Senator LA FOLLETTE. Mr. Chairman, we have a motion pending, have we not, that we had better vote upon?

The ACTING CHAIRMAN. The motion of Senator Watson that we proceed with the hearings was agreed to. There is no other motion pending before the committee.

Senator CUMMINS. I am in favor of Senator Watson's motion to proceed with the inquiry.

Senator THOMPSON. Until 12 o'clock.

The ACTING CHAIRMAN. There is no motion before the committee at present. Senator Kellogg, do you wish to make a motion to incorporate these questions and answers in the record?

Senator KELLOGG. I would like to ask if the replies of the executive officials of the railways that were asked for at the same time are here? The ACTING CHAIRMAN. The Chair is informed that they are in the printer's hands and are expected to be here any moment.

Senator POINDEXTER. Whether they are printed or not, Mr. Chairman, I ask that they be printed following the reports of the Interstate Commerce Commission in the proceedings of the committee. Senator KELLOGG. That is, that both of them be put in the record? The ACTING CHAIRMAN. Did you make that as a motion, Senator Kellogg?

Senator KELLOGG. Yes, sir.

The ACTING CHAIRMAN. Including Senator Poindexter's suggestion?

Senator KELLOGG. Yes.

(The motion was agreed to, and the matter referred to will be found in a previous part of this record.)

Senator POINDEXTER. Now, if I may be permitted to express an opinion, I think since we are here and have these busy men here from the Interstate Commerce Commission, and as Senator Cummins has some particular inquiries that he wants to make of them, I think we should call upon them and hear their statements.

The ACTING CHAIRMAN. Is it the pleasure of the committee that the Interstate Commerce Commissioners be called now?

(There being no objection, it was so ordered.)

Senator CUMMINS. There are four members of the commission here, and I suggest that they determine among themselves who will first

appear.

The ACTING CHAIRMAN. Is the chairman of the commission present?

Commissioner HALL. Yes, sir.

The ACTING CHAIRMAN. Mr. Commissioner Hall, we will be very glad to hear in turn from all the members of your commission, and I suggest that you designate the order in which they shall appear, or as it may suit their convenience if they have any particular wish in the matter. If they have no particular wish, we will hear from you first, as chairman of the commission.

STATEMENT OF HON. HENRY C. HALL, CHAIRMAN INTERSTATE COMMERCE COMMISSION.

The ACTING CHAIRMAN. Mr. Hall is at the service of the commission, and I suggest that Senator Cummins open the inquiry.

Senator CUMMINS. Mr. Hall, do you prefer to make a statement in the order in which you may think best, or would you prefer that whatever you may say shall be said in answer to inquiries?

Commissioner HALL. Senator Cummins, the views of the commission have been expressed in its special report to Congress supplementing the annual report and, as far as was possible in the time allotted, in its response to 13 questions-I think there were 14 in number, but there were 13 in reality-addressed to the commission under date of the 21st instant.

Obviously the shortness of time and the many engagements which the commission has had have prevented as full a reply as might otherwise have been made. I may say that some of the questions calling for statistical information could not have been answered except with a force that we have not available, and an expenditure of time that would have been out of the question under the circumstances; for example, that with regard to the market value of securities-I think it is question No. 2. I am told by our statistical department that an answer to that question in the detail in which it is put would require the services of perhaps 150 expert men accustomed to the use of logarithmic tables for three or four months.

So what has been done-and I am requested to state this on behalf of those who have had charge of preparing these tables and answersis to make such reply as would meet the gist and substance of what is thought to be the inquiry underlying the express question. For any inadequacy we can only submit the physical impossibility of full compliance.

This statement having been considered and made by the commission as a whole, I think I have no general statement to make, and will endeavor to reply to such queries as may be addressed to me.

Senator CUMMINS. Mr. Hall, before taking up the tables which your commission has kindly presented to the committee, I think it is first worth while, even under present conditions, to ask you to elaborate a little upon the railway situation. I think it is due to the Senate and to the country to have some further knowledge with regard to the reasons which lead the commission to the conclusions it announced in its special report under date of December 1. I call your attention to this paragraph, simply to furnish an initial point:

Since the outbreak of the war in Europe, and especially since this country was drawn into that war, it has become increasingly clear that unification in the operation of our railroads during the period of conflict is indispensable to their fullest utilization for the national defense and welfare. They must be drawn, like the individual, from the pursuits of peace and mobilized to win the war. This unification can be effected in one of two ways, and we see

but two.

Will you state the difficulties and the deficiencies in transportation which came under your observation and which led you to the belief that the present system was inadequate to meet the demands of the country for war purposes and of commerce as well?

Commissioner HALL. Senator, an adequate reply to that question would, I presume, involve a review of all that has taken place since the outbreak of the war in Europe and, more especially, since this country was drawn into that war. The conclusions here expressed might be said to be a composite of the observations made from day to day of what was going on in transportation and of deductions such as

gradually grow in the mind of any man as to what seems to be the general trouble and what seems to be the prospect of rectification or cure. To single out any one particular fact from the many facts and attach to that fact its significance as compared to other facts would be a very difficult matter. It is like the experience that a lawyer has after 20 years of practice as compared with the experience and knowledge that a lawyer has when he is just out of the law school. It is the development of his thought and observation that he brings to a new case, and yet he could not assign, perhaps, to any particular part of his past experience the quality that enables him to deal more effectively with what comes before him now.

Stated very broadly, one may say that, physically, the railroads of this country are all one. Their rails connect throughout the country over 260,000 miles of road. The division between them is artificial, not physical, just as the division between the several States of the Union or the different counties of a State is political and not physical. There is this difference: The dividing line in the case of railroads is that drawn by ownership or control; but looked at as an instrumentality of transportation, the rails and what goes with the rails in the way of roadbed and tunnels and bridges and all the rest practically constitute an entity, stretching from one coast to the other, from the Canadian border to the Mexican border, and beyond, stopping only where they reach the oceans.

The difficulties that hinder the utilization of these rails to their fullest extent are not inherent in railroad operation. They result from a conflict of interest between competing roads, and they result also from certain statutory restrictions that the States and the Nation have seen fit from time to time to impose upon the operation of the roads. It is obvious that where the competitive influence existed from the start it can not be expected to disappear at the turn of a thumb, and where the carriers are restricted, as they are restricted by law, from pooling their freight or pooling their earnings to compensate the road which has the traffic and gives it up to another because the other happens to have its way clear, when the road which has the traffic has not its way clear it takes a very high spirit of patriotism indeed for the management of the railroad to see its revenues depleted without any sort of compensation for the surrender of traffic.

If you will take a railroad map and observe how the rails run, it is obvious that, particularly here in the East and in certain parts of the Middle West, there are a great many different ways by which one can go from one point to another, and it is also obvious that every road, no matter how circuitous it may be, is the shortest line from one point to another. Admiral Mahan has pointed out that the unstaked seas are nevertheless traversed by routes of traffic. So it is with railroad transportation in the United States. It has become the usage to send shipments through certain gateways. Those gateways are very often producing points. They are well known to all railroad men. The natural course of traffic is to move through those gateways. Now, when it happens that there is a large volume of traffic normally flowing through a producing gateway from a territory that is also producing, and then there is suddenly superimposed such an enormous business as has been brought upon the car

riers of this country by the war in Europe, and, since we have been drawn into war, by our preparation for adequate participation in that war, the gateway becomes choked unless something is done to make it possible for traffic which does not necessarily have to pass through this gateway to pass around it by another and less encumbered line. It is obvious that if all the railroads of the country belonged to one owner, even if divided for convenience in operation into various districts, that owner, without a thought of the earnings of one particular line as compared with another particular line, would utilize all those lines to their maximum economic capacity.

In brief, the entire plant would be utilized regardless of the earnings of one part as against another of the plant, so as to reduce congestion to the minimum and keep the traffic moving. The congestion does not occur on the main track where the trains move. Transportation includes delivery, and in a sense the traffic capacity of a carrier may be said, at least so it seems to me, to be measured by its capacity to deliver, to get the cars unloaded and start them back with or for a fresh load.

So, generally speaking, the thought is this, that so long as the various railroad lines that constitute this continental whole, physical whole, are owned and operated by different companies, each responsible to its stockholders and its bondholders, and each seeking for traffic and depending upon that traffic over its own rails for its earnings and to meet its obligations-just so long as that continues, the owners of each of these segments will be striving to get that traffic and to have that earning. But the moment that the whole is operated as a whole, the traffic can be sent by the most direct practicable route. If there are fifteen channels available, three of them the main channels, and the three get choked, the other twelve will be utilized in so far as that controlling influence of capacity to deliver at destination can be taken care of.

So that the thought, reduced to its essentials, is really exceedingly simple. You have here a great plant. Its components are owned by a number of different companies and each of the companies is utilizing what it has to make its earnings meet its obligations. But looked at as a great engine or instrumentality of war preparation and war conduct, it seems to be plainly desirable that, whatever the original intent, it should now be utilized as though it were one plant and just in the way it would be utilized if it were one plant, with the greatest economic results.

I am not suggesting here the establishment of strategic lines for the purpose of coast defense or other strictly military purposes, important as that might become. I am speaking only of the utilization to best advantage of an existing transportation plant.

That is perhaps a rambling answer to your question, but it indicates what is the underlying thought in my mind-that here is a great plant, here is a great need, and the plant should be utilized to the fullest extent in the way it would be done if there were but one plant.

The ACTING CHAIRMAN. That has been accomplished by the order of the President in taking over these roads, has it not?

Commissioner HALL. That has made all these things possible; yes. Senator WATSON. Wherein did the railroad managers fail in that respect to bring about perfect coordination?

Commissioner HALL. I have not suggested that they failed. Senator WATSON. I am asking whether or not they did fail, and if so, in what respect.

Commissioner HALL. The railroads of this country got together in April, as you know, a few days after it was recognized by Congress that a state of war existed between this country and the Imperial German Government, and adopted a resolution in which they undertook to sink their individual and competitive interests-I am not quoting now-and to operate the roads as a continental system, and I think there were zealous and very effective efforts to bring about just that. An executive committee was appointed, the same committee that has now been selected by the Director General to assist him, and they have been exceedingly diligent ever since their appointment in dealing with this weighty problem and have accomplished very good results. They have been aided in that by the commission on car service, which as a subcommittee has accomplished very great results, but in doing so both have been hampered by the antipooling clause in the act to regulate commerce which makes unlawful the pooling of freights and the pooling of earnings. This made it impossible for them to compensate a road which by complying with their directions was deprived of revenues. So with the antitrust provisions; those limitations were there. It is true that as long as every road had paying traffic that it could handle that would not so much matter. But it has been necessary since the 1st of May to send between 225,000 and 250,000 empty cars out from this congested eastern district to the South and West. These have been carried by intervening carriers, not only with no revenue, but as a per diem expense charged against them on each foreign car to cover the rental thereof. They have done it in compliance with what amounted to nothing more than requests of the car-service commission. Those requests have been very specific. They have said to the Pennsylvania Railroad Co., for example, "Send so many empties within such a time to such a line," and it has been done.

Senator WATSON. Then your theory is that the Director General will have a certain power that the railway managers do not have, and that he can set aside the antipooling laws and can set aside the antitrust laws, and bring out a coordination that they could not because of the hampering effect of those laws?

Commissioner HALL. He does not set them aside; he is acting for the President. The President can not pool against himself, nor create a trust or combination against himself. It is not setting aside any law. It is all done through the exercise of the power conferred upon the President by the Constitution in time of war and by Congress for war times; putting him in a place where the restrictions of those statutes do not apply to him, because he can not combine against himself; he can not pool with himself; and he can not conspire with himself.

Senator POINDEXTER. Speaking of those empty cars that the railroads were required to carry, without revenue from the transportation of them, in what way was that different from the normal course of car service for the handling of traffic? What I mean is this, they were going to the south, as you say, undoubtedly to be loaded and return loaded. Was not that a case of normal conditions?