The Senate made 44 amendments to section 1 of the bill, which authorizes new improvement work. These amendments covered additions to authorizations made by the House, and the adoption of new reports received since the Committee on Rivers and Harbors closed its consideration of the bill. All of these additions were recommended by the War Department in official reports.

The remaining amendments relate to survey items and verbal amendments to House items, on all of which the House conferees receded.

RAILROAD CONSOLIDATIONS

JUNE 24, 1930.-Referred to the House Calendar and ordered to be printed

Mr. PARKER, from the Committee on Interstate and Foreign Commerce, submitted the following

REPORT

[To accompany S. J. Res. 161]

The Committee on Interstate and Foreign Commerce, to whom was referred the joint resolution (S. J. Res. 161) to suspend the authority of the Interstate Commerce Commission to approve consolidations or unifications of railway properties, having considered the same, reports thereon with an amendment and recommends that the joint resolution as amended do pass.

The committee finds it inadvisable at this time to enact the joint resolution in the form in which it was passed by the Senate. Some of the policies embodied therein, the committee feels, do not demand emergency action by the Congress, and legislative action upon such policies should await the completion of the investigation now being conducted by the committee upon railway unifications and holding companies. On the other hand, the committee is of the opinion that there are defects in the existing provisions of the interstate commerce act relating to acquisition of control of carriers and consolidation of their properties that demand immediate consideration by the Congress and that should be remedied by provisions of law permanent, rather than temporary, in character. The committee has therefore reported a substitute for the joint resolution as passed by the Senate, covering three matters of emergency character which, in the judgment of the committee, should be enacted into law at the present session.

SCOPE OF SUBSTITUTE

These matters are grants of authority to the commission with respect to, first, hardships and losses suffered by railroad employees. as a result of unifications of railroads; second, losses suffered as the result of such unifications by States, municipalities, or individuals under contracts for value or provisions of law governing the location

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of general offices or shops of railroads; and, third, acquisitions of control of two or more railroad carriers by individuals, holding or investment companies, voting trusts, and other noncarrier persons.

LOSSES TO EMPLOYEES

As to the first of these matters, paragraph (a) provides that in hearings upon applications to the commission for authority to acquire control of one or more railroad carriers, or to consolidate their properties, the employees of any carrier by railroad involved in the acquisition or consolidation may intervene and be heard. Under the railway labor act, Congress has approved the policy of railroad employces being represented by representatives of their own designation, and the substitute, pursuant to this policy, permits the employees also to intervene and be heard through such representatives. The substitute further provides that as a condition to the approval by the commission of any such acquisition or consolidation, the commission is authorized to require that the carriers involved shall make proper provision for minimizing and/or compensating the employees for the hardships and losses suffered by them as a result of the acquisition or consolidation.

The committee understands that the commission is now of the opinion that section 5 of the interstate commerce act, properly interpreted, grants authority to the commission to make proper provision for these matters in connection with its approval of any acquisition of control or consolidation of properties. The section, however, contains no specific provision upon these matters and the committee believes that any doubts as to the existence of the authority should be removed by the enactment of a definite provision of law.

The hardships and losses contemplated by the committee amendment may, of course, be of widely diverse character. They may be illustrated, however, by such hardships and losses as result from reductions and changes in the carrier's force, or as result from changes of residence or from the disposal of homes forced by changes in the location of the railroad shops or offices. The employees who would receive the benefit of these provisions are all those persons in the service of the carrier who perform any work defined as that of an employee or subordinate official in the orders of the Interstate Commerce Commission. This would include office, as well as operating, employees.

LOSSES TO MUNICIPALITIES

As to the second of the matters covered by the substitute, paragraph (a) provides that, as a condition of the approval of an acquisition of control or consolidation of properties, the commission shall determine what is just and reasonable and in the public interest with regard to the losses sustained by reason of change of location of railroad offices or shops pursuant to such acquisition and consolidation. The losses are those sustained by States, municipalities, or individuals and flowing from breaches of requirements of State law, or of contracts for value or contracts governing donations of bonds or proceeds thereof where the law or contracts require the maintenance of general offices or shops in a particular locality.

HOLDING COMPANIES

The commission, in its forty-third annual report for the year ending November 30, 1929, states (p. 79) that

In our last annual report we called attention to the acquisition by individuals or groups of individuals of control of railroads. We stated that this might seriously affect the maintenance of competition among carriers. Corporations organized as trading, investment, or holding companies appear also to be active in acquiring control of or substantial interests in various carriers. It seems clear that the acquisition of control or of an amount of stock sufficient to influence the policies of competing railroads, either by individuals or by other noncarrier corporations, may result in the suppression of competition in a manner no less harmful than if such control be exercised directly by one carrier over another.

The commission recommends in its report that in view of the fact that these acquisitions of control may result in suppression of competition consideration should now be given by Congress to possible legislation.

The existing law (sec. 5 of the interstate commerce act) regulates acquisitions of control by one carrier of another carrier or carriers but does not cover acquisitions of control by individuals or by holding or investment companies of carriers. The committee agrees with the commission that this defect should be immediately remedied by legislation in order to preserve competition.

To this end the committee has provided in the substitute that the acquisition of control in any manner of two or more carriers by railroad by or through holding or investment companies, voting trusts, or other persons who are not carriers by railroad, is prohibited unless approved by the commission. The substitute further provides that any violation of the prohibition may be enjoined at the suit of the United States, or by any commission or regulatory body of any State in which is located any part of the lines of the carrier by railroad, or by any other party in interest. The control covered by the provisions of the substitute is actual control acquired by individuals, associations, or corporations which are not carriers and which therefore do not own and operate railroad properties but nevertheless separately or jointly direct or have the power to direct the railroad carriers' operations and management by virtue of stock ownership in the carriers, voting trust agreements, or other contractual arrangements in respect to the stock or securities of the carriers or the properties operated by them Such control is usually held by holding or investment companies although instances have been brought to the attention of the committee in which individuals have held a controlling interest in the ting stock of a carrier. The control may be held directly or indirectly, and the provisions of the substitute are sufliciently broad to cover control held through one or more intervening corporations. or associations. The substitute would not apply to acquisitions where actual control already exists or to acquisitions of less than actual control.

It should also be noted that, while the substitute is prospective in operation and applies only in the case of an acquisition of control of at least two carriers consummated after the passage of the joint resolution, this requirement would be met even if control of one of the carriers had been acquired prior to the passage of the resolution.

The substitute further provides that the provisions of the interstate commerce act and the supplementary acts applicable with respect to