COMMISSION ON COMMUNICATIONS SATURDAY, MAY 11, 1929 UNITED STATES SENATE, COMMITTEE ON INTERSTATE COMMERCE, Washington, D. C. The committee met, pursuant to adjournment on yesterday, at 10.30 a. m., in room 412, Senate Office Building, Senator James Couzens, presiding. Present: Senators Couzens (chairman), Watson, Glenn, Brookhart, Pittman, and Dill. The CHAIRMAN. The committee will be in order. I think we might as well proceed. STATEMENT OF LOUIS G. CALDWELL, ESQ., CHICAGO, ILL.Resumed Mr. CALDWELL. Upon reading over my testimony of yesterday and noting again the arguments that were presented by members of the committee, I am inclined to withdraw my suggestion that the terms for commissioners should be any longer than provided under this act. I think the considerations they urged should prevail over mine. I would not want to be misunderstood in what I said as to emergency applications. I agree thoroughly with Senator Dill that not only each application for license should have all the information called for by section 8 of Senate bill No. 6, but also that each renewal application should have all the same information. There is a continuing necessity for it. Senator DILL. That section gives very broad powers, in that it enables the commissioners to get complete information. I think that is correct. Mr. CALDWELL. What I did have in mind was a situation arising out of a practice that was in existence at the time I arrived at the commission, to telegraph authority to stations to do this or that for a period of time. Of course, that practice was not in accordance with the law. I quickly discovered, however, that there are cases where safety to life and property at sea are involved and it is necessary to act quickly. Some sort of emergency authorization for a limited period of time seems necessary. Senator DILL. And that emergency safety clause should be put in. Mr. CALDWELL. As an interesting example of what police signals in cities are doing just now, I cite a matter which came to my attention just yesterday. In Chicago a broadcasting station has an arrangement with the local police department whereby it broadcasts directions to police automobile squads to proceed to points from which crimes are reported. It seems that such directions were broadcast about a particular burglary that was in the process of being committed, and the burglar was still in the house. He heard the direction, from a loud speaker somewhere in the house, left a note saying, "Thanks for the warning" and promptly left. The CHAIRMAN. That was also sent to me by the police department in Detroit. It was only indicative of the fact that they needed a different wave length, and perhaps not such a long distance. Mr. CALDWELL. In connection with the advertising practices which were under discussion yesterday, I call attention to the fact that the National Association of Broadcasters is already working on and has accomplished something toward a code of ethics. I do not know how far that will go. But the broadcasters themselves have thus achieved some substantial advances. I think it is significant that they have, themselves, realized the evils that are prevalent, and are endeavoring to impose obligations upon themselves. In section 10 of Senate bill 6 there are prohibitions against the issuance of licenses to certain classes of persons who are aliens or who are controlled by aliens. I have the feeling that in some respects this section is too broad. The important defect, however, is with respect to ship licenses. There are many vessels, owned by American corporations, which must be registered as American vessels under our navigation requirements, which can not be licenses under this section. The statutory requirements as to registry do not require that an American corporation have less than 20 per cent alien stock ownership. Therefore, certain American corporations, owning ships which have more than 20 per cent alien ownership are in a dilemma. Under the navigation statutes they must have and maintain radio stations on each ship and yet they can not have licenses under this act or under the present radio law. Another defect that is present in the navigation statutes is the use of the word "steamer" in specifying what vessels must be equipped with radio stations. That will probably be interpreted not to include vessels propelled by power generated by gas engines, etc. Senator DILL. What is your suggestion as to how this should be amended to cover the situation you have raised there? Mr. CALDWELL. I have drafted, although I have not with me, a suggestion which I submitted to Congressman White during the House committee hearings this winter. In substance, however, I made two suggestions: 1. That the matter be left to the discretion of the commission in such a way that the alien control should not be permitted to be sufficient in amount to be inimical to the interests of the United States. Senator DILL. And apply that to ships? Mr. CALDWELL. The other suggestion was to have an exception to the section applying solely to ships and other mobile stations. Senator DILL. Do you think it is objectionable to have it apply to other than ships? Mr. CALDWELL. It probably is necessary to have it extend to other kinds of mobile stations such as aircraft stations and perhaps also stations on railroad rolling stock. There are other cases where, I think, it works an unnecessary hardship, ana is undesirable. I have three concrete cases in mind. One is where a very popular broadcasting station is owned by an American insurance corporation; the corporation has a Canadian director who was put on the board of directors in an honorary capacity purely as a compliment to certain Canadian interests. He had nothing to do with the control of the corporation. Another corporation applying to the commission for a license had a vice president in England who had nothing whatever to do with any activities of the corporation connected with the radio station proposed, which was merely an experimental station. Another corporation had a Canadian director; the concern was operating a broadcasting station, and the director in question was again in largely an honorary capacity. The CHAIRMAN. In those cases you think we should change the law? Mr. CALDWELL. I think so. In the two cases where there were Canadian directors, the corporations could have removed the directors, but for some reason or other they felt they could not do that. Instead they created subsidiary corporations, all the stock of which was owned by the parent corporations which still had their alien directors. The law as it stands is not hard to evade. Senator PITMAN. Personally I can not see any objection to stock ownership in aliens. I can see that a lot of changes would be necessary as it stands. Mr. CALDWELL. The principal thing is to be able to control the situation in time of war. Senator PITMAN. Would not that terminate the whole thing? Mr. CALDWELL. There are other provisions of the act that amply protect us in time of war and provide for sufficient control of the situation. The President, for example, can shut down any station, or take it over, as soon as war is declared. Senator DILL. I think there is danger in time other than during war. I think there is an attempt there to prevent alien influence in radio stations and radio broadcasting. I think that was one of the purposes for inserting that when this law was written. Senator PITTMAN. It is possible our theory will go, but that was a means of isolation. Senator DILL. There might be a saving clause put in there, probably. Senator BROOKHART. We have outlawed war now, so that we do not need to be afraid of that any more. Senator DILL. There is more danger in peace, probably. I suggest, Mr. Caldwell, that you send to the reporter the suggested amendments. I do not mean to insert at this particular place in the bill; but I would like to have in the bill the matters which you studied with great care last year. Mr. CALDWELL. I am afraid some of those things are in my office in Chicago, and since you have made several requests for suggestions of that character, I wonder whether it would not be all right for me to send them to you later by mail. I can send you a complete set. Senator DILL. I suggest that you send them to the Chairman. The CHAIRMAN. You may send them to me, and we will insert them: Mr. CALDWELL. Section 12 of the bill provides for revocation of licenses by the commission on grounds therein set forth. The question has arisen as to whether it gives the commission power to suspend a license. Many cases occur where the discipline necessary is less than a revocation, and yet there should be some discipline-for instance, where a station has deviated from its wave length because of negligence; for the first time or two perhaps a suspension is sufficient punishment. Senator DILL. Your suggestion is to give them power to suspend the license for a time? Mr. CALDWELL. Either suspend or revoke. I think the section should not be mandatory; the commission should have the right either to suspend or revoke. Furthermore the section should not be mandatory, and I do not believe it is, as to any ground on which suspension or revocation may occur. Further, in lines 17 and 18 on page 20 of the bill you will find provisions that are unnecessary in view of the fact that you have taken over from the Interstate Commerce Commission into this new commission the determination of the issues which are there covered. In other words, it is not necessary to have any provision for the effect to be given to findings by the Interstate Commerce Commission, because the Interstate Commerce Commission will no longer have power to make those findings. Senator DILL. And, furthermore, this bill is intended to give this commission the power to make its investigations and its findings? Mr. CALDWELL. Yes, sir; I suggest also that you consider changing the procedure provided in this section. This section requires the commission first to make an order of revocation and then call in the parties to hold a hearing to determine whether its order was right. The result may be unnecessary and premature publicity to a revocation, with consequent injury and damage to the station's contract arrangements and good will. It seems to me that if the station were first charged with an offense, then summoned for a hearing, and then, if warranted by the evidence, had its license revoked, it would be the better procedure. Senator DILL. Might not your suspension work properly there? They might suspend a station pending a hearing. Mr. CALDWELL. I think that if it were properly safeguarded by a preliminary hearing that might be done. If not so safeguarded, a provision of that kind might be abused by overzealous engineers. A station is in some respects like a newspaper that, when temporarily enjoined, loses its readers and advertising. If you put a station out of business for a time it loses its listeners and breaks its advertising contracts. The CHAIRMAN. In my opinion a thing of that sort should always be heard and given consideration before action is taken. Senator DILL. Yes. Mr. CALDWELL. In the manner of proceeding provided by this section there is some danger of injustice because of its inverted character. Senator DILL. But, Mr. Caldwell, the provision is here that no such order of revocation shall take effect until 30 days' notice in writing thereof, stating the cause for the proposed revocation, has been given to the parties known by the commission to be interested in such license. Mr. CALDWELL. I understand that, Senator, but just as soon as a station license is revoked, the newspapers carry the news that station ABC has had its license revoked before any hearing. Unjust injury and damage may be done to the station simply upon publication of an order of revocation of its license. I am simply mentioning this as a cause of possible injustice to stations, rather than to suggest that any necessary element of due process has been left out. In section 14 I want to call attention to what seem to me to be very serious defects. This section corresponds to section 16 in the present radio act; it covers appeals from decisions of the commission. In the first instance it provides that an applicant for a permit or for a station license, or for the renewal or modification of an existing station license shall have the right of appeal from the decision of the commission to the Court of Appeals of the District of Columbia. It does not provide an appeal for anyone but the defeated applicant. It is almost impossible, particularly in the broadcast band, to have a decision in favor of the applicant which does not affect someone else than the applicant. In other words, if station A is occupying a channel and the channel is applied for by station B, if the channel is taken away from station A and given to station B, station A can not appeal under this section. Senator DILL. Could not Station A, by setting up an opposing and counter petition, come in? Mr. CALDWELL. Up to the time of the commission's decision it has nothing to ask for. It is satisfied with its channel and appears at a hearing as sort of a party defendant. It has no legal ground of complaint unless and until a decision is made in favor of station B. soon as the decision is made its rights are affected for the first time. I advise a form of proceeding by which a station such as station A not only has a right to be heard but may also have equal rights of appeal. Senator DILL. Take the case you mentioned yesterday of the 175,000 affidavits he came in and made his fight as though he was being tried on the application of another station for his channel. Mr. CALDWELL. Yes. The commission is regularly giving such a station a right to participate in the hearing although the statute does not require it. Senator DILL. Yes. Mr. CALDWELL. But he does not have any standing on appeal if his wave length is taken away from him and given to the applicant station. Senator DILL. He would have to make another application and come back again for another hearing? Mr. CALDWELL. Yes; and I am not so sure that he could come in again on the same evidence under the present provisions of the statute. Senator PITTMAN. Is there a provision for an intervention? Mr. CALDWELL. There is no provision of that kind, and I do not know how he could achieve any standing on appeal. I have talked the matter over with the justices of the court of appeals with respect to one aspect. While they very carefully say that they do not want |