Commissioner SPLAWN. It is not, without his resigning from the Commission.

Mr. YOUNGDAHL. Is there anything in the bill which would provide that such cannot be so?

Commissioner SPLAWN. I think that the law now requires that a Commissioner shall have only one vocation, that of Commissioner, and this Administrator is another vocation, and I do not believe that a Commissioner, under the law, would be eligible to take over that job, as the title is drawn.

Mr. YOUNGDAHL. Now, referring to section 204, which provides for program of coordination; as I understand this section, that program applies merely to the railroads.

Do you think it necessary for this coordination plan to provide for other modes of transportation?

Commissioner SPLAWN. That is a matter I think you will want to think more about as you go along with the hearings here and hear from the different agencies. It appears to those of us in the Commission who have studied this railroad situation for some time that there are opportunities for coordination and cooperation among the railroad carriers which might save them considerable operating expenses.

Now as to those other agencies, I think there might be further exploration, and that is provided for, as I understand, as one of the duties of the Administrator.

I think that the title dealing with the Administrator is so drawn that you may call upon him to make such explorations so that you might have the facts, if you do not have them by the time that you get through with these hearings on that point.

Mr. YOUNGDAHL. In connection with that same section, in line 8 of section 204, may I read line 5, on page 25:

under common ownership or control, collective or cooperative arrangements. What is the meaning of "collective", Doctor Splawn?

Commissioner SPLAWN. Common usage, by two or more companies. Mr. YOUNGDAHL. Would you say that that referred to collectivism? Commissioner SPLAWN (continuing). Very much as you have in the Union Terminal down here in Washington; the same sort of collectivism.

Mr. YOUNGDAHL. It does not refer to any other kind of collectivism?

Commissioner SPLAWN. Contractual rights, or contracts as between

parties.

Mr. YOUNGDAHL. The reason I asked, is that I just do not like the word "collective." That is all.

Now, referring to this Administrator: From all I have understood from your testimony, he must be a man of wide experience and knowledge of transportation problems. Is that correct?

Commissioner SPLAWN. If you do not provide for such a man, I think you should not set up the office.

Mr. YOUNGDAHL. Well, do you think that you can get a man with those qualifications for $7,500 a year?

Commissioner SPLAWN. I think it would be unfair to the man, considering the responsibility, to limit his salary to $7,500.

Mr. MARTIN. Put me down for $12,500.

Mr. YOUNGDAHL. I believe that is all, Mr. Chairman.
The CHAIRMAN. Mr. Halleck.

WAYS FOR IMPROVING THE TRANSPORTATION SITUATION

Mr. HALLECK. Dr. Splawn, in coming up to this legislation, I have had the idea what we were attempting, if we could do so, was to do something to aid the railroads and other systems of transportation in this present emergency.

Commissioner SPLAWN. Not merely in the present emergency. This is not regarded as merely an emergency statute, Mr. Halleck, but as a long-run proposition. The transportation situation has not grown up overnight. As I tried to point out Tuesday, it is a result of many things which have happened during the past 20 years.

Mr. HALLECK. Is there anything-of course, your statement has been fine and clarifying, so far as I am concerned-but in just a word, could you point to specific things in this bill that will in some measure at least relieve the financial situation of the carriers?

Commissioner SPLAWN. Yes; I think, to begin with, part II, which deals first with pooling, that there is considerable possibility as to economies there; also in that part as to unifications or mergers, or consolidations, as the case might be, there are a good many properties on the ragged edge which may be taken over by other companies and operated at least as auxiliary properties, profitably, without their being abandoned and torn up, the strong companies taking them over, using them as auxiliary companies; but not find it necessary to maintain them as to a high standard of maintenance as the main stems and would move over them probably more slowly moving traffic, hold them in reserve for the peak service which comes periodically in the course of a decade or so.

Then, we come next to parts III and IV of title I: The bringing of all carriers under the jurisdiction of the Commission so far as a floor of the rates is concerned to stop this fixing of rates by unregulated carriers at levels unreasonably low which has the effect of pulling down the rates of the regulated carriers; the more definite rule as to what the minimum should be; the conservation in that way of the revenues of these transportation companies. I think that would be very considerable.

I think that in the stabilization of the situation in the prevention of the wasting of funds in struggles for traffic which would be eliminated through such a rule as this, that there would be very large savings.

Then, the entire title II with reference to the Administrator looks to the exploration by these companies of various possibilities of improving operating conditions, reducing operating expenses; necessity now today is bringing out a great many improvements in operation through adaptations to changed conditions. Sometimes companies would be almost ready to enter into some agreement, but for some reason over which they have no control there would be a hitch. The Administrator, being a statesman-that is the assumption, that he will be a statesman-an impartial and very intelligent and wise individual, experienced in business matters, would be able to make suggestions, bring about compromises usually without having to come to the Commission to get an order, the order being the last resort and the thing that would be resorted to only in extreme cases. Under title III, reorganization is provided. There is no great financial assistance in reorganizing properties. The companies have

to be reorganized because their revenues are not adequate to meet their obligations. It is merely something that is necessary and has to be done, because of lack of revenue.

As those reorganizations are worked out and the fixed charges are adjusted to the reasonable expectations of income, there will be more solvency, more solvent companies, assuming that we have a normal situation as to traffic.

As to title IV, that presupposes that several companies which will have good earning power in the future will find it advisable at present to borrow some money which they can repay out of future earnings for the purposes set out there.

The last title does not involve a great deal, relatively, so far as the entire system is concerned, but to the particular companies involved, it is considerable-about $10,000,000.

I think that the chairman in his bill has presented a minimum of what you might do and that there you may see fit to add other titles and other paragraphs after you have heard more in the course of your hearings.

COMMISSION PROCEDURE

Mr. HALLECK. About how long has it taken the Commission under its present arrangement to decide or determine the rate cases coming before it?

Commissioner SPLAWN. That is difficult to say. The statute, so far as suspension cases are concerned, limits the Commission to 7 months. Frequently if there is much protest and much involved in those suspension cases, the parties find it necessary to ask for time and the carriers are very considerate in extending the effective date of their tariffs until the matter can be adjusted.

The courts require a formal procedure, a quasi-judicial procedure, in these rate matters. The Commission does, however, handle more individual rate cases in an informal way, including fourth section and the like, than it does in a formal proceeding, but you are referring to the formal proceedings.

Mr. HALLECK. Yes.

Commissioner SPLAWN. And the formal proceedings must be as though they were in court; that is, there must be a hearing, an open hearing, of the parties; the parties have to have time in which to prepare their testimony. Sometimes that is very laborious. Then after the testimony is in, the parties for one reason or another will frequently ask for time in which to brief the cases, and before they are argued they will frequently ask for proposed reports and that has turned out to be a very satisfactory and in the long run a time-saving part of the procedure for either the examiner or the commissioner in charge, to put out a proposed report.

Then the parties want time to file exceptions and after the argument it is submitted, and then as to how long it will take the Commission to get it out, depends upon the difficulties involved in the particular proceeding.

There is no rule as to how long it would take to get out a rate case. Some complainant who is very impatient to get relief and just knows in his own mind that he is very right, becomes very restive. Others sometimes ask for more time or the Commission itself, if it finds the case very difficult and finds that it takes time to work out the matter in accordance with the law, takes more time.

Mr. HALLECK. How long, Doctor, would you say is the average time that is taken to get one of these cases through?

Commissioner SPLAWN. It depends upon what is averaged. I could not give you an average that would be worth anything. Some

cases

Mr. HALLECK. Well, would it be a year or 2 years?

Commissioner SPLAWN. I could not say. The Advanced Rate case (Ex Parte 123)-I forget when the petitions were filed-it was sometime in the fall, I think, of 1937, and the report was put out in the last Advanced Rate case in the following March. That was a nationwide proceeding. And then there may be some proceeding involving very little, a very small amount of reparations or some alleged discriminations which, for one reason or another, may run anywhere from 6 months to 2 or 3 years, depending upon the circumstances and what happened as to the parties, and the difficulty of the case and all.

Mr. HALLECK. It it generally desirable in the public interest that these rate cases be terminated as quickly as possible.

Commissioner SPLAWN. It is; and one of the purposes of the author of this bill in recommending a functional reorganization of the Commission is to have one group devoting themselves exclusively to rate

matters.

Mr. HALLECK. That leads me to this question: Do you think this bill, if enacted into law, would expedite the determination of rate cases? Commissioner SPLAWN. I think it would have that effect. Of course it would not, insofar as the parties are concerned. Much of the delay is occasioned by the parties themselves. The Commission does its best to speed them up, but so far as the Commission is concerned, and so far as the Commissioners are burdened with detail and have to stand reports over until they get time to look into them, it would help a great deal, not only in time but more particularly and which is more important than the element of time the satisfaction that the Commissioner would have in being able to apply his mind without interruption to the very difficult questions.

Mr. HALLECK. And most of these hearings in the first instance come before and are tried before examiners appointed by the Commission. Commissioner SPLAWN. The most of them are; yes.

Mr. HALLECK. Does the Commission undertake to review the entire record taken by the examiner, or do they in some measure at least follow his recommendations?

Commissioner SPLAWN. That is pretty well guarded, Mr. Halleck, in this way. The examiner has to write ordinarily a proposed report which is served on the parties. The counsel then file their exceptions with the Commission. If the examiner goes wrong on the facts, the counsel for the parties certainly will point that out and the Commission then taking these exceptions goes back to the record and checks to see if the parties or the examiner is correct and then another examiner will always aid before this gets to the Commissioners, pointing out whether or not the examiner who has written the report has overlooked anything and with these aids from other examiners who are keen to find mistakes-it is a competitive game. Men are promoted on the basis of efficiency and it is greatly to the credit of an examiner to point out errors that another examiner has made in the report. That is all impersonal and there is no feeling about it. It is just as if you

130981-39-pt. 1- -8

were playing a good game of chess. Then, the Commission is served by a group of practitioners or commerce counsel of unsuually high order. Many of the most able members of the bar in this country, are specialists in commerce law and practice before the Commission, and they are very keen to detect any error in the statement of facts or conclusions of law which the examiner will put out in a proposed report, and these are always brought to the Commission in written exceptions and oral argument.

Mr. HALLECK. Of course, if we increase the membership of the Commission considerable expense will be involved. Do you think if that money were used to hire more examiners and experts, that it might result in quicker action by the Commission?

Commissioner SPLAWN. No; I do not. That is not the problem. You will give the Commission the money to get the examiners to serve in the capacities in which they can serve. The purpose of this bill, as I understand it, is not to have 19 men to sit as a body to decide issues, but to have ordinarily not more than 3 or 5, and through a specialization in that way, the Commissioners would have more time for mature deliberation and consideration of the matters before the particular Commissioners.

Mr. HALLECK. Would the setting up of this Appeal Division over the Rate Division have a tendency to delay final determination in rate cases?

Commissioner SPLAWN. That would depend altogether on how the Appeal Division would function. If it functioned as the entire Commission now functions in that capacity, it would not.

Mr. HALLECK. Well, this Appeal Division, as I understand it, could review the cases, not only on matters of law, but on questions of fact. They might conduct further hearings

Commissioner SPLAWN. The author of the bill advises me that he did not intend that final determination should be placed in this Appeal Division to the extent of having the Appeal Division conduct the hearings. If further hearings are ordered by the Appeal Division, it is his thought that they should be sent back to the Rate Division.

Mr. HALLECK. In view of the fact that the decision of the Appeal Division will supersede the decisions and authority of the rate-making division, do you think that some special requirement of training in the law or in the field of transportation should be required of the members of that Appeal Division?

Commissioner SPLAWN. Not particularly more than of the members of the Rate Division. I think that there should be the greatest care in appointing the members of that Rate Division. The members of the Rate Division would be supposed to get out orders that would stand up in the first instance, but the ideal situation would be that the Appeal Division would never grant a petition. That would be ideal. That is, that they would find that the Rate Division was always correct and always deny the petitions; but still they would have the work of reviewing on petition, reconsidering, seeing whether or not they would grant or deny; but I think it would be very unfortunate to create the impression that the members of the Rate Division would be men who could not be relied upon to be right in the first instance,

Mr. HALLECK. Have you given any thought in view of the fact that the Commission as a whole is to be divided politically, to the proposition that possibly the Appeal Board, by reason of its position of high authority, should also be divided politically?