to the TVA, and if successful, put in the necessary equipment to bring the coal to the surface. : They had everything else there they needed, but you would have to put in the slope and put some under- ground mine machinery in. I presented it to Nugent to see if they were interested in taking some old equipment they [76] had in some of their mines in Illinois and putting it down there and bringing the coal out and putting it through. the plant that was already there, and selling it to the TVA. pinay opis 1 1511 H operate a dock Does United Electric still own and BY MR. EISEN: A * 5 EE : — 5 5 ö é i 2 ＋ 5 MR. EISEN: Yes 109 BY MR. EISEN: Q Did any of the Iowa utilities located the Mississippi ever come down and look over the Indi field? ls that the same one? Did you talk with them about the field? No, I didn’t. I may have been in on a few con- tions, but mostly it was done by our sales depart- t. What was reported to you as to their reaction? Nothing favorable. Too little reserve, a relatively and no particular interest on the POPOrPOr>er>o > V else 5 f i > 28 5 k a 2k. give “the production cost, profit and cash flow estimates” of your Industry field. MR. EISEN: I am going to ask the reporter to mark the letter Morris Deposition Exhibit No. 23. (The document was marked Morris sition Exhibit 23, for iden 10-1-68.) 11711 Q —in 1964 again you seemed to be on the Verge of success with that field, when Iowa Southern tilities was interested. Now, is it [172] really a ques- tion of a prospective utility getting interested in it that could change the thing? I mean, couldn’t it change to- Q Is it your testimony that the Industry field will never be a minable strip mine? A That is too big a question for me to answer. I possibly pass an opinion on that. Wouldn’t at- were on the verge several times in the as far back even as 1961, of thinking that it was almost immediately feasible for mining at [173] the time Commonwealth Edison was interested, were you not? A I answered that question. I said nothing ever came Q But that—wasn’t it— A We tried to sell them, we tried to sell Iowa South- ern, we tried to interest Iowa-Illinois Gas—without suc- cess. So those failures indicated that it was a marginal proposition at best. Q Well, what is your opinion on if and when the In- dustry field will become minable? MR. HEDLUND: Mr. Eisen, I think that question has been answered and asked about three times. I think the record will show that the witness is unable to guess when, if ever, the field is going to be minable. BY MR. EISEN: Q Would you say it would become feasible to mine 83 when the Fulton-Peoria coal becomes dis- sipa A I don’t know whether it would or not. I wouldn't pass an opinion on it, because there are so many—so many other fields available to the market. I mean, pro- Yes. 111 ducers able to put coat [174] into different markets by their locations. a . * 3 1193] Q Front loaders, the development of machines to load trucks, also have been advanced, haven't they? A Front loaders?—I don’t know just exactly Isn't there a loader made by—I believe it is Caterpillar, that has advanced strip mining methods? A That must have been in the last two or three We never used one of them, or I never heard about it. mvs Seeman Have you heard of the term “high lift” THE WITNESS: High lift. But that isn’t used in loading trucks in a strip mine, to my knowledge, unless there has been a development recently. BY MR. EISEN: Q Is it fair to say that, based on your opinion, what is considered unrecoverable coal ts i feasible tomorrow to mine, that is, in the future? And unless something develops that I can’t foresee, I don’t believe that 120 and 150 foot overburden will be to your experience in the coal business, the historical nature. A Well, if it couldn’t be mined by stripping, then, the only other way would be underground mining. And I couldn’t voice an opinion on underground mining, be- cause I never had any experience in it, and I know very little about it. Q Did you from time to time investigate the pos- sibility of developing underground mining properties for United Electric? call in Mr. Nugent’s what [195] could be I would want to check that with peo- with it than ourselves,” that he was counsel with the Freeman ice? something about this, and I think where to the Freeman people. Weren’t you picking that coal up for yourselves? 41. 822 55 1275 A „-- 5 8 8 § 5 2 8 K 8 2 : oS more familiar Q Wel, what was your relationship with this Central A No, we were not. Q You were just going to A I recall he says “however, ple 0 Bes Q would ask Freeman to give us their opinion on it. 113 A We have no organization, we have no experience in underground mining. And if we were to attempt to go into it, it would require building an organization that had the knowledge and experience and know-how to do it. [207] BY MR. EISEN: Q Did you also, Mr. Morris, at one time investigate un property west of Greenville, Illinois? A We may have. I don’t recall it, off-hand. Do you recall some coal controlled by G. Stuart Jenkins of St. Louis? A I remember he owned some coal, yes. 114 MR. EISEN: Let me ask the reporter to identify as Morris Deposition Exhibit No. 35, a letter dated July 17, 1962, addressed to Mr. Morris from R. J. Hepburn, relating to G. Stuart Jenkins, underground coal, west of Greenville, Illinois. (The document was thereupon marked Morris Deposi- tion Exhibit No. 35 for identification, 10-1-68.) BY MR. EISEN: Q 1 would Uke to show you this letter, Mr. Morris, and ask you if you can tell us approximately how much coal in terms of tons was involved in that property re- ferred to in the letter? A Yes, I recall it. It is addressed to me, signed by Mr. Hepburn. Q Yes, sir, whether you recall how much coal [208] was involved? A I don’t recall, no. MR. EISEN: Will you stipulate that the stipulation heretofore agreed to with regard to admissibility of documents applies to Morris Deposition Exhibit No. 357 MR. HEDLUND: Very well. BY MR. EISEN: Q I would like to now show you a document, which I will ask the reporter to mark as Morris Deposition Exhibit No. 36, being a letter dated March 14, 1966, from T. H. Latimer to Mr. R. H. Inman, entitled, “Put- nam County, Illinois”. (The document was thereupon marked Morris Deposi- tion Exhibit No. 36 for identification, 10-1-68.) Q The letter indicates that Putnam County is near Greenville— MR. CUSACK: Granville. Q Oh, that is Granville. MR. HEDLUND: That is in Ohio. A Granville—that is a way down on the Mississippi River, isn’t it? Q Yes. I have to change that. [209] A Is that where that Jenkins property is? Q I don’t know. MR. EISEN: Did the prior exhibit—was I misread- ing that, or did that say, “Greenville”? 115 MR. SAMUELSON: Greenville. THE WITNESS: There is two different towns. BY MR. EISEN: Q Do you know whether or not we are talking about the same area, Mr. Morris? A I don’t know. Let me look at that letter. Maybe I can tell you. Do you mean United Electric Coal has still an- other area of underground option that we haven’t run to before? A We looked at anything we ever heard of. And that on the record. Q Well, what happened to Mr. Jenkins’ property, if you know? Was that referred to Freeman, do you know, sir? A It must have been, because you see that notation in my handwriting on it. [210] Q Is that your handwriting that says “bad roof?” 7 A Yes. So I must have asked Freeman about it. (There was a discussion off the record after which the taking of the deposition proceeded as follows:) _ BY MR. EISEN: Q I will show you the document and ask you if it doesn’t show a lot of coal in that area? MR. HEDLUND: I will object to your characteriza- tion of these documents, Mr. Eisen. I think we will — faster if we let these documents speak for them- ves. Q Were there—well, there is a lot of coal in that area, is there not, Mr. Morris? A Let me read this letter. I don’t know that I ever saw the letter. (Examining document). Well, you have a question, I believe. I have forgotten what it was, now. Q I said that there was a lot of coal in that area, was there not? A That is what this letter says. And the figures are evidently taken from the Illinois Geological Survey Reports, which could or could not be accurate. 116 [217] Q If, Mr. Morris, after consulting with Free- man, [218] they advised you that a particular under- ground opportunity that you had come across was feas- | ible for mining, would you have kept it, or would you have turned it over to Freeman? MR. HEDLUND: I will object to the question as asking for speculation from the witness as to what might have happened had something happened. But if he wants to answer, he may. A Well, I don’t mind answering it. My thinking that we were not underground people, didn’t thing about it. First, we would get their opini to whether we should even go ahead and try this underground acreage, whether or not i put into United Electric, I never A I would have to look at it to tell you. [2384] And adjacent to that property Ruby Chandler Jordan had a lease on about six million tons of No. 9 [235] seam coal, which would have to be mined under- It was too deep for stripping. And the life of the Ruby Mine was getting rather close to the end— I forget when they mined out—and at that time some consideration was given by Freeman of taking some of their equipment that they weren’t using, like under- ground mining machines, and putting it over there and mining that coal. Q I think we are duplicating what you have already told us. A I think we are. MR. EISEN: Does the stipulation apply to Morris Deposition Exhibit No. 467 MR. HEDLUND: It does. BY MR. EISEN: Q I would like to show you a letter dated November 20, 1957, to Mr. G. I. Grasty of Richmond, Virginia, from T. H. Latimer, the subject is “Coal Lands in Virginia and Kentucky”, and ask the Reporter to that Morris Deposition Exhibit No. 47. ik A No, we didn’t get into that area. It was clear out of our bailiwick. There were a lot of big producing companies down there already formidably established in 118 the market and in the coal fields. And sometimes we would have somebody write us or come into see us, and if they did, we would take a look at it to see if it was worthwhile. Plus the fact that in the early days of the A It was an acreage rather small in the Merrimore property. ‘ 5 4 5 [241] Q When do you think it will be feasible to mine the Round Prairie field? A That is purely a guess. Purely a guess. Q Do you have an educated opinion? A I couldn’t give you any time or how many years it will be. I can only say that the competitive situation will have to change to where mining that coal would be profitable. Q I would like to show you a document entitled “Round Prairie field’, dated January 16, 1968, which appears to be a letter, a two-page letter, addressed to you from Mr. T. H. Latimer, and ask the Reporter to mark that document Morris Deposition Exhibit No. 48. (The document was thereupon marked Morris sition Exhibit 48 for identification, 10-1-68.) * [244] Subsequent events indicated that it is going to be a long time, if ever — 1 wouldn’t say “if ever”, be- cause maybe someday that field will be mined, but it will have to come after the competitive situation from Belleville strip, southern Illinois raw coal, on volume and unitized train rates have gotten all the business they want or can handle. Then it might be possible to con- sider this. But when, I couldn’t give you any idea, 119 o pick parently you felt optimistic about it at this i half [270] As of the time you left, had Alcoa furnished you with any prediction mh when [271] they would be Q They didn’t indicate you that they would be ; i time? you feel that you would have an advantage any other company in mining this coal field? A You mean United Electrie as such, or United stead of us by ourselves. I don’t think they would give us any consideration on mining it as United Electric. (275] BY MR. EISEN: Q Did you ever have a conversation with Mr. Nugent event You discussed the right of first refusal in kr. ot to use of the Beaucoup a 120 is the way they put it, and that was about as far as it went. And I am quite sure I told that to Mr. Nugent. Q And likewise, they would give you every considera- 2 1 event that they decided to develop it? es. ; Aas far as your being the company which would mine it? A We would be allowed to discuss it [276] with mem, and they would probably, knowing them and any big corporation, discuss it with a lot of other people, too. * * * * [298] Q Do they use any in the winter time? A It depends on the type of contract they have with the gas company, whereby on [299] cold days when the gas is needed for home heating, they could cut them off. And I don’t know now er utilities had that type of contract or not. Some industries I do know had contracts where they would get gas when it was avail- able in the wintertime, and then when it got cold and the gas was needed for home heating at the much higher price, why, they could cut them off in I guess an hour’s notice, I don’t know. Percentagewise, I couldn’t tell you what it was. But it was substantial, I would say. But not in the wintertime was it substantial? A Not in the wintertime, no. Do you know what organization or agency would keep records upon which you would rely in determining what such percentages were? A For the utilities, the Federal Power Commission Records would show it. For other industries, I don’t know where you would get those records. Q Does United Electric and Freeman serve gen- erally the same geographic market area? [300] A Not entirely, no. Some areas we serve, both of us. Other areas they serve and we do not, and some we serve and they do not. t oma in general, the geographic areas which serve served by both of us. One plant of Union Electric is served by us,.another plant is served by them. And I don’t think there is much else. MR. CUSACK: Off the record. (There was a discussion off the record, after which the taking of the deposition proceeded as follows:) GE, 1 if 2 me 15 848 231 business prior to the merger— 1427141 lane iH , . elit 77 it pda eh 523 sel HE 22252 woe foul like Prior to 1960, were there customers whose busi- ness both United Electric and Freeman solicited, whose business was not so solicited after 19607 MR. HEDLUND: Do you want to give us a date, Mr. Eisen? I think we will move faster if you can pinpoint the period of time that you were talking about. A Tou would have to take each mine separately. Q You would have to? A If you want an answer, you would have to. Prior to your association with Freeman— MR. CUSACK: Off the record. A I don’t recall of any. [304] Q What are the outer limits of United Electric Coal’s sales area for any of its mines? (There was a discussion off the record, after which the taking of the deposition proceeded as follows:) BY MR. EISEN: Q Is there more or less competition in the coal in- dustry today than theré was ten years ago? A There is fewer companies, of necessity, due to the changed market conditions. But my opinion at the time just as great. You had a different type of market I left, the competition between those companies was still entirely. E 242 i 5 E Hl hi 47 £32 Hal #4 HY 715444 I have just a few questions. CROSS-EXAMINATION ult i 120 1. 1115 1 A e 4H n ae 2 1E „1 it ii 3 14 al af f l. eee un e 3 3 43 i N i 155 3 11115 5 Ahe ee Filia “hs Hel HELE aly ae a a 3154 348525 BAS 1775 747 3% 347 ess l-AZ-H-vi- 28I23-Kzs 121 puss 11 gs 1 dis ; 45 1115 5 14237551 fal ltr pe fie iy 211177 211 i Sat ‘ i feasible than 2 A It might be under certain conditions 2 What conditions? 181 EXCERPTS FROM DEPOSITION OF FRANK FRE D- ERICK KOLBE, TAKEN OCTOBER 10, 11, 15, 17, 18, 22, 24, 25, 28, 29, 30, & 31, 1968 Q And did you then become active in the [9] man- agement of United Electric as an officer? Q A Q As president of United Electric? A As president of United Electric. Ware was a min- ing engineer and had spent several years at one of the nitrate companies in Chile. Q And then did you succeed Mr. Ware as president? A Then later on, Ware resigned to become president of the International Minerals, and then I became Presi- * In what year did you become president of United Electric? A 1939. And you continued on the Board? A Tes. 110] And how long did you continue as president of United Electric, Mr. Kolbe? A Until 1959. Q And after that, what was your position with Unit- ed Electric, if anything? A Oh, I was Chairman of the Board for two or three Q And do you recall when you resigned as Chairman of the Board? / A I think in 62. It will all appear in the minutes. Bunte Kolbe, could you give us a little background nited Electric, when it was founded, if you know? A No. Our sales department was a very fine sales department. We have always had an outstanding sales That's S-o-u-l-e? were not coal peddlers in the sense that you go from one like a milk man, and up an order, but they were real sales vice presidents. Would you like an illustration? Q Well, yes, that would be fine. A Well, for instance, Johnny Morris, we wanted to sell coal to Northern States Power and Light— them a price shipping it by barge up there that would be better for them than bringing [24] it up the Lakes. 1311 Q Mr. Kolbe, I now show you what has been as Kolbe Deposition Exhibit 2, for identification, and I ask you, Mr. Kolbe, if you can [32] identify this document? what is it, Mr. Kolbe? t is the United- Electric Coal Companies’ 1956 Report. , Mr. Kolbe, I ask you to examine that document, and I ask if you are familiar with it? A Yes. Q PT... ie cee & in recent days? A Yes. Q Mr. Kolbe, is the document which has been marked as Kolbe Deposition Exhibit 2 accurate? A Yes. MR. CUSACK: I ask counsel if the standing stipu- lation applies to Kolbe Deposition Exhibit 2. MR. HEDLUND: It does. MR. CUSACK: Thank you. THE WITNESS: CCC and Ames. MR. HEDLUND: I object to that as not responsive. * * * * [59] A Tes. — We earned that, those figures. One year here, as a matter of fact, in 64, we earned $5.16, and that’s before this 72 [60] cents, which would have made it $5.88, and, as a matter of fact, the 72 cents may be low, for all I know. I see. So we way exceeded these figures. As set forth on 9-C? Yes, yes. I might say it was really a tragedy for 3 that this merger with Crown—with Truax didn’t go through. We would have gotten—well, today, on the basis that I mentioned, of 1.45 shares of Truax for ours, we would have gotten—our stock today would have been worth a hundred dollars. It was a tragedy that it didn’t go through. MR. HEDLUND: I move to strike that testimony as not being responsive. BY MR. CUSACK: Q Mr. Kolbe, I would like to go through some of the annual reports of United Electric with you for a moment and ask if you can comment thereon. PO pO [74] Q Of old shovels? soft material coming down into the pit. Tou see, a lot of this dirt and so forth can run almost that a serious problem in strip mining, that the vegetable matter, d it just can rot, and also, if you have sand, you see, wet sand, it will run almost like water. 130 [78] No. 67 C 1682 UNITED STATES OF AMERICA, PLAINTIFF v8. GENERAL DYNAMICS CORPORATION, THE UNITED ELECTRIC CoAL COMPANIES, AND FREEMAN COAL MINING CORPO- RATION, DEFENDANT Friday, October 11, 1968, 10:00 o’clock a.m. Parties met pursuant to adjournment. PRESENT: MR. EISEN, MR. CUSACK, MR. FUTTERMAN, MR. SIMS, appeared for plaintiff; MR. HEDLUND, MR. KEMPF, appeared for defendants. ALSO PRESENT: MR. FRANK NUGENT, MR. J. MICHAEL McGUINN. (The taking of the deposition of FRANK FRED- ERICK KOLBE was resumed in Room 2634, 219 South Dearborn Street, Chicago, Illinois, as follows: ) * * * * [83] Q Are you a member of any other trade associa- tions or an officer of any other trade associations? , } A Q Were you a member of the Illinois Coal Producers ion? A Yes, I was. Q Mr. Kolbe, yesterday you testified in regard to the dev elopment of unimite. 84] Q Who discovered unimite? A I did. I got a patent not on it specifically, but on m of packaging and so forth. Q a process? : A Well, it was a container. The duPont Company I turned it over to the corporation and the duPont Com- pany paid the corporation $20,000 for the patent. Thank you. Now, before, Mr. Kolbe, we return to your testimony regarding the Kolbe Wheel Excavator, could you please tell us who were the competitors of United Electric dur- ing the time that you were a director and an officer of United Electric? A Well, everyone who sold coal to the same people pots did was a competitor, and a number of people who idn’t. Q Can you give us the names of these companies, sir? A Well, I would start out with Truax-Traer. Harri- son Eiteljorg had a little mine out there that I have for- gotten the name of. [85] Then, of course, there was Peabody and also Free- man, and there were just any number of them. Q Was Ayrshire a competitor of United Electric? - 182 A Oh, yes. . Q Was Stonefort a competitor of United Electric? A I think so. Yes, they had a mine in Fulton County. They would be competitors of ours, yes. Q Thank you. A You could get that better, probably, from Mr. Mor- ris, who actually was fighting with all of these people all the time. 5 3 5 5 196] Q Do you consider, Mr. Kolbe, the wheel a very important development for the success of United Electric, that is, contributing to the success of United Electric? A Oh, enormously. How in the dickens would we have mined a hundred feet of overburden without it in Cuba, or 85 feet, and made money? Cuba has been a very, very successful mine. Q With high overburden? A With high overburden, and the Buckheart mine, the overburden there would just swish out on you, and we were able to put it back so that it obviated that. Q Mr. Kolbe, do you have an opinion on the capabili- ties of a wheel excavator regarding the moving of over- burden, do you have an opinion as to what is the most overburden a wheel excavator is capable of moving? e In Germany they move up to 300 feet. I don't ow. Q Of overburden? A Of overburden. They handle it differently than we do. They finally have to load it into railroad cars and transport it away, but it digs [97] up to 350 feet. 11181 BY MR. CUSACK: Q Mr. Kolbe, do you know whether other mining com- panies had looked at the Banner mine property prior to 3 acquiring this property? es. Do you know which companies looked at it? Ayrshire, Sherwood. 1 that Sam Sherwood? es. PO PO Pp , 133 Q Did United Electric obtain the Banner mine prop- erty after Ayrshire, Truax and Sherwood had looked at it? Q Do you know whether Ayrshire turned down the Banner mine property as a new mining property? A They all three turned it down. Q All three turned it down before United Electric ired this property? A That is right, that is right. 8 20 * > * [125] Q Tou testified, Mr. Kolbe, regarding the Cuba mine, the Buckheart mine, the Fidelity mine, the Buffalo Creek mine, the Rushville mine and [126] what was the name of that mine near St. Louis? A Freeburg. Q Did United Electric operate any other mines while you were chief executive officer of United Electric? A Yes. We opened up the Mary Moore mine near Danville and the Skyline mine near Charleston, West Virginia. Q Mr. Kolbe, did United Electric ever operate an underground mine? A Oh; we had a small operation at Buffalo Creek. Q A small underground operation? A Yes. Q Could you explain how United Electric got into the underground mining business at Buffalo Creek? A We had two advantages. In the first place, we had a washing plant that was built for the strip mine, so we would have no additional cost of constructing a washing plant or preparation plant. Q Was that a strip mine at Buffalo Creek? 11271 A Right. All right. we thought we could do something down there. Q How long was this underground mine at Buffalo Creek in operation by United Electric, do you recall? A I can’t tell you any more. I don’t remember. Q Mr. Kolbe, one of the contentions of the defendants in this lawsuit, and Mr. Hedlund will correct me if I am wrong— MR. HEDLUND: I may object already, but continue. BY MR. CUSACK: Q (Continuing) — is that United Electric [128] does not have the capability of engaging in underground min- ing. Do you believe this is a fact, sir? A First of all, I am not sure that the underground mining companies do. Q Do you believe, Mr. Kolbe, that United Electric has the capability of opening an underground mine if it so desires? A Oh, yes. We could do it, yes, but I would just like to say that this is a very difficult job. The underground mining companies in 1923 turned out eighty-one million tons of coal. Thirty years later, in Illinois, they turned out a little over twenty. In other words, there was sixty million tons produc- tion of companies that went out of business because of fires, roof falls and bankruptcies. It is a tough business, it is a tough business, and we would have to be very— any organization would have to be very, very careful going into the underground mining business. Q Do you believe, Mr. Kolbe, that United Electric would be able to go into the underground mining business and be able to go into it success- [129] fully, under your management? (The document was thereupon marked Kolbe Deposi- tion Exhibit 12 for identification, 10-11-68.) * * * * [183] BY MR. CUSACK: Q Mr. Kolbe, would you please examine Kolbe Deposi- tion Exhibit 13 for identification. A Yes. Q Can you tell us whether United Electric, during the period of time when you were a chief executive officer, often did look at underground properties with a view to the possibility of mining these properties? A Well, we looked at them but we never did any- thing much about them. During— 8 r MR. HEDLUND: Perhaps, Mr. Cusack, you should let Mr. Kolbe finish his answer. Q Do you have anything more to say in answer to that question, Mr. Kolbe? Be" During these years we had two problems that £3 D uf 1 as Hl 115 1 li 17 HB 1 i E 1 United Electric mines? judge that these labor costs in much. can too of fact, this—oh, Huey who bias 1737 12 * 7215 se B 12 „ n gt 1 he dats! 11 451 15 8 3 year wheels get mines, 1 att mee hiker Te 188 MR. HEDLUND: '. You mean as a practical matter, it is properly phrased. Tt cannot BY MR. CUSACK: 8 have I got i I do Field and 00 feet you see t I of crea Shida can instance, tha got to opinion Truax- „ we ha deeper the and every , the and the deep could do. 22 a 1912 a if 1 am gat z £3 LL 1465 ** [165] BY THE WITNEss: 140 Buyers’ Manual, and I ask you, sir, to please examine this exhibit. A Yo * * * 5 [168] Q Do you know whether any of that coal comes in there now? A Peabody had some mines, but I cannot remember whether the mines have worked out or not. Q Thank you, Mr. Kolbe. Are there trade associations whose membership is limited to coal producers? 2 Oh, yes. National Coal, National Coal Policy, Mid- west Coal Producers. Q Mr. Kolbe, are there any labor unions whose limited to employees of coal producers? ine Workers, and Progressive Mine Work- 152 2 Fires 177 52 H 70 a5 E 25 EE ; j u name a few for us, please? and Saward’s, which is limited, I think, Is that S-a-w-a-r-d’s? * f i Q Mr. Kolbe, based on your knowledge and experience, what fuel, if any, dominates the steam electric utility market in Illinois and surrounding states? coal. you give us the reason for this, sir, if you The low cost. Mr. Kolbe, on a year-around basis, have coal prices been considerably lower, considerably higher, or PFE Oe EE ee peel green, tion A Oh, they are lower, much lower. Q What would your answer to that be in regard to firm oil prices? 141 oe. pe b Bg, 23 diner : ty By 11 5 He 15 ee HIRE i 1 I viel diy FL. ts {iii 111177144 445 ath 1.84% ff 141 b 1. 115 SAL ii i i . Be i: 21235 PPLE Li 111 17357217 % J 1 JJ HT Hy pulls : oi 8 48 ladles I trea 28221 988 28 * Q Mr. Kolbe, Kolbe Deposition Exhibits 32-A, 32-B and 32-C refer to what coal field, sir? A It is a coal field north of the Fidelity mine, sepa- rated from it by the Beaucoup Creek Field north of there. Q Do you know the name of the field, sir? A Round Prairie. Q Thank you, Mr. Kolbe. Are the coal reserves that United Electric acquired— excuse me. Strike that, please. Mr. Kolbe, do you know whether United Electric ac- quired coal reserves at the Round Prairie Field? A I just don’t remember all that. I just don’t. MR. CUSACK: Will counsel stipulate that United Electric acquired coal reserves at the Round Prairie Field? * * * * 12031 Q Mr. Kolbe, who was the president and chief executive officer of United Eleetrie at the time United Electric began to acquire underground reserves at Round Prairie? A I think Morris was. Wasn't he president? I think so. Not me. Q Mr. Kolbe, why did United Electric, if you know, acquire underground reserves at Round Prairie? 143 A Well, just for the reason given there, that we have A Yes. you A I would have had ideas, as a matter of fact, on i coal mining, just like I did in strip coal mining. I might have revolutionized the whole thing. Q As you did with the Wheel Excavator and with Unimite on stripping? A Yes, yes, drills and one thing and another. [208] Q All right. A I also was instrumental in getting the deep coal field into metallurgical coal. I mean, all of these Q Mr. Kolbe, do you feel that. United Electric could mine the Round Prairie Field? : MR. HEDLUND: That has been asked and answered, hasn’t it, Counsel? MR. CUSACK: Yes, I assume it has. Thank you. 7 5 d i 144 N BY MR. CUSACK: Q Mr. Kolbe, have you ever heard of the Ind Field? it is located? Yes. Q Is that in McDonough and Schuyler Counties? A 1275 12 11 bes 115 Ht 11275 Hg: 11 f iy % K nitty tt faunas 583. H. ae HH Ler ee vipa 111 : ; 1247 1 113755 fale 8 0 3 — 11265 1 15 Aft 7927 O i 8 a 1 re 11 17 comparison out of my mind. is elear. [237] BY THE WITNESS: A Well, I can make the MR. HEDLUND: Just so the record is BY MR. CUSACK: companies, in fact, who are building an atomic energy plant, and I understand they are using our method of beat transfer of that, although I had no idea of getting into atomic energy, but it is a way of transferring heat that I think works very well, works better than this method they use—that General Electric and the other le use, 1238] The Hanna Coal Company Hanna Compan Be want to put in an oil recovery process from shale, 4 g 8 Oil in the tar sands of Athabeska. They are not using our process for separating the oil from the sand, or the tar from the sand, but the Hanna Company would use our process. a Now, would have liked to have investigated = They were going to mine this deposit, open pit mining. We are experts on open pit mining. [239] Q United Electric? A United Electric. Q Yes. A I would have looked into that. I notice now there is a mine in Nevada doing this, and doing very well, apparently. It was described in the May issue of Na- tional Geographic. I mean, with a company with money and with ex- the world is the limit. Q What about coal reserves, Mr. Kolbe? A We would have acquired those coal reserves north of Canton, the coal reserves over here in Vermilion County, had they still been available, and also those in— 147 we would have drilled much more extensively out in— world, the sky is the limit. Q Industry? A Industry, sure. The MR. CUSACK: We have no Thank you very much, Mr. Kolbe. further questions at this time. There is a however, that we might have one or two more possibility, questions tomorrow. 148 [242] . No. 67 C 1682. UNITED STATES OF AMERICA, PLAINTIFF, vs. GENERAL DYNAMICS g TION, THE UNITED ELEc- TRIC CoAL Cour AND FREEMAN COAL MINING CORPORATION, Thursday, October 17, 1968, 10:00 o’clock a.m. Parties met pursuant to adjournment. PRESENT: MR. EISEN, MR. CUSACK, MR. FUTTERMAN, MR. SIMS, appeared for plaintiff; MR. HEDLUND, MR. KEMPF, appeared for defendants, ALSO PRESENT: MR. FRANK NUGENT, MR. J. MICHAEL McGUINN. (The taking of the deposition of FRANK FREDE- RICK KOLBE was resumed in Room 2684, 219 South Dearborn Street, Chicago, Illinois, as follows:) [298] Q At this luncheon, Mr. Kolbe, do you recall telling Mr. Chaffetz and me that while you had been president of United Electric you had been very reluctant to undertake underground mining? 149 A That is my position, and I might well have told vou that. Q Do you recall telling us, in connection with that, that during the 1950’s you had been too old to undertake such a new venture? A Which you will bring out later, you say. Q Yes, sir. Q Do you recall, getting back to the luncheon with Mr. Chaffetz and myself, telling us that United Electric's failure to materially improve its reserve position between 1945 and -1950 was because of the following factors: First, that United Electric had 30 years of [801] re serves at that time; secondly, that it was in a poor cash position; and third, that it had been your judgment at that time that UEC could not afford the substantial investment that would have been involved in view of the 150 — de 0. Q My question is, do you recall saying that to Mr Chaffetz and me at that luncheon? 13021 A Yes. I think I would have said that, because that is my position. Q Thank you, sir. A I should— Q Well, sir— MR. CUSACK: Just a moment, please. I do not think he has finished the answer to the question— [303] MR. HEDLUND: No. I am sorry, Mr. Cusack. This is my deposition and I intend [304] to conduct it the way I wish to and according to the rules. MR. EISEN: In that case, we are going to move that the question and answer be stricken. MR. HEDLUND: Fine. . MR. EISEN: The witness not having had an oppor- tunity to complete his answer. BO el apn soe r ample opportunity to complete answer on that partieular question on redirect. 11705 2 Able Thank you, sir. BY THE WITNESS: A Which is my objection to previous questions. MR. HEDLUND: A (No answer.) or conducting conversations with , | | think that this was not a [321] there is a very bad com- and one thing and another, Orient, and so forth. : : E b i : : : 2 245 Au 8 * 731 153 1887 FRANK FREDERICK KOLBE, CROSS EXAMINATION (continued : ) BY MR. HEDLUND: Q Mr. Kolbe, when you and I met, last week or the week before that, do me that you had nothing to do with the sales of U Electric during the 195087 A Very little. MR. HEDLUND: Would you hand the witness Kolbe Deposition Exhibit 9-A, 9-B and 9-C, please, Mr. > 245 eer dae a 1 Hs i 118155 8 11111 4 fi 21 1 12 2 1 13 2 f Electric’s working capital could be over $5,000,000 Q At the end of that fiscal year, Mr. Kolbe, what was United Electric’s working capital? Q It is a fact, is it not, Mr. Kolbe, that United Electric did not achieve working capital in the amount of $5,000,000 until 19647 — This deal never went through, did it, Mr. Kolbe? A $3,438,544. A Yes. 155 2 a l im hy re | 4. fd 115 fact, Mr. to the 4,500,000 out Cuba and t in and diverted. said that Was not to tons I object, Hr i : i 2112 ae 157 BY THE WITNESS: A Yes. It was discontinued before the date of this report, before September 10th, 1954. BY MR. HEDLUND: Q Why was it discontinued, Mr. Kolbe, if you recall? A Because we did not make any money there. Q It is the fact, is it not, Mr. Kolbe, that you had substantial losses in that operation— [401] A Tes. Q —for that period of time? A Yes, we did. Q Who was in charge of that operation? A The Mine Manager, Mr. Bob Donaldson. I think we also someone else under whose management it was — am got someone 1 not sure that Donaldson was not in charge of it when it was put in and we got this other man later. I would not be sure of that. You see, I think Reid was the Operating Vice Presi dent at that time. Let me just see. (There was a short interruption, after which the taking of the deposition was resumed, as follows:) BY THE WITNESS: A May I see the previous one, the 1953 one, or the 1952 one? MR. HEDLUND: Certainly. (There was a short interruption, after which the taking of the deposition was resumed, as follows:) [402] BY THE WITNESS: A Yes. In 1953, Mr. Reid was vice president. It would be under him. BY MR. HEDLUND: Had Mr. Reid any prior experience in under- ground mining? MR. CUSACK: If you know, Mr. Kolbe. a 158 BY THE WITNESS: A I would not know. I do not remember. BY MR. HEDLUND: Q It is a fact, then, is it not, Mr. Koble, tha 77... poe aad bas ome, states that, “When this operation”, referring to the drift United Electric got involved in the operations of the Skyline Mine? A The realization of this coal was very high, as I remember, between $5 and $6, and of course, our coal sold for much less than that, so between the realization Q Did Island Creek Coal Company come to you with = this proposition or did you go to them, if you recall? j A I think I heard about it through Bill Cooke, and we probably went to them first. Q Is it fair to say, then, that you initiated the ne- gotiations that led to this [409] operation? A I would say we did. I am speaking of “you” in a personal sense. A Oh. Yes. Q If you recall. conditions with respect to the Skyline Mine? A This was one of the few strip mines, possibly the only one in that vicinity, so it would have, we hoped— we thought—cost advantages. Q Was Island Creek not stripping any coal— A No. [420] (The document was thereupon marked Kolbe Deposition Exhibit B for identification, 10-18-68. ) BY MR. HEDLUND: Q_ I now hand you, Mr. Kolbe, what has been marked Kolbe Deposition Exhibit B for identification, and ask you if that refreshes your recollection as to another at- tempt by United Electric to get into underground opera- tion. (There was a short interruption, after which the taking of the deposition was resumed, as follows:) BY THE WITNESS: A This says, “In connection with your memorandum of October 8th”, which I do not have here. It says: “I am sorry that the underground miner did not perform. I believe this method of mining has a great future, but underground mining is not our business, and under the conditions I think the only thing for us to do is to continue to [421] wait until someone in the deep mining field produces a working ma- chine and a workable system.” MR. CUSACK: For the purpose of the record, the memorandum is to Mr. R. J. Hepburn, dated October 9, 1957. 160 BY MR. HEDLUND: Does that refresh your recollection as to an attempt, in addition to the drift mine at Buffalo Creek by United Electric, to get into underground mining? A Well, this would be exactly contrary to it, wouldn't it? “TI think the only thing for us to do is to continue to wait until somebody in the deep mining field produces a working machine and a workable system.” Q Do you recall purchasing the underground miner referred to there? A Yes. It was for use at Buffalo Creek. Q Did you participate in the design of the machine? A No. What happened was that I saw the possi- bilities of such a machine and the C. W. [422] Neff Company, George Harrington, had worked for, I think, years on the Kinley, McKinley or Kinley machine, and he had had a man by the name of Robbins working on that with them. At the same time Arnold Lamm was working on the Colmol. There were a lot of people working on this general idea, and I saw where it would make quite a difference in the deep coal field. None of these machines were too good at that time. I went over and saw the Sunny Hill operation. I was in hopes that we could use it. We had, I hoped, an advantage in operating an un- derground mine in that we could go in from our pit. We would also have a washing plant. It would increase the reserves we could put through that plant, possibly on second shift and so forth. - The strip coal industry has done a lot of work along this line. Peabody built a punch miner utilizing part of this and so forth, and I believe they lost a substantial amount of money on it, but anyway, they did it. It is a = logical thing for a strip coal miner to be interested I went over and saw Arnold’s machine, went under- ground, with the possible idea of making a small one. Arnold had that in mind. It didn’t strike me. A it did, it mined not very much. Q What subsequently became of the machine? A I imagine it was simply junked. Q Would it be fair to say that this venture cost the company in excess of $600,000? c A No. I don’t think—you mean the whole deep un- That was not really question. I did not ask yu her eee I asked whether— A That is, though, what you did ask. . Q If I did, then, I would like to rephrase the question. In terms of the initial cost of the [425] machine and any other expenses involved in its use, repair, redesign or design, do you recall whether or not the total expense to the company was in excess of 3600, 0007 A Just on that one machine? 162 Tes. A 8 but I wouldn't think so. [448] BY THE WITNESS: A (Continuing) I just want to say that—after 63, of course, I haven’t kept track of developments in the coal business too much—that a new way of shipping coal has come in, which is the unit train, and this new de- velopment, of course, could affect this Rail-to-Water. I don’t know whether it has or not, but what might have been a good investment in good judgment by these seven coal companies at that time could be changed, of course, by later developments. I don’t know whether it has been or not. The rate on these—on this shuttle service that has been inaugurated is substantially less than the previous rate; in some cases, perhaps half as much. BY MR. HEDLUND: Q Mr. Kolbe, do you have Kolbe Deposition Exhibit 13 in front of you, and if so, would you review that once again? (There was a short interruption, after which the taking of the deposition was resumed, as follows:) [449] BY THE . A Les. BY MR. HEDLUND: Q In the margin, in handwriting, appears the fol- lowing, under the date of 2-25-57: “Kolbe says not interested.” Do you recall why you were not interested in this field, tt that, in fact, was the case? A It's a deep mine, in four feet of coal, away from our present operations, and we may have already started thinking about the Banner property, we had other uses for our money. F against it. [456] At Fidelity similarly the two i each other. eee dat as lho ypc eh = lara plant instead of hauled coal way down to Those would be some of the things. Furthermore, our selling and executive expenses, our sales personnel called on the same people as their sales personnel. There is an obvious economy there. Perhaps [457] at times we could have used that washing ours. in Q If you know, at that time— 164 ape one 14 1 82 75 et 1 457 Hin | Ba 271115 83 Fé 1125 : 4122 e 12 11 815237 IE . rf HE thd Fads #2 —whether or not it was? Q A No. 1516] 2 ( Court Reporter) : How do you spell it in English, please? BY THE WITNESS: MR. HEDLUND: On the record. BY MR. HEDLUND: Q Did you make an attempt to acquire that? A It never went very far. The reason why I wanted to acquire it was that I thought it an ideal mine for the Wheel. They were working it with two draglines, and I thought a Wheel would be the way to mine it. J Do you recall when this attempt was made? 0. Q It would have been in the 1950’s, would it, Mr. Kolbe ĩ A It might have been in the late 1940's. 17 1 pat 12155 ? but the patents are being used. 0 7 543 J 2% ff 11 i E f 116 ft 11 1 1 1. 23 * 1 af 5 27 % „ pet BL Iii 1 b gi¥e 15 34775 j tt 125 17771 14 f fogs iti eee 211 70 9 7 88 882 ges . 217 7715 1215 1-37 S85: é @ 2185 2 hd ae II iz MR. HEDLUND: In any other areas Mr. Latimer may have been involved in. MR. CUSACK: He testified he was a land man, a competent land man. 16371 Q with respect to explosives? A Yes. I might say that other people tried to get— the final break-through was in [638] Indiana, and they could get no patent on it. My position with the Patent Office often was this: The Patent Office said, “Everybody knows that.” I would say PPP use it?“ Well, they just had no answer to that one, but that evidently is just because everybody knows it and every- body is so smart and has a need for it but doesn’t use it, doesn’t enable you to get a patent, which I think is an unreasonable position on their part, but it is their posi- tion. Q During your direct examination by Mr. Cusack, you referred to a number of experiments that you con- ducted with nitrogen tetroxide. A Nitrogen? Q Tetroxide. A Nitrogen— was it penta or tetra? Was it pentani- tromethane? MR. STEVENS: Do you have the page reference, Mr. Hedlund? BY THE WITNESS: A Not nitrogen tetroxide. 171 MR. HEDLUND: Nitrogen tetroxide. 1654] Q In other words, it is your best recollection that you applied the name Unimite“ to a number of explosives, only one of which was the ammonium nitrate- coal dust-nitromethane composition? A We might well have used it for the one having fuel oil in it, too. I don’t really see why we would change We weren’t advertising it to the general public. We were just using it for our own purposes. 2 It is true, is it not, that the composition ammonium A Ej i 7 Hl 7 z : : 8 5 1 8 i 8 8 MR. HEDLUND: I again bring to your attenti Mr. Cusack, that at various places in the record it you who brought up Unimite, and I am try to find out what the facts were. BS A No. MR. HEDLUND: Mr. Youker, will you please mark for identification as Kolbe Deposition Exhibit S, a copy — Ar - 172 (The document was thereupon marked Kolbe Depo- sition Exhibit S for identification, 10-28-68.) MR. HEDLUND: Having done so, would you tender Kolbe Deposition Exhibit S to the [656] witness, please. (There was a short interruption, after which the taking of the deposition was resumed, as follows:) BY MR. HEDLUND: Q Mr. Kolbe, I direct your attention to Column A of ee ee eee MR. CUSACK: Counsel, are you marking for iden- ae ee tent? MR. HEDLUND: Not at this time. MR. STEVENS: You are directing his attention to Column A? MR. HEDLUND: . Column A of Table 1 on Page 2. THE WITNESS: What page? MR. HEDLUND: Page 2. (There was a short interruption, after which the taking of the deposition was resumed, as follows:) BY THE WITNESS: MR. STEVENS: Mr. Hedlund, first of all, the table to which you have referred does not refer to coal dust. I do not know what it is. It certainly has to be read in context with the entire application. FF einen eee Kolbe, to answer the question. 2 8 i 8 173 BY THE WITNESS: A This has only—this doesn’t have kerosene in it or coal dust, as pointed out. It uses nitromethane. I tried to get a patent on this, did I not? Did you just read where I did? MR. HEDLUND: No, sir, you did not, not on this composition. BY MR. HEDLUND: (The Document was thereupon marked Kolbe Depo- sition Exhibit T for identification, 10-28-68. ) (There was a short interruption, after which the taking of the deposition was resumed, as follows:) 174 MR. CUSACK: I note, Counsel, on the second page it states: “Agreed to this 9th day of July, 1956, The United Electric Coal Companies, by Frank F. Kolbe.” MR. HEDLUND: Fine, sir. Thank you. MR. CUSACK: Gamal met I pend Ie tossed pai graph on the first page of Kolbe Deposition Exhibit T into the record? MR. HEDLUND: I would be more than happy to have you do so, Mr. Cusack. MR. CUSACK: The second paragraph states: “Hercules Powder Company hereby waives the royalty payment of three-quarters of one cent per pound of explosive composition [660] resulting from the practice of the inventions claimed in United States Letters Patent No. 2,325,064, made and used by you, which would become due under the reference license agreement, so long as Mr. Frank F. Kolbe continues the devolpment and experimental work in the practical application and use of explosive com- positions covered by United States Letters Patent No. 2,325,064 at the facilities of The United Electric Coal Companies, and so long as you make available to Hercules for its unlimited use written -reports of such development and experimental work, and so long as you permit authorized representatives of Hercules Powder Company at Hercules’ election, to visit your plants and observe such development and experi- mental work. You further agree to grant and do hereby grant to Hercules an irrevocable, non-exclu- sive, royalty-free license, with the right to grant sub- licenses without accounting to you, under any inven- tion first conceived or reduced to practice by you 1661] in the performance of the development and experi- mental work contemplated by this agreement, but such license shall be limited to those inventions con- ceived or reduced to practice while this letter agree- ment is in effect.” : Thank you. 175 MR. HEDLUND: Will counsel stipulate that the pat- ent referred to in this letter is the patent that we have had marked as Kolbe Deposition Exhibit 87 MR. CUSACK: It certainly is. It has the same num- ber. BY MR. HEDLUND: 4 15 ü . f with. Now, you gentlemen— MR. HEDLUND: I meant to Say MR. STEVENS: I think you should ask him that be- BY MR. HEDLUND: Q I will ask you, then, Mr. Kolbe, if prior to this let- ter you were paying royalties to Hercules. A No. . Q Do you recall that prior to this letter you had a license agreement with Hercules? A No. I do not recall having a license agreement with Hercules. Q Do you recall, after the date of this letter, wheth- er or not you continued the development and experimental work in the practical application. and use of explosive compositions covered by the patent referred to in Kolbe Deposition Exhibit T? A Yes, we did—wait a minute. We went [663] ahead 176 with what we were doing on nitromethane and ammo- nium nitrate and with coal and oil. Q Do you recall whether or not— A It is my remembrance that we had gone ahead with this for some time before any of this ever came up and before I knew about their work. Now, do you know when we started using this material? Q You will recall, Mr. Kolbe, the reference in the 1956 annual report of United Electric, on Page 9, which states as follows, in part: “The cost of this operation was substantially re- duced when we inaugurated the use of a new 2 85 sive a year ago. After years of research“ A Yes. We were doing work on that probably before we ever inaugurated the use of it. We hired—as appeared from Huey’s letter, we hired Mr. Damon, we made a contract with Glenn Damon in the Bureau of Mines, by which they conducted work on explosives for us, and I don’t know when all that would have happened. I will continue on a little bit from Page 9 of the 1956 annual report, which states in part: “After years of research we discovered [664] this compound called Unimite, which had the qualities of —— compactness and safety, so valuable for our In addition, Mr. Kolbe, I would like to inform you that the records of United Electric indicate that the use of Unimite, including nitromethane, or rather, consisting of nitromethane, coal and ammonium nitrate, was the com- pany’s principal explosive beginning on July 14, 1955, and continuing through May of 1958, and on May 16, 1958, ‘the company began using prilled nitrate and fuel oil as an explosive. A It doesn’t say, though, when we originally got the —when I originally got the idea of using this stuff. Q No, it certainly does not, Mr. Kolbe, and I think what you have just said is consistent with the statement 178 BY MR. HEDLUND: Q You state, Mr. Kolbe, on Page 188, in part: . . . so we talked to the Aluminum Corporation of America about establishing a big aluminum smelter either in St. Louis or along the Mississippi there, or in Perry County, right at our mine.” Is it not a fact, Mr. Kolbe, that at the time you origi- nally talked to Aluminum Corporation, they had a smelter in St. Louis, if you recall? A They had an aluminum oxide plant there. I am t sure whether they had anything more or not. Q Do you recall whether at that time Unfted Electric was selling coal to the Aluminum Company facility in St. Louis? A Yes, we were—that is, we did from time [673] to time. [684] MR. STEVENS: —that your objective is [685] best accomplished by saying, looking at the documents you have shown him and the testimony which you just’ re-read, is there anything else? ; MR. HEDLUND: That is what I am trying to do, and I thought I had done that. MR. STEVENS: All right. ’ (There was a short interruption, after which the taking of the deposition was resumed, as follows:) BY THE WITNESS: A I don’t remember (b), which is given here. MR. HEDLUND: That is on— — „ e Referring to the letter of. December + MR. HEDLUND: All right. BY THE WITNESS: A What I remember is (a), if Aleoa—I would like to go back to the beginning of the deal. We had large reserves at Fidelity. I was trying to 179 find a market for them. We wanted to negotiate. We wanted to get Alcoa interested in buying coal from us. They objected that our reserves would not last the life of what they wanted to do, so we [686] suggested that we would buy additional reserves, deep coal, to the north of us. That was done. We had no strings whatsoever on that deep coal, but we thought that they would first use our coal because it would be cheaper. It was logical that they would. MR. HEDLUND: I am sorry. BY MR. HEDLUND: Q By “our coal”, you mean at Fidelity? A At Fidelity mine, yes. All right. A And when that coal was exhausted, if they needed more, they would give us serious consideration for mining the other, and also, that if they ever sold it, as was cov- ered in that. agreement, they would give us the first chance of buying it. Now, that was the whole thing, and we didn’t go into that if we came to a specific proposition for leasing Alcoa is willing to consider seriously such a lease. We didn’t go into that. I didn’t go into that. I wasn’t considering that we would—the coal was pur- chased for possible use for their aluminum plant. If they didn’t want it, they would [687] first consider us as a purchaser, and that, I suppose, would cover the matter in (b), but it was not exactly stated the way it is in (b). 734] BY THE WITNESS: A (Continuing) I don’t know whether this is the time to go into the whole coal history or not, but you must remember that the coal industry is a tough industry and that many people have gone broke in it. MR. HEDLUND: Yes, I understand that. BY THE WITNESS: A.4 Continuing) Therefore, you don’t indulge in the expansion. It’s quite a venture, this expansion in the coal industry. 180 BY MR. HEDLUND: Q Directing your attention to the first full paragraph on Page 3 of Kolbe Deposition Exhibit Y, do you know whether as of 1956 the competitors of United Electric had better organization for prospecting than United Elec- tric did? . MR. STEVENS: Mr. Hedlund, I.think it is only fair to ask you to explain to the witness what you mean by “competitors.” Do you mean what Mr. Latimer meant, or do you have a different meaning in this lawsuit, or— 17351 MR. HEDLUND: I have n “meaning at all. I believe Mr. Kolbe has testified as to Who he believes the competitors of United Electric were. He certainly under- stood what the word “competitors” meant when Mr. Cu- sack asked him, and I will use it in the same sense that Mr. Cusack asked him, so that he can understand what I mean by my question. MR. STEVENS: That does not really help me very much. Could I have the question again, please. Q (Read by the reporter.) MR. HEDLUND: If you would prefer, Mr. Stevens, I can ask him with reference to specific companies. I think that might prolong it. MR. STEVENS: If he can answer— THE WITNESS: Let's just answer this. BY THE WITNESS: A In Fulton County, let's just take that, I have given you the amount of coal, and you can determine the exact, that we acquired after 1939 for the Buckheart Mine. It was twenty, thirty [736] million tons. The Little Sister, our next competitor—or next field to us—acquired rela- tively very little, I think, in addition to the field that they were right in. [758] Q Following July 31, 1959, there were five new directors appointed, or rather elected, to the Board of United Electric; that is so, is it not? 181 [759] A Yes. Q Were you in favor of that or opposed to it? A 1 would much rather have kept my former group of directors, of course, because we would then have gone ahead with the Industry Field and done other things. Q Following July 31, 1959, Mr. John M. Morris was appointed or elected President of the company and its chief executive officer? A Yes. Q Was that with your approval? A I would rather, if a change were made, and I would have been sharply in favor of a change when I got through with the Banner Mine, I would rather have had Arnold Lamm as President—not as President but as chief execu- tive officer. I told Arnold that, but in the first place, Arnold would not have accepted it because Arnold is a very, very independent person, and he would not have accepted the dictation from Material Service. I would have been in favor of having Johnny Morris —I would have made Lamm Chairman and * * * chief executive officer. I would have [760] been in favor of making John Morris President because he has been an excellent sales executive, he is perhaps more than a sales executive, and he is perhaps more than a sales executive, but I didn’t think he had the mining experience and the drive to establish new mines and that is what Arnold would have brought to the picture. Q I may have asked you this before, sir, but if not, following Mr. Morris’ appointment as President, did you nevertheless continue active in the management of the company? A I did some things. There’s always a question wheth- er you should get out or whether you should stay. If you get out, like the refugee in Germany or whatnot during the Nazis, if you get out you are powerless to influence events. You get out, you save your reputation, you do a lot of things, but you are out and you cannot influence events. My friends still had and I still had a big invest- ment in the corporation. I stayed. . It turned out to be a very good thing that I did, be- cause Tom Tarzy got a contract with Commonwealth Edi- ' N 182 son. Before that time we [761] had a contract with Commonwealth Edison which called for from 750,000 to a million and a quarter tons. Tom worked out a contract with them for 1,750,000, to two and a quarter million tons. ö 5 * * * * 18161 Q Do you have an opinion, Mr. Kolbe, given existing prices for labor, machinery and equipment, and the present condition as it is known in the Industry Field of United Electric, what it would cost to mine that coal per ton? A Not under today’s condition; I don’t know what costs are today. . I pointed out the other day, however, that its competi- tive conditions have been improved by the recent wage agreement. Q There might be a question, might there not, how- ever, whether its competitive position had been sufficient- ly improved? A We thought it a good field in 1959, all of us did, and I think I have seen nothing to make me think it isn’t a good field today. I might say that at-some time in the past I told Mr. Nugent that if he didn’t like the field and wanted to get out of it, that I would try to find him a purchaser for it. He did not care to sell it. Does that offer still stand, sir? A I would try to find him a purchaser for it, Yes, it aces. [903] A I would like to call your attention that the retail deliveries of coal to other consumers, which would cover those for household use—well, it would cover the customers of Buffalo Creek Coal, [909] that in 1944 it hit a top of 122,112,000 tons, that every year after that, rg down to 1965, is less until in 1965 it was 19,048,- BY MR. CUSACK: , Q Would that, Mr. Kolbe, account for the discontinu- | ance of the Buffalo Creek operations? 183 MR. HEDLUND: I object to that as being sugges- tive and leading. N BY THE WITNESS: A (Continuing) It was one of the reasons for the market. was disappearing. Another reason for our closing the mine was it was not worth while to bring in bigger equipment that could have handled higher overburden. MR. CUSACK: Thank you, Mr. Kolbe. 184 EXCERPTS FROM DEPOSITION OF ROBERT H. INMAN, TAKEN NOVEMBER 4, 1968 151 I did have a stint in the service. I was a navigator with the 8th Air Force in England. Q By whom were you employed prior to your — ment by Material Service Corporation? A The United Electric Coal Companies. For how long were you employed with The United Electric Coal Companies? A Except for three months in 1955, I was there for twenty years, from March Ist, 1948, until April Ist, 1968. Q Did you work for any other coal companies prior to your association with United Electric? A No. Q Did you have any other mining experience before your Xe with United Electric? A No. Mr. Inman, have you had any conversations with Mr. Hedlund or any of the other attorneys for any of the — during the past few days or past few mon A Yes, I have. Q Did you talk about this case? A Yes. ö [7] Q Did you talk about the feasibility of United Electric becoming an underground miner? [8] A No, we did not. Q Have you had any conversations with Mr. Morris in regard to this case? A No, I have not. Q Have you had any conversations with Mr. Camicia in regard to this case? A Not in the last year. Did you discuss with Mr. Nugent the testimony he gave during his deposition? A No, I did not. Q When you first were employed by United Electric, what was your position? 185 A Field Engineer. Q What responsibilities did that entail? A Particularly surveying and keeping the inventories of the various mines in the Fulton County area. Q What position did you hold after you were a field engineer? A Chief Mining Engineer. Q When did you assume that position? A Approximately in 1957. [11] MR. CUSACK: Off the record, please. (There was a discussion off the record, after which the taking of the deposition was resumed as follows:) MR. FUTTERMAN: Back on the record. BY MR. FUTTERMAN: Q Who is Pona Eaton? A I know him. He was a drill foreman prior to my taking the position. Q When did you cease to be Chief Mining Engineer of United Eleetrie? A December, 1964. Q Did you hold any other position with United Elec- tric after that date? A I was General Superintendent for a year and then Vice-President of Operations. Q During your tenure as General Superintendent, to whom did you report? A John Morris. Q Was he President at that time? A Les, he was. Q Who reported to you in that position? A The mine superintendents and various staff people. 1121 When did you assume the position of Vice- President? A I think it was in December, 1965, the following year. 186 Q Did you have a more specific title than Vice-Presi- dent? A Vice-President of Operations. Q How long did you hold that position? A Until April of this year. To whom did you report when you were Vice-Pres- ident of Operations? A The first year I reported to Mr. Morris, until he retired. Then I reported to Mr. Nugent. Q Whom did you supervise in your position as Vice- President in charge of Operations? In other words, who reported to you? A The mine superintendents and my staff. Q Who succeeded you as General Superintendent? A The man who succeeded my position, but not with the same title, was R. F. Donaldson. Q What title does he have? A General Manager, Strip Mining. 8 5 * * * 1141 BY MR. FUTTERMAN: Q Is he still employed by United Electric? A He passed away. He was killed. Q When you were General Superintendent, who did Mr. Latimer and Mr. Jensen report to? A To me. Q When you were Vice-President in charge of Oper- ations, who did Mr. Latimer and Mr. Jensen report to? A To me. Q When you assumed the position of Vice-President in charge of Operations, were the duties of the General Superintendent combined with the duties of the Vice- President in charge of Operations? A Yes, they were. Q Do you know whether or not Mr. Hepburn had any deep coal experience? _A Not to my knowledge. Q Would you say from your experience that it would be possible for a strip man to make an evaluation of underground mining equipment in a particular mine? MR. KEMPF: May I have that question [15] read back, please, Mr. Youker. Q (Read by the Reporter.) MR. KEMPF: I am going to ask you to define what you mean by “strip man.” MR. FUTTERMAN: A man who has had essentially all of his mining experience in strip coal mining. THE WITNESS: Could I have that quéstion back again, please? MR. FUTTERMAN: Would you read the question again, please, Mr. Youker. Q (Read by the Reporter. ) = BY THE WITNESS: A I would not rely on his evaluation. I would say it would be possible but not probable. BY MR. FUTTERMAN: Q Did you ever have any deep coal experience? A No, I did not. Did United Electric Coal Companies at one time consider purchasing the Kerr Coal Company in Colorado? A Could I have that question again, please? MR. FUTTERMAN: Will you read the question, please, Mr. Youker. * * * * 129] MR. FUTTERMAN: Will vou read the question to the witness, please, Mr. Youker. Q (Read by the Reporter.) BY THE WITNESS: A My testimony is that I am a strip miner and I took the adyice of so-called deep mine experts for this answer, and they advised me that it was unprofitable under the conditions that prevailed. BY MR. FUTTERMAN: 188 MR. KEMPF: I think the witness has already an- swered that. He pointed out, for instance, the lack of reserves that you asked him about, any additional re- serves. BY THE WITNESS: A This was not a normal deep mine operation. Where they were mining at the time, I think there was about 5,000 foot of cover, and it was having roof falls. With these kind of operating obstacles, we did not want to take * 922 * * a * a [82] Q Do you know if they own sufficient acre- [33] age so that they could justify opening a mine in that area? : A Could I have that question back, please? MR. FUTTERMAN: Will you read the question to the witness, please, Mr. Reporter. „(Read by the Reporter.) BY THE WITNESS: A No. I do not know. 4 BY MR. FUTTERMAN: Q Did United Electric believe that it would have dif- 2 in economically producing coal in any No. 2 coal eld : A Could I have that question again, please? MR. FUTTERMAN: Will you read the question to the witness, please, Mr. Youker. : Q (Read by the Reporter.) BY THE WITNESS: There are some that we would feel that way about, BY MR. FUTTERMAN: Where would they be located? C The Sepo Field, which is near Lewistown, Illinois. The Roodhouse Field we investigated. There is an area at Mount Sterling that we have [34] dropped. PO 5 — 189 There is an area at Jacksonville, surrounding the bluff, that we thoroughly investigated and dropped. We dropped the Ottawa area and the Augusta area. That is all I can recall at — time. ae . Q In what county is ugusta area A I do not remember. It is west of McDonough County. Q Why was United Electric unable to put together a coal field at Roodhouse? A The No. 2 coal is an erratic coal that cuts in and cuts out, goes up and down. We are leery of mining any coal, any No. 2 coal, after you get over 65 feet of over- burden, because of the thinness of the coal. We could not acquire enough tonnage to justify the field. Do you mean that you could not acquire sufficient tonnage at the Roodhouse Field to open a field? A Commercially strippable. [54] Q Would it be possible to tie yp coal in the Au- gusta area with the Industry Field? / This was our first effort. I do not think it worked out. 8 Q Why was that? A The coal did not go — you recall the tonnage figure for the Augusta Area 4 A No, I do not. Q Could you give us any kind of an approximation? A We were hoping for twenty million. I think it is less than ten. Q Would that be the total field, or would that only cover those properties which United Electric leased or A This would be the figure we would desire to own or control. Q Who is Dale Emling? 8 2 Mining Engineer, United Electric. . id you order Mr. Emling to make a thorough Study of the actual strippable reserves in the Augusta area 190 did. I cannot semember exactly. [55] I i aia F approximately ten milion tons I do not not recall. nn 22212 a Bier 5 eel 5 in Jackson County. said near Jacksonville, Illinois. also. mentioned that United Electric had done S a 1 1 deen terminated somewhere around 1957? A Yes, sir Do you recall why United Electric decided to drop the leases and options in this area? 5 : : 2 : i : MR. FUTTERMAN: Read the question, please, Mr. Q What did you hear? 194 A That we did not have any machinery that would handle this material. hen you speak about material“, are you refer- Q What do you mean by “handling” it? A That the depth of the overburden was too high for the machinery that we had available at that time. th of the overburden? taking me back quite a few years, but I assume that it started about 60 feet, and as you progress westerly, it goes up to 150 to 200 feet. {67} Q Would present stripping machinery be capable of mining some or all of the coal in the Salt Fork Field? A I would have to review the drilling, but I would say yes. Can you recall whether or not there would be suf- ficient tonnage in the Salt Fork Field which could be mined by present available stripping machinery? A I would like to review the maps before I would answer that. Q Mr. Inman, are you certain that United Electric dropped all of the options and leases it had in the Salt Fork Field after one year, after holding them for one year? A I could not swear to that. Q So that it is possible that some of these options and leases may have been continued beyond the one-year period that you referred to? A It is possible, yes. Do you recall approximately how far the Salt Fork Field was from the Mary Moore mine? — A Approximately four miles. If sufficient tonnage had been available [68] in the Salt Fork Field to justify a mining operation, could the coal have been processed through the Mary Moore facilities? A On a small scale. This was a very small plant. Q Well, if sufficient coal were found in the Salt Fork Field to justify mining, would it have been feasible to expand the facilities at the Mary Moore mine? A I would say yes. 195 In your opinion, and in the light of the technologi- cal advances that have been made during the past ten years in stripping equipment, d it be reasonable to go back to the Salt Fork Field and take another look as to whether or not it could possibly be mined? MR. KEMPF: If that field was available? BY THE WITNESS: A If the field is available, yes. BY MR. FUTTERMAN: Q Do you know if the field is available? A Only by hearsay, I hear that it is not. I do not know for a fact. Do you know or have you heard who owns [69] the field now? A I understand, and I only heard this, that Ayrshire picked it up. Do you know approximately when they picked up the Salt Fork Field? A Just as an estimate, in 1960 or 1961, and this is only an estimate. MR. FUTTERMAN: Just one moment, please. (There was a short interruption, after which the tak- ing of the deposition was resumed as follows:) BY MR. FUTTERMAN: Q Mr. Inman, did United Electric ever make an offer to Illinois Power Company to mine coal that was owned Mur Power Company adjacent to their Vermilion plant A I do not know whether we made an offer or not. Q. Did you investigate this possibility? A We drilled their property. Q What were the results of that drilling? A High overburden and a poor type of overburden, to my recollection, of high sand content. [84] Q When the ratio for strip coal is so high that the feasibility of economically mining [85] the coal— withdraw that. 196 Do you recall how many tons were involved at the oe . A No, I not. Q Was any utility planning to buitß; Per plant near the Petersburg, Indiana, Fiel A This was my understanding. 7 Q Do you know which utility that Wierall the exact A Some utility in Indiana. I do not name. i Q Do you recall whether or not 98 wen. ally built a plant near the Petersburg F Q Where is the Belle five Field loca*d? ere is e Rive A I think it is approximately 20 miles S0utheast of Mount Vernon, Illinois. i Q What kind of coal was present 1 A Coal miners have a certain mame think it has a not want to use right now, but I do not designation. Do you recall the average overbuT a2 depth? In regard to the thickness, do you mean that the was 30 inches thick, more or less? Less than 30. How much less? I do not recall how much less. Was it more than two feet? No, it was not. which the as follows:) (There was a short interruption, taking of the deposition was resum — 197 [87] BY THE WITNESS: by the Reporter.) MR. KEMPF: Mr. Reporter, will you read the prior questions and answers concerning the 30 inches thick. (The record was thereupon read by the Reporter as above recorded.) MR. KEMPF: Does that clear it up in the witness’ mind? MR. FUTTERMAN: I will ask the question again. BY MR. FUTTERMAN: Q How much less t [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386414_0099%3A01. Public record. Not legal advice.