Congress has thus recognized the close connection which must necessarily exist between Federal regulation and State regulation under our dual form of government.

From the foregoing it results that the State commissioners have a very great interest in these Federal regulatory commissions. It is not a financial or selfish interest. They have nothing to gain or to lose personally from any legislation which Congress might enact affecting the Federal commissions either in emoluments of office or in any financial advantage or disadvantage which may accrue to them personally. Their interest is only that of public officials charged by law with the protection of public interest. Their desire is that Congress shall preserve the independence and the efficiency of these Federal agencies.

We urge that regulatory commissions ought to be as independent of political influence and control as the courts. Their decisions affect the financial interests of millions of rate payers, on the one hand, and of millions of investors in these public-service properties, on the other. The commissions should be independent, and they should be able, and equipped with experienced and competent staffs.

It is not enough that a commission be composed of honest men of good ability. It must be supported by a competent organization. Especially is this true of the Federal commissions which exercise jurisdiction throughout a country composed of 48 States. Most of what these commissions do must necessarily be done in their name by others. The Interstate Commerce Commission, for example, performs its functions through various bureaus and a large number of employees. With such a commission, the selection and organization of its employees is its most important function, for upon the character of its organization and of the employees who compose it, depends the success of the commission in all branches of the work with which the Congress has charged it.

Congress, when it created the Federal regulatory commissions, recognized these facts. It made those commissions independent in the exercise of their functions and independent in the choice and organization of their employees. Furthermore, to insure, so far as humanly possible, their independence from political influences, it made these commissions bipartisan. This has represented the deliberate policy of Congress for more than 50 years, persisting through all changes of party control.

The result has been such as to bear witness to the wisdom of this congressional policy. The independent commissions have acquitted themselves well.

The Interstate Commerce Commission this year ended 50 years of service. During that time it has won the confidence alike of the ratepaying public, and of the carriers. From each side, from time to time, may have come complaints and criticisms, which fact may be proof of the impartiality of its administration of the law. Shippers and carriers alike, however, recognize the fairness and the devotion to duty, and the incorruptible character of the Commission and its staff.

Congress, itself, has placed the stamp of approval upon the manner in which it has handled its functions, for it has repeatedly enacted statutes to extend its jurisdiction.

When the Commission was created in 1887 the powers granted were small. The Commission could gather statistics. It could investigate and admonish. It could award reparation for unjust rates collected

in the past. What the railroads should do in the future, however, the Commission could not control, as to construction, or securities or their rates. From time to time, however, the Congress has extended the Commission's powers until now it controls construction and abandonment; it controls issues of securities; it controls reorganizations; it controls rates, and joint use of terminals, and joint routes, and the like.

In brief, the destinies of the rail carriers of America, and of motor carriers, as well, have been committed to the Interstate Commerce Commission; and the Commission has likewise been vested with important functions as to air and water carriers; and bills are now before the Congress to broaden these functions.

Nothing could speak more convincingly of the confidence of Congress in the Interstate Commerce Commission than this consistent increase of its powers and duties since the Commission was created in 1887.

This great increase in the Commission's jurisdiction has not come about suddenly at any one time, but represents a gradual extension made in many statutes passed at different times. These statutes have been passed only because the Commission has so exercised powers previously granted as to gain the confidence of the Congress.

It is a significant fact that shippers and carriers alike are opposed to any limitation of the Commission's powers, or interference with its independence.

The proposals now before the committee have filled the country with alarm, because of the widespread belief among those interested in the work of the Federal regulatory commissions that any withdrawal of power now exercised would operate adversely to the public interest, both of the rate paying public and of the carriers.

It may be confidently stated that no department of the Federal Government has to its credit a more consistent record of good service than the Interstate Commerce Commission; and that no department of government has more completely won the confidence of the people of the country, both of those who use the carriers subject to the Commission, and those who own the securities which represent the investments made in carrier properties.

For 50 years this Commission has functioned dealing with cases which involve, as some rate cases do, millions of dollars, and dealing with business matters aside from rates of the most vital moment to immense financial interests, and during all that 50 years the breath of scandal has never touched the Commission. Nobody has ever entertained a suspicion even that its judgment on any matter, or a case before it has been in any way improperly influenced.

That is no small accomplishment. The Commission acts through an organization running into many hundreds. Cases of the utmost importance are heard in their preliminary stages by inconspicuous subordinates drawing but moderate salaries.

That the Commission in its various bureaus through the half century of its existence has been able to attract and hold in its service competent men, so imbued with high ideals of public service that no malfeasance or suspicion of malfeasance has ever arisen is one of the principal reasons for the high place the Commission holds in the confidence of the Congress and of the country.

The other regulatory commissions have not a half century of service behind them; but I believe it may be said that each of them, in the years which it has functioned as a regulatory commission of

general jurisdiction, has made as much progress, and has established itself as well in the public confidence, as the Interstate Commerce Commission did in an equal period of its early existence. Each has notable achievements to its credit, but there is no occasion to recount them.

In setting forth reasons why Senate bill 2700 should not be applicable to the Interstate Commerce Commission, we desire it to be understood that the same reasons apply with equal force in the case of each of the four regulatory commissions which I have mentioned.

OBJECTIONS TO SENATE BILL 2700

The State commissions represented in our Association ask that the Interstate Commerce Commission, the Federal Communications Commission, the Federal Power Commission, and the Securities and Exchange Commission be wholly exempt from the provisions of Senate bill 2700.

As to each of said commissions Senate bill 2700 is objectionable for the following reasons:

1. Senate bill 2700 would deprive each such commission of control over its own "policy-determining subordinates" and over all persons in confidential relationship to the Commission, and over the appointment and promotion of the Commission's working forces, placing such control in the hands of the President or of an executive department under the President.

2. Senate bill 2700 would deprive each such commission of the power to shape its policy and direct effectively the work which has been devolved upon the commission by Congress.

3. Senate bill 2700 would deprive each such commission of control over the organization of the commission's working forces.

4. Senate bill 2700 would prevent each such commission from advising Congress as to appropriations necessary to enable the proper performance of the duties imposed upon the commission by the Congress.

5. The provisions of Senate bill 2700, empowering the President to transfer functions of a commission to any other agency are of uncertain meaning, and no commission affected thereby will be able to oppose any construction which the President may see fit to place upon those provisions.

I will discuss these several objections in their order.

SENATE BILL 2700 WOULD DEPRIVE EACH SUCH COMMISSION OF CONTROL OVER ITS OWN "POLICY-DETERMINING" SUBORDINATES AND OVER ALL PERSONS IN CONFIDENTIAL RELATIONSHIP TO THE COMMISSION, AND OVER THE APPOINTMENT AND PROMOTION OF THE COMMISSION'S WORKING FORCES, PLACING SUCH CONTROL IN THE HANDS OF THE PRESIDENT OR OF AN EXECUTIVE DEPARTMENT UNDER THE PRESIDENT

Section 2 (c) of the bill before the committee provides in part as follows:

The President is authorized by Executive order to transfer to an executive department * * * the appointment of personnel, and the maintenance of personnel records (of any independent establishment).

Section 207 (b) provides as follows:

SEC. 207. (b) Whenever the President finds that an office or position in the classified civil service is policy-determining in character, or that a confidential relationship exists between the head of any executive department, independent establishment, or independent agency, and any person holding any office or position under the immediate supervision of such head, he is authorized by Executive order to except such office or position from the classified civil service.

Section 203 provides as follows:

SEC. 203. (a) Hereafter any office or position in any agency of the Government to which an appointment is authorized to be made by the President alone shall be filled by appointment without term by the head of the executive department, independent establishment, or independent agency in or under the jurisdiction of which such office or position is located, except (1) any office or position which the President finds is policy-determining in character, and (2) any office or position of head of any bureau, division, service, or other similar agency which is in order under the jurisdiction or control of and is directly responsible to the head of an executive department, independent establishment, or independent agency.

(b) Hereafter the President, by and with the advice and consent of the Senate, shall make appointments (1) to fill any vacancy in any office or position of head of any bureau, division, service, or other similar agency of the type referred to in clause (2) of subsection (a) of this section, and (2) to fill any vacancy in any office or position which the President finds is policy-determining in character.

It will be seen that the President, himself, subject to Senate confirmation, would be empowered by this bill to make appointment to all offices and positions which he holds to be "policy-determining" in character; or the occupants of which are in confidential relationship to the Commission through its chairman, and that he would be empowered to transfer to an executive department the appointment of all other persons constituting the Commission's personnel, together with the personnel records upon the basis of which the employees of the Commission may be either promoted or dismissed from service. The power, which the Commission at present exercises, to control the appointment of its principal subordinates and its working forces generally, subject to civil-service regulations, now observed, would thus be destroyed. All appointments of the Commission's principal subordinates would become Presidential appointments, and all other appointments would pass into the control of a Cabinet officer.

Appointments in the Commission's services have heretofore been made upon merit only. If this bill shall be enacted they will hereafter be made subject to the same political influences and considerations which are inevitably taken into account ordinarily in the making of Presidential and departmental appointments.

It is the opinion of those for whom I speak that no greater catastrophe than this could come to these Federal regulatory commissions. Does the committee believe, for example, that the Interstate Commerce Commission would now have at its command an organization as experienced, as able, and as unitedly loyal to the highest ideals of public service, if the Commission had exercised no control over appointments of its subordinates, officials, and working forces?

It is in the building up of this organization, and in the keeping of it free from political influences, that the Commission has been most conspicuously successful. Its service now offers a secure career in which experience and ability may receive appropriate recognition.

A strong and dependable organization of trained experts has resulted, to which the Commission in large part owes the high place which it holds in public confidence.

We ask the Congress not to deprive the Commission of the power to preserve this organization, and not to open every place of large or petty responsibility to a political scramble by making the same subject to Presidential appointment, and Senatorial confirmation.

If the committee will call for a statement of the service and experience of the men who now fill places of importance in the Commission's organization, it will discover that they are men who have qualified for their places by experience and demonstrated ability. Most of them have been selected from the ranks of Commission service. Those for whom I speak believe that this situation would not exist if the places were to be filled by Presidential appointment, subject to Senatorial confirmation, and to the influences which inevitably apply to such appointments.

SENATE BILL 2700 WOULD DEPRIVE EACH SUCH COMMISSION OF THE POWER TO SHAPE ITS POLICY AND DIRECT EFFECTIVELY THE WORK WHICH HAS BEEN DEVOLVED UPON THE COMMISSION BY CONGRESS

Each of the regulatory commissions mentioned was created as an agency of Congress. Its duties and the standards whereby it is to be guided have been declared by Congress. In the interpretation and administration of the statutes which the Commission administers, however, the Commission exercises a broad discretion.

For the proper exercise of such discretion the Commission is responsible to the Congress and to the public. It may not, under the law, surrender that discretion to any other official of the Government, however highly placed. This bill, however, if enacted, will hamper or destroy the ability of the Commission to determine principles which will be adopted, and the routine construction and administration of the law by taking from the Commission the power to select the persons who, in places of responsibility, exercise the Commission's power.

If this bill becomes law, the President hereafter under section 207 (b) will determine what places involve duties demanding confidential relationship to the Commission through its Chairman, and what places are of such responsibility as to be termed "policy determining", and those places the President will fill under section 203 (b).

In theory of law the Commission will still be charged with determining the construction and administration of the regulatory laws under which it acts, and of exercising therein the wise discretion which the law presumes it will exercise; but the choice of those in whom it must place its confidence, and upon whom it must rely, will be taken from it.

SENATE BILL 2700 WOULD DEPRIVE EACH SUCH COMMISSION OF CONTROL OVER THE ORGANIZATION OF THE COMMISSION'S WORKING FORCES

If Senate bill 2700 becomes law the control of its organization will be taken from the Commission. Section 2 (a) provides in part:

SEC. 2 (a) Whenever the President, after investigation, shall find * * necessary to accomplish any of the purposes set forth in section 1 of this title, he may by Executive order subject to the limitations hereinafter provide * *

(2) Regroup, coordinate, consolidate, reorganize, or segregate the whole or any part of any agency ("agency" being defined to include "any independent establishment", which term by definition includes each of the four regulatory commissions) or the functions thereof.