queries to see if there is the difficulty that appears to you, and, if so, how to remove it.

Mr. COLE. Doctor, is it your opinion that the adoption of the language we find in this bill would expedite the reorganization of our railroads?

Commissioner SPLAWN. So far as Government procedure is concerned, or court procedure is concerned, it is my opinion it would. Whether they would be expedited or not depends on traffic pick-up and the credit conditions generally, in my judgment; but so far as procedure is concerned, I think this would be a marked improvement and it has the virtue of placing all of the responsibility in one place and of also getting the expert treatment of it which was, I think, aimed at originally. You get the advantage of the Commission's advice in the matters where the Commission is expert; but you remove from the Commission this court work in which it is not expert.

Mr. COLE. What provision, if any, is there to give the new court jurisdiction over pending reorganizations now in our courts throughout the country?

Commissioner SPLAWN. There is a section which provides for the transfer of all of these proceedings to the court and there is a provision also that the courts that have jurisdiction at present shall continue right on until such a transfer.

Mr. COLE. What section is that?

Commissioner SPLAWN. That is section 305, on page 39.
The CHAIRMAN. Mr. Boren.

APPROPRIATIONS FOR INTERSTATE COMMERCE COMMISSION

Mr. BOREN. I should like, if you are in position to do so, to have some analysis made of the cost of this legislation; and cost of operation of the Commission at the present time.

Commissioner SPLAWN. The Interstate Commerce Comission for the fiscal year (1939) has a total appropriation as I recall of $8,726,000; $3,250,000 of that is for the administration of part II, or the Motor Carrier Act; $200,000 was for the administration of the Air Mail Pay Act, but that $200,000 has been transferred to the Civil Aeronautics Authority under the statute which was passed creating that authority. That reduced the total appropriation for the Commission for this fiscal year from $8,726,000 to $8,526,000, of which $3,250,000 was for motor-carrier regulation.

Now, that appropriation, Mr. Boren, has run along fairly evenly for a good many years. If you will take the appropriations for some of these departments and compare them with the appropriations you have made to the Interstate Commerce Commission, I think you will decide that the Interstate Commerce Commission's appropriation is about equal to that of a bureau or section of some bureaus.

Mr. BOREN. With reference to possible increases under this legislation, Doctor, it is anticipated that this bill will increase the expenses of operating the Commission?

Commissioner SPLAWN. We estimated last spring that the authority for which the author of this bill has substituted an Administrator would require approximately $1,000,000.

Of course, in dealing with conserving nearly $30,000,000,000 of private investments and much of this property operating over ways created

at an outlay of over $20,000,000,000 of public funds, a million dollars, if you can conserve the billions affected and effect economies running into the millions, a million dollars in comparison would be a mere bagatelle.

CAPITAL LOANS

Mr. BOREN. Mr. Chairman, there is just one other question. I see that the time has passed for adjournment. But, on page 27, section 208, there is provision for the borrowing of capital, for extensions, with particular reference to the Reconstruction Finance Corporation.

Doctor, does not this provision delegate what amounts to control over any particular line or company to the Reconstruction Finance Corporation? I particularly have in mind the possibility of suspending operations of a road, and maybe you are familiar with the fact that in my own State there is such a question at the present time, the Reconstruction Finance Corporation, in order to protect their loan might find it necessary to stop service, trains, or runs.

Commissioner SPLAWN. They would have the same control that any creditor in a similar position would have.

Mr. BOREN. But none beyond the control that a private creditor might have?

Commissioner SPLAWN. That is so far as any creditor is concerned. Of course, there may be more prestige to the Reconstruction Finance Corporation. You would have to count that. And then they might be listened to more attentively than a private banking concern. I do not know about that. But, that is a mere matter of opinion.

Mr. BOREN. Mr. Chairman, I will stop here. I had other questions, but the time of adjournment has arrived.

The CHAIRMAN. The committee will stand adjourned until 10 o'clock tomorrow morning.

(Thereupon, at 11:52 a. m., the committee adjourned to meet at 10 a. m. the following day, Friday, January 26, 1939.)

TO REDISTRIBUTE THE FUNCTIONS OF THE INTERSTATE

COMMERCE COMMISSION

FRIDAY, JANUARY 27, 1939

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C. The committee reassembled, pursuant to the taking of recess, at 10 a. m., in the hearing room, New House Office Building, Hon. Clarence F. Lea (chairman) presiding.

The CHAIRMAN. The committee will come to order. You may proceed, Dr. Splawn.

STATEMENT OF COMMISSIONER WALTER M. W. SPLAWN, INTERSTATE COMMERCE COMMISSION-Resumed

Commissioner SPLAWN. Mr. Chairman and gentlemen of the committee

The CHAIRMAN. Do you prefer to be asked questions, or would you prefer to start with your statement?

Commissioner SPLAWN. I think that perhaps the other things I have in mind are such that it may conserve your time just to wait to see what questions are asked.

The CHAIRMAN. Mr. Bulwinkle.

COMPENSATION TO CARRIERS

Mr. BULWINKLE. Doctor, referring to pages 26 and 27, section 207 of the bill, I am asking you will not the order issued by the Commission upon the petition of the Administrator involve the taking of property? Commissioner SPLAWN. It was not intended to do so, Mr. Bulwinkle; not without compensation.

Mr. BULWINKLE. Well, just a minute; but it will involve the taking of property, leaving off the compensation feature.

Commissioner SPLAWN. It will involve the diversion of traffic against the will of those who would otherwise handle it; but not without compensation.

Mr. BULWINKLE. I am coming to that a little bit later.

Commissioner SPLAWN. Yes; that is correct. It is an interference with ordinary private rights.

Mr. BULWINKLE. What provision is there in the bill for a judicial determination as to what constitutes just compensation for the taking of the property?

Commissioner SPLAWN. The provision in part II of title I is that the consideration shall be what is found just and reasonable by the Commission.

Mr. BULWINKLE. But that constitutes, then, your judicial determination, does it not?

Commissioner SPLAWN. Yes. It must be just and reasonable. If the Commission issued an unjust order, of course, its order would be set aside. The Commission would have to set out the facts which would support such an order and which would show that the consideration was just and reasonable, and that would mean, as I construe it, that the report and order of the Commission would have to make it clear that there was due compensation.

Mr. BULWINKLE. Now, do you not think that the bill should contain a provision for a judicial determination by the courts of the legal questions involved?

Commissioner SPLAWN. I do not; because the courts under the provisions now, if there is a feeling on the part of a carrier that the Commission had been arbitrary, it has the remedy in the courts under the procedure you have already provided.

Mr. BULWINKLE. Well now, this bill in its present form then only provides for the situation by way of an injunction in a three-judge court?

Commissioner SPLAWN. To set aside the order of the Commission; that is right.

Mr. BULWINKLE. To set aside an order of the Commission.

Commissioner SPLAWN. That is, the title would place on the Commission the very definite responsibility to put out a lawful order.

Mr. BULWINKLE. Well, is there any provision in the bill, in section 207 or anywhere else in the bill, which would require that the carrier would be adequately compensated, if it should be required to give up some of its property or rights?

Commissioner SPLAWN. Yes; I think that the Commission, Mr. Bulwinkle, by this title would be required to provide for such compensation in the division of the earnings.

RAILROAD REORGANIZATION

Mr. BULWINKLE. In section 309, page 42, does not this section provide that it is still incumbent on the Commission to receive from the debtor, or others who may be interested, plans of reorganization?

Commissioner SPLAWN. Yes; that is being redrawn by the chairman. and as I understand it and with your permission, Mr. Bulwinkle, I will put in the record in response to your question after further conference with the chairman, what the revised draft would propose to do definitely.

Mr. BULWINKLE. Does this revised plan require the Commission to certify to the court the plan?

Commissioner SPLAWN. No. I understand it does not.

Mr. BULWINKLE. But does not this bill provide that the provisions of the existing law be repealed which provides that the court cannot approve a plan either with or without modification, unless first approved by the Commission?

Commissioner SPLAWN. I understand that the Chairman is taking that out in his redraft of this title.

Mr. BULWINKLE. I have no knowledge of what the Chairman is

Commissioner SPLAWN. That is why I suggested, if I might be permitted, after further consultation with him, to put in here what he would like to have as an explanation of that title.

Mr. BULWINKLE. Well, does this new proposed plan of the chairman then constitute an amendment to section 77 (b) have anything further to say in regard to the plan after it has been certified to the court? Commissioner SPLAWN. There is no certification as I understand by the Commission in his redraft.

Mr. BULWINKLE. After this plan is certified to the court then under his bill, has the court any authority to confer further with the Com

mission?

Commissioner SPLAWN. As I understand the redraft of the Chairman it does not require any certification by the Commission; but the court, as I understand, will be free at any time to ask the Commission questions on questions of fact within its particular knowledge. Mr. BULWINKLE. Now, Doctor, I do not think I will ask you any further questions on this 77 (b), because until I see this plan it would be useless to take up time unnecessarily on it; but I want to ask another question. On page 45, what is the necessity for the word "thereon" in line 2? Is that changed in this new plan that you have? Commissioner SPLAWN. Well, that would be out, as I understand it, Mr. Bulwinkle.

RAILROAD SUBSIDY

Mr. BULWINKLE. Well, I am not going to ask any further questions then along that line. I want to ask just one thing for my own information. I would like to have your answer to this: Did your committee take into consideration or think about any sbusidy for the railroads?

Commissioner SPLAWN. The committee of Commissioners of last

spring?

Mr. BULWINKLE. Yes.

Commissioner SPLAWN. Yes; we thought about that; but we did not conclude to recommend any subsidy. It was our thought that the transportation business of this country could stand on its own feet, be self-sustaining, and the recommendations that we made had that in mind.

We did recommend some lending of money by the Reconstruction Finance Corporation, but that was more of a conservation measure. Mr. BULWINKLE. In the nature of a loan?

Commissioner SPLAWN. In the nature of a loan and we expected that it be repaid.

Mr. BULWINKLE. Mr. Chairman, I do not care to ask any further questions now until I see these amendments.

The CHAIRMAN. Mr. Halleck.

TRANSPORTATION ADMINISTRATOR

Mr. HALLECK. Mr. Youngdahl is anxious to get away, Mr. Chairman. I will yield to him.

The CHAIRMAN. Mr. Youngdahl.

Mr. YOUNGDAHL. Doctor, is it your understanding that one of the Commissioners could be appointed Transportation Administrator?