Second. The general bill should also have a clear provision that a period of at least 12 months should be allowed the short-line railroads in which to readjust where possible their finances and working conditions to the new order of things, and to this end receiverships or levies on the property of short-line railroads should be made clearly unlawful for the period as contemplated by the act, except and only by mutual consent of the owners and creditors. In other words, there may by many of the short-line owners and operators who, being tired of the struggle and seeing no hope of permanent relief, would wish to give up the struggle and allow their property sold for benefit of the creditors. In this connection it is my calm judgment that unless the protecting arm of the Government is for the time being thrown around these short-line railroads at least 75 per cent, possibly more, will be thrown into bankruptcy. This would be bad business from the standpoint of the general public, the owners, and creditors as well.

Third. The act should carry a clear provision that the Interstate Commerce Commission should by the act itself be instructed to increase horizontally freight rates 25 per cent over existing rates as now promulgated in order that all the railroads, including the big ones, will have sufficient revenue with which to sustain themselves during the period of transmission from Federal to private control. This increase of rates to stand for two years, and after that to be subject to revision according to the best judgment of the Interstate Commerce Commission.

Fourth. The act should carry a provision clear and strong in its wording that the short lines shall be furnished a fair proportion pro rata of the entire available car supply, this being necessary because none of the short lines have cars enough, and have to depend on the large lines for the bulk of their supply. The short lines having neither money or credit with which to buy this equipment, if the trunk lines did not supply them as heretofore, 90 per cent of them would die from inanition; they would simply shrivel up.

Now, Mr. Chairman, I wish upon receipt of this communication you would cause it to be read before your committee, with the hope on my part that you may see your way clear by these or similar provisions to save and safeguard the short lines of America from total ruin.

Yours, truly,

GEORGE M. BRINSON, President.

The CHAIRMAN. Mr. Cawcroft and Mr. Carlson, of Jamestown, N. Y., are here and wish to be heard. Which of you desire to testify first?

STATEMENT OF MR. SAMUEL A. CARLSON, MAYOR, CITY OF JAMESTOWN, N. Y.

The CHAIRMAN. Give your name, address, and whom you repre

sent.

Mr. CARLSON. Samuel A Carlson; mayor of the city of Jamestown, N. Y.

Mr. Chairman, the city of Jamestown is confronted with a situation which I want to bring to the attention of your committee, and I assume other cities will be similarly situated shortly.

The city of Jamestown is supplied with natural gas by a Pennsylvania corporation. The source of supply is in the State of Pennsylvania about 60 miles from the city. Jamestown has a population, including suburbs, of 50,000 people. The Pennsylvania Gas Co. began operations in the city about 35 years ago and has continued the supply of natural gas up to the present time.

It has attempted to advance the rates and the matter is before the New York State public service commission. Owing to some legal interference, the public service commission has failed up to the present time to prevent the increase in rates. I am going to call on Mr. Cawcroft, our corporation counsel, to explain the legal features in that difficulty.

Now, the corporation has surrendered its franchise and served notice on the city that on May 1, 1920, it intends to discontinue the supply of gas to the city of Jamestown. If this threat is carried out, it will mean a calamity to that community, because all the householders have equipped for natural-gas fuel and no other.

The point I want to bring to your attention is this: The Pennsylvania corporation, being outside of the State of New York, holds that the tribunals of the State of New York have no control over its supply or its rates, and we feel that there should be some Federal legislation to remedy this situation; that there should be some Federal agency, either the Interstate Commerce Commission or the Federal Trade Commission, or some other body which may be created by Congress, to deal with a situation whenever and wherever gas is brought in from one State to another and the attempt is made to shut it off, as is now being done in this case.

The CHAIRMAN. Of course, you are familiar with section 1 of the interstate commerce act?

Mr. CARLSON. Yes; I understand that.

The CHAIRMAN. Which reads as follows:

That the provisions of this act shall apply to any corporation or any person or persons engaged in the transportation of oil or other commodity except water and except natural or artificial gas, by pipe line or partly by pipe line and partly by railroad or water, and so on.

The statutes expressly exempts pipe lines for the transmission of gas in interstate commerce, and so, of course, you can not invoke the protection of the interstate commerce act, as the act does not cover the situation you have in hand.

Mr. CARLSON. I fully realize that, Mr. Chairman, and that is why I am here. We want your committee to recommend to Congress an amendment to the interstate commerce law as it is now.

The CHAIRMAN. That is, take out that exception?

Mr. CARLSON (continuing). By which that clause will be entirely eliminated, so there will be no exception, and so that the same control will apply to natural gas that now applies to railroads. We can see no reason why, in a situation of this character, the same powers should not be extended to the matter of the natural-gas supply as there is now in the matter of transportation service.

The CHAIRMAN. About how many patrons or consumers have you got in Jamestown of the natural-gas supply coming from Pennsylvania?

Mr. CARLSON. About 9,000.

The CHAIRMAN. Are any of your manufacturing industries built around as a fuel for motive power?

Mr. CARLSON. Yes; but not entirely, they use gas partly in connection with their industries.

The CHAIRMAN. Is this movement on the part of the Pennsylvania corporation supplying gas due to the fact of a gradual but sure diminuition in the supply?

Mr. CARLSON. That is the position the gas company takes, asserting that the gas supply is diminishing.

The CHAIRMAN. Then, sooner or later, of course, the people of Jamestown will have to yield to the inevitable, law or no law.

Mr. CARLSON. That may be the inevitable consequence, but we hold that as long as there is natural gas and since this company was

granted a franchise with the implied understanding that it would supply the community with gas, the citizens of Jamestown should be treated as all other gas-consuming communities are treated as long as there is gas available. If there is a shortage of gas, we are perfectly willing to have a pro rata reduction made in the amount that each consumer is supplied with, and that reduction should apply to all communities alike. It would not be fair to discriminate against the city of Jamestown simply because there is a greater demand for gas within a shorter radius of the gas fields, which I understand is the case at the present time.

The CHAIRMAN. Is Jamestown the farthest point of supply for this company?

Mr. CARLSON. No; the city of Erie is supplied by this company. There are other companies which we understand are connected with this Pennsylvania Gas Co. who supply Buffalo, but this particular company does not supply any other community in the State of New York except Jamestown and Falconer, and Falconer is a suburb of Jamestown.

Mr. HAMILTON. Is there any controversy with the company as to rates?

Mr. CARLSON. Yes; that is what has led up to this situation. Mr. HAMILTON. And since there is a controversy, they are proposing to settle the controversy by cutting off the supply.

Mr. CARLSON. That seems to be the attitude of the gas company. Mr. HAMILTON. Have you not a legal remedy against them? Mr. CARLSON. Well, that is a problem and that is one of the matters I want our legal advisers to explain to this committee.

Mr. DEWALT. Are they discriminating against Jamestown alone as to price or are they raising the price for their gas all along the territory?

Mr. CARLSON. They are raising the price for Jamestown only, and they have threatened to shut off Jamestown, which is the only city against which they are discriminating.

Mr. DEWALT. How far is Erie from these gas wells?

Mr. CARLSON. Erie, I think, is about 100 miles from the gas wells. Mr. DEWALT. And you are 60 miles away?

Mr. CARLSON. Yes.

Mr. DEWALT. Is it a fact in the case, or will it be a fact in the case, that they charge more in Jamestown for gas than they do in the city of Erie

Mr. CARLSON. Yes, sir; I might say, Mr. Chairman, in this con

nection

Mr. DEWALT (interposing). Just one moment. Is there substantive proof of that fact or will there be substantive proof of that fact? Mr. CARLSON. Yes.

Mr. DEWALT. Do you know anything about the provision

Mr. CARLSON (interposing). Just a moment. The last advanced rate will begin this next month, so that Jamestown has not yet paid this advance.

Mr. DEWALT. I understand.

Mr. CARLSON. But will pay the new rate.

Mr. DEWALT. What I want to know is whether it will be a substantive fact in the case that they are discriminating against James

town alone and whether or not the rate in Jamestown is higher than the rate in Erie.

Mr. CARLSON. Yes; that is the situation.

Mr. DEWALT. Do you know anything about the provisions of the charter granted by the State of Pennsylvania to this gas company? Mr. CARLSON. You mean the franchise granted by the city!

Mr. DEWALT. No; by the State of Pennsylvania.

Mr. CARLSON. I do not know anything about that. You mean the charter creating the corporation in the State of Pennsylvania? Mr. DEWALT. Yes.

Mr. CARLSON. No.

Mr. DEWALT. Now, undoubtedly, if they carry gas to New York, by the provisions of their Pennsylvania charter they must have the right to go beyond the confines of the State of Pennsylvania. That must be so primarily. Now, you say you have no remedy?

Mr. CARLSON. Apparently we have no remedy, unless it is provided by the Federal Government. I would say, Mr. Chairman, there is a movement on foot in the State of Pennsylvania to place an embargo on all gas going out of the State. The matter is now before the Public Service Commission of the State of Pennsylvania.

Mr. DEWALT. And there is where your remedy is.

Mr. CARLSON. But it is beyond our control. We are in the State of New York. We may regulate their methods of doing business in New York State, but how can we regulate their mechanical operations at the wells?

Mr. DEWALT. You can be heard in the State of Pennsylvania if they make a discrimination against you. If they have a right to carry gas to New York by their charter-which they undoubtedly have, or else they would not carry it there-and if they are making a discrimination against Jamestown in favor of any town in the State of Pennsylvania, and they have cut off your supply of gas, they are violating the provisions of their charter.

Mr. CARLSON. Then you think we could get redress in Pennsylvania courts?

Mr. DEWALT (continuing). And you would have your remedy before the State commission of the State of Pennsylvania; there is no doubt about that.

The CHAIRMAN. Possibly Mr. Cawcroft can give us the legal phases of the situation as your corporation counsel.

Mr. CARLSON. Yes,

The CHAIRMAN. Will you yield, then, to Mr. Cawcroft?
Mr. CARLSON. Yes, Mr. Chairman.

STATEMENT OF MR. ERNEST CAWCROFT, CORPORATION COUNSEL OF JAMESTOWN, N. Y.

Mr. CAWCROFT. Mr. Chairman, perhaps I can explain the foundation of this peculiar situation in which the city of Jamestown, in common with many other cities in that region, finds itself. Jamestown has been built up on the natural-gas industry for the past 35 years. The Pennsylvania Gas Co. has brought gas in there through an 8-inch main. An 8-inch main was adequate for a town of 10,000 The city has grown to 40.000, and in addition there are 10,000 people

engaged in the metal industry in the surrounding region, which is tapped by this Pennsylvania Gas Co.

The gas company sought to raise the rate. The city believes it can pay any price that is just under the coal rates, but it takes the ground that whatever price it does pay should be determined by due process of law before its public-service commission after a full examination of the facts. To that end it brought a proceeding before the Public Service Commission of the State of New York under the publicservice law, which authorized it to bring such a petition, to review its rate. The gas company sought a writ of prohibition to prevent the review of the rate by the courts and commissions of the State of New York. The city took the position that when gas got over the State line it became the subject of local control; that it was a sort of local package or consignment of produce or goods. The city lost its contention on that theory in the State court, but it did win the practical features of the decision in this sense: Judge Cordoza, in the court of appeals, took the ground that the sale of gas is Jamestown, where it was over the State line, was not the sale of a product in a package or like passing something over the counter, but that it was interstate commerce, and that the commissions and courts of the State of New York could continue to regulate the price and quantity of gas until the Congress of the United States placed this interstate gas company under the control of the Federal courts or the Federal Interstate Commerce Commission. So down to date the courts of New York have held that we have full authority to review the rates and the quantity of gas sold in Jamestown under our publicservice commission; in other words, while we lost on points of doctrine, we won the practical decision in every court of the State of New York.

The CHAIRMAN. That is to say, if Congress did take jurisdiction, then the public-service commission could not act.

Mr. CAWCROFT. Yes; in that case we lose our lawsuit the moment the Congress of the United States takes that exception clause out of this act. Now, we have won our lawsuit in every court to which we have gone, but we are still in this dilemma: Having won our lawsuit in every court, the Pennsylvania Gas Co. now proposes to take direct action, as the phrase goes, and shut off the gas on May 1. Now, that is why we are here. We take the ground that if the Pennsylvania Gas Co. has been brought into the courts of the State of New York and under of the commissions of the State of New York and has lost in every legal proceeding, then if by the mechanical control of the gas within the State of Pennsylvania it is going to overturn the courts and the commissions of the State of New York, then we contend we are entitled to relief at the hands of your committee by a suitable amendment to the interstate-commerce act, so that this matter will pass under the administrative control of the Interstate Commerce Commission.

On the point raised by the gentleman here (Mr. Dewalt), of course we shall advise the common council of the city of Jamestown that it is entitled to injunctive relief in the Federal courts to prevent the Pennsylvania Gas Co. from shutting off mechanically the supply of gas passing over the State line into Jamestown.

Mr. DEWALT. What do you say to this idea: The Pennsylvania Gas Co. having acquired its rights under a charter from the State of