Mr. THOм. Only as to rates; the second proposal I am making-I mean the comments I am making as to what will happen if you do not adopt that view-does not do away with the power even as to State rates; it merely gives a supervisory power over them. Mr. DEWALT. In the three directions named? Mr. THOM. Yes, sir. Mr. WEBSTER. Mr. Thom, if I catch your view correctly, it is this: That if a given carrier is engaged in interstate-commerce transportation, it is then within the power of Congress to confer upon the Interstate Commerce Commission the power to fix the rates to be charged by that carrier, even though the rates relate solely and purely to intrastate traffic? Mr. THOM. Yes, sir. Mr. WEBSTER. How do you distinguish that view from the holding of the Supreme Court of the United States in the first Federal employees' liability case, where the act was held unconstitutional because it undertook to fix the rights of an employee employed by an interstate carrier who was engaged at the time of his injury in purely intrastate service, and it became necessary for the Congress to write a limitation into the second employees' liability act confining its operations to cases where the employee at the time was engaged in a service having relation to interstate commerce transportation? Mr. THOM. I would not. I think that the Supreme Court of the United States has gotten away from that doctrine. I think we to the meaning of that case, Judge, but I think that the Supreme Court of the United States has gotten away from that doctrine. For example, here is a carrier operating two trains in intrastate traffic on the same road and Congress comes along and says that they must be equipped, that the State trains must be equipped with certain safety devices, not the interstate trains, but the State trains. The Supreme Court of the United States says that is so, because that is essential to the safety of the instrument of interstate commerce. A wreck may be brought about just as well by a train running in intrastate commerce as in interstate commerce. Mr.WEBSTER. And the power in the State would impede or interfere with the movement of interstate commerce? agree as Mr. THOM. Exactly. Mr. WEBSTER. And consequently would have relation to it? Mr. WEBSTER. What relation would there be between a rate relating solely to commerce moving wholly within the limits of a given State and a rate relating to commerce between States? Mr. THOM. I think the most intimate relation. I think if the State rate does not bear its fair burden of sustaining this instrument of interstate commerce, it throws the burden of it on interstate commerce. Mr. WEBSTER. Under the holding in the Shreveport case if a rate imposed even by a State has the effect of imposing an undue burden upon interstate commerce or creates unjust discriminationMr. THOM (interposing). Unjust discrimination. Mr. WEBSTER (Continuing). On interstate commerce. Mr. THOм. Our plea is simply that you shall extend the doctrine about den, and we say, moreover, that if the power exists to remove unjust discrimination or to remove undue burden after it has occurred, Congress is not so helpless that it can not prevent unjust discrimination and prevent undue distribution of burden by adminisitering all the affairs of the interstate carrier ab initio. Mr. WEBSTER. Does not that argument assume that if the power is vested in the States that their action will constitute unjust discrimination? Mr. THOм. No. It only involves the conclusion that the commerce of the country is so important that it must be protected from that possibility. It can be done by remedial action after it occurs. In order to be effective, Congress can declare that it must never be permitted to occur. Mr. WEBSTER. While your present position, as I understand, is confined solely to the one element of rates, would not the logic of your position extend to the whole subject and authorize conferring upon the Interstate Commerce Commission the power to make all regulations, whether relating to rates or not, affecting purely interstate traffic? Mr. THOм. I think so. It is only a question of the wise exercise of the power; it is not a question as to the existence of the power. Mr. DENISON. That would logically lead to this conclusion, that Congress could exempt interstate carriers from State traffic? Mr. TнOм. Undoubtedly. I think the power over interstate carriers is just as great as over national banks. I think that Congress has as much power to prevent taxation in respect to interstate car- • riers by any other authority than itself as it has with respect to the instrumentality of the banks. Mr. DENISON. Therefore, the logic of your position would be that Congress could prevent municipalities or States or local governing bodies from compelling the roads to elevate their tracks or to put watchmen at the crossings, or to comply with any other purely local police regulation, because it would be a burden upon interstate commerce? That is the logic of your position? Mг. THOм. Yes, sir; I do not shrink from it. I think it is not a question of the existence of the power, but a question of its exercise. Mr. DENISON. And it is only a question of time when it would be done if we get started? Mr. THOм. No. I hold, Mr. Chairman, that you gentlemen sitting there are just as much the representatives of the State as the city council or the legislature of the State. The powers of government have been divided between the States and the National Government, not for the purpose of putting them under a foreign authority, but selecting the representatives who are best qualified to deal with certain classes of cases of local or national importance. It is a mistake to speak of Congress as a foreign power. You gentlemen are representing a matter of national consequence when you represent commerce. It is put into your hands because it is a matter of national consequence, and because it can be better regulated as a matter of national consequence than it can as a matter of local consequence, but in the exercise of your powers you are not foreign to the interests of the people of your States; you are representing their interests in respect to a national question just as much as you are representing the interests of your States in respect to the power to make war and the power to defend those States. All that is committed to the authority which represents all the States just as much as you are exercising a supervision over the interests of those States in the matter of controlling imports and exports. Commerce is one of the subjects that has been selected to be a matter of national consequence and the control of it is confided to the representatives of the States in Congress and to the representatives of all the people in Congress, and your power to coexistent with the nationality of the States. But, I say, Mr. Chairman, that you are asserting a certain degree of your power in this bill, you are regarding it from the standpoint of a supervisory authority, and we ask you, if you adhere to that, to add the amendment to which we have alluded, the three things, of allowing the railroads to complain of making unlawful and inequitable the burden as between the two classes of traffic and of conferring the power of suspension accompanied by the duty to prescribe Proper methods for reparation in case the power of suspension is inadvisedly used. Mr. SIMS. Why not make it easy and authorize one corporation to acquire all the railroads in the United States, a national road, all be subject to the Interstate Commerce Commision, taxes, and everything else? Mr.THOM. If you can do that you certainly can regulate the intrastate traffic by interstate carriers. Mr. SIMS. It would be much simpler and easier? Mr. THOM. I do not know about it being easier. I do not look upon Mr. SIMS. Not for those who own the railroads. The CHAIRMAN. Mr. Thom, will you kindly insert in the hearing your suggested amendment to section 5 of the Cummins bill? Mr. THOM. Yes, sir. The CHAIRMAN. Have you in draft form your suggestions which you have set forth in these three principles and amendments to section 13 of our bill, giving the commission supervisory power? Mг. THOм. We have, and I will present them. I do not suppose that I can trespass longer on your time. I have one or two other points that I wanted to present. The CHAIRMAN. Extend them in the hearings, if you will. mittee. Mr. THOM. I did not say that I misjudged them; I said I wondered if they ever had time to read those things. The CHAIRMAN. The committee will take a recess until 2 o'clock. (Thereupon the committee took a recess until 2 o'clock p. m.) Hon. JOHN J. ESCH, ASSOCIATION OF RAILWAY EXECUTIVES, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D. C. MY DEAR MR. ESCH. While I was on the stand yesterday you asked me to present to the committee a draft of a substitute provision for what is now contained in H. R. 4378, in lines 23 to 25 on page 20, lines 1 to 25 on page 21, and lines 1 and 2 on page 23, relating to the authority of the Interstate Commerce Commission over State rates, and I accordingly herewith hand you a draft of the proposed substitute which, as you will note, provides for questions as to State rates being brought before the commission on complaint of the carrier as well as of other parties interested; for a suspension of State rates where the commission is of opinion from informal evidence that the State rates violate the law, and for power in the commission to remove any undue inequality of State rates as compared with interstate rates-these in addition to matters already covered. Very sincerely, yours, ALFRED P. THOM. DRAFT OF PROPOSED SUBSTITUTE OFFERED BY MR. THOM. For the information of the commission, every carrier subject to the provisions of this act shall file with the commission, from time to time, schedules showing all its individual or joint rates, fares, charges, classifications, regulations and practices for the transportation of passengers or property wholly within one State; and shall likewise file with the commission copies of all laws and orders of any State railroad commission or other State authority regulat ing rates, fares, charges, classifications, regulations or practices of said carrier for the transportation of passengers or property wholly within one State. The commission may determine and prescribe the form, time, and manner within which said schedules, orders, and acts shall be filed with it. The commission shall confer with the authorities of any State having regulatory jurisdiction over the class of persons and corporations subject to this act with respect to the relationship between rates, fares, charges, classifications, regulations, or practices of carriers subject to the jurisdiction of such State bodies and of the commission; and to that end it is authorized and empowered, under rules to be prescribed by it, and which may be modified from time to time, to hold joint hearings with any such State regulating body, on any matters in which the commission is empowered to act, and where the ratemaking authority of a State is or may be affected by the action taken by the commission. The commission is also authorized to avail itself of the cooperation, services, records, and facilities of such State authorities in the enforcement of any provision of this act. Whenever, either upon the complaint of any carrier, or of any person interested, or upon the initiative of the commission itself, there shall be brought in question any rate, fare, charge, classification, regulation, or practice or any body or level of rates made or imposed by authority of any State on a carrier engaged in interstate commerce, the commission shall cause such State, or States, to be notified of the proceedings. The commission, after full hearing, shall, as to carriers engaged in interstate commerce, make such findings and orders as will, in its judgment, remove any undue inequality, or undue or unreasonable advantage, preference, or prejudice as between persons, localities, commodities, or other traffic, in State and interstate or foreign commerce, respectively, or any undue, unreasonable, or unjust discrimination against interstate or foreign commerce, which on the part of carriers engaged in interstate commerce, are hereby forbidden and declared to be unlawful, and such findings or orders shall be observed, while in effect, by the carriers affected thereby, and the commission shall make the rates, fares, and charges, or the minimum and maximum of such rates, fares. and charges, and any classification, regulation, or practice which, in its judgment, will remove such inequality, advantage, preference, prejudice, or discrimination. Pending such hearing and consideration the commission, if it be made to appear to its satisfaction by informal evidence that any rate, fare, charge, classification, regulation, or practice, or any level or body of rates applicable to State traffic of a carrier engaged in interstate commerce, constitute an undue inequality or an undue or unreasonable advantage, preference, or prejudice as between persons, localities, commodities, or other traffic, in State, or interstate and foreign commerce, or any undue, unreasonable, or unjust discrimination against interstate or foreign commerce shall suspend such State made rate, fare, charge, classification, regulation, or practice, or body or level of rates and direct the carrier, until further order of the commission, to main tain such relationship between State and interstate rates, fares, charges, classification, regulations, or practices as the commission may seem reasonable and just; but in the event of such suspension and such direction to a carrier the commission shall make reasonable requirements as to payment of any amount of reparation that may thereafter be ordered by the commission, within one year after the date of final action of the commission in the premises. AFTER RECESS. The committee met pursuant to the recess at 2 o'clock p. m. The CHAIRMAN. Mr. Forney Johnston wishes to present as a part of the hearings a certain brief or statement. ADDITIONAL STATEMENT OF MR. FORNEY JOHNSTON, OF COUNSEL FOR THE NATIONAL ASSOCIATION OF OWNERS OF RAILROAD SECURITIES. Mr. JOHNSTON. Mr. Chairman, may I have the permission of the committee to present the opinion of Mr. Root and the other counsel for the National Association of Owners of Railroad Securities relative to this question of excess-earnings regulation, in view of the fact that a memorandum has been filed here with reference to that provision in the Cummins bill, embodied in section 6, which we ourselves have asked to be amended in order to relieve its constitutionality of any question of doubt. We think it highly proper that the matter should be presented from the standpoint of the constitutionality of .excess-earnings regulation as properly and correctly stated, so that the opinion will be definite upon the question rather than upon a single paragraph of a pending bill. The CHAIRMAN. Have you it ready now? Mr. JOHNSTON. It is not ready. The bony structure of it is ready, but it will take a day or two to put it in definite shape. The CHAIRMAN. You can submit it to the clerk by Tuesday of next week? Mr. JOHNSTON. Yes. It is important to bear in mind that the process of excess earnings regulation is based upon the establishment of rates upon a group basis-rates necessary to sustain transportation in each group. No shipper has a right to complain of rates necessary to sustain transportation considered in the aggregate. No carrier who is given rates higher than it would receive if the rates were considered solely on an individual rate or individual carrier basis can complain if Congress impresses a trust upon the excess. It could authorize this excess to be returned to the shippers, but that would be impracticable as the excess involved in each shipment would be negligible. So Congress can clearly deal with this excess which is a by-product of the rational exertion of the commerce power in the general public interest in transportation. It is obvious that Judge Hughes's opinion does not attempt to deal with that question and is confined merely to the original theory of section 6 of the Cummins bill, which we understand has been modified so as to meet the criticisms properly directed to it. 152897-19-VOL 3-36 |