OPERATION OF RAILROAD LINES BY OFFICE OF DEFENSE
TRANSPORTATION

Mr. CASE. I believe you told Mr. Snyder that you were operating some truck lines. Are you operating any railroad lines?

Colonel JOHNSON. Yes. We are operating the T. P. & W., which is a bridge line across Illinois. We have made $6,000,000 or $7,000,000 and that is in the bank.

Mr. CASE. Do you pay the operating expenses?

Colonel JOHNSON. We pay everything that anybody paid in the operation of it before, all the ad valorem taxes, and everything. I do not know whether there are any privilege taxes involved in that or not. We do not pay any gasoline taxes, Mr. Roddewig tells me. Mr. CASE. What State or States does that involve?

Colonel JOHNSON. The State of Illinois only. It goes to the Iowa line and to the Indiana line.

Mr. CASE. You do not pay State gasoline taxes in the operation of that railroad?

Colonel JOHNSON. No we do not.

Mr. CASE. Are you familiar with the operation of Montgomery Ward by the Government, and their policy with respect to paying taxes?

Colonel JOHNSON. No; only what I see through the paper about it. Mr. CASE. Do you know whether or not as a matter of fact in the operation of Montgomery Ward the Government pays gasoline taxes? Colonel JOHNSON. I do not know.

Mr. Roddewig says that he knows they do.
Mr. CASE. You know that they do?

Mr. RODDEWIG. I know that they do pay it.

Mr. CASE. But you do not?

Colonel JOHNSON. No; I do not.

OPERATION OF TRUCK LINES BY OFFICE OF DEFENSE TRANSPORTATION

Mr. CASE. In what States are you operating these truck lines? Mr. RODDEWIG. You are speaking of the ones we actually operate ourselves?

Mr. CASE. Yes.

Mr. RODDEWIG. In the States of North Dakota, Minnesota, South Dakota, Iowa, Nebraska, Kansas, and Missouri. Those are the States that are affected.

Mr. CASE. Do you have any information here as to what proportion of the traffic those truck lines carry is strictly war traffic, and what proportion of it is civilian traffic?

Mr. RODDEWIG. No; we do not, and that is very difficult to distinguish, because hauling gasoline or lubricating oil to a rural community in North Dakota for use on a farm is just as much war traffic as moving something into a war plant.

PAYMENT OF STATE TAXES

Mr. CASE. Do you pay gasoline tax in the States of North and South Dakota, Minnesota, Iowa, Kansas, Missouri, and these States you mentioned on these truck lines?

Mr. RODDEWIG. No, sir.

Mr. CASE. Do you pay highway license fees in those States?
Mr. RODDEWIG. No, sir.

Mr. CASE. Do you pay for compensation plates, according to the weight of the trucks?

Mr. RODDEWIG. No, sir.

Colonel JOHNSON. No, we do not.

Mr. CASE. Do you pay the ad valorem tax?

Colonel JOHNSON. Yes, we do.

Mr. CASE. Do you pay any accumulated back wages of employees under wage awards?

Colonel JOHNSON. No, we do not.

Mr. CASE. Do you pay wage awards in your current operations? Colonel JOHNSON. Yes, sir.

GOVERNMENT PROCUREMENT OF TIRES

Mr. CASE. Do you give these truck lines you operate the benefit of Government procurement on tires and repairs?

Mr. RODDEWIG. The ones we actually operate?

Mr. CASE. Yes.

Mr. RODDEWIG. Yes.

Colonel JOHNSON. Just like the Government.

Mr. CASE. That is, you get a reduction of price on the tires for them?

Colonel JOHNSON. Government prices; yes.

Mr. CASE. What saving does that amount to?
Colonel JOHNSON. How much in money?

Mr. CASE. Yes; what percentage do you save?
Mr. RODDEWIG. Speaking about what?

Mr. CASE. In the Government procurement of tires, what benefit is it to these lines that you operate?

Mr. RODDEWIG. On tires we have had difficulty. The tire companies, with one exception, will not sell to us on the contracts that they agreed to sell to the Government on, so we have had to buy battle scarred tires and what not to keep the lines going. That is, that were surplus from the Army, but I would expect that if the tire companies would sell to us it would have been a great deal of saving to the Government, that that would make a substantial saving in operating costs. Mr. CASE. You said that there was one company that does sell to them under Government contract.

Mr. RODDEWIG. Yes.

Mr. CASE. What company is that?

Mr. RODDEWIG. The Firestone Co., and one or two of the smaller companies.

Mr. CASE. Is that the reason that the profit that you make in these operations

Mr. RODDEWIG (interposing). We are not making any profit on those operations.

Colonel JOHNSON. We are not making a profit on those operations, but we are making a profit on the railroad.

Mr. CASE. You are making a profit on the railroad?

Colonel JOHNSON. Yes, sir; a great one.

Mr. CASE. Do you get for these truck companies that you operate a priority in the allotment of tires?

Colonel JOHNSON. No; not at all.

Mr. CASE. If there is Government procurement, is not that charged to the quota allotted to the State for commercial truck operations? Mr. RODDEWIG. We have to go to the local rationing board to get ration certificates for tires.

Mr. CASE. In that case, though, if you maintain that you are a Government agency, do you not assert Government priority?

Mr. RODDEWIG. No; the Government has no priority in that respect. If the Post Office Department wants tires in Minneapolis, for instance, they have to go to the ration board in Minneapolis, or if the Interior Department wants tires here in Washington they have to go to the ration board here.

Mr. CASE. I have heard that the competing companies that you are not operating are subject to the depletion of the quantities available for the State by reason of the tires that you take under Government priority?

Mr. RODDEWIG. No, sir; that is not true. Actually, they have been helped, Congressman, for this reason: That since we have started to operate the eight lines, we have not been able to purchase the normal amount of tires that those eight lines would have purchased if they had been operated privately.

Mr. CASE. Of course, the private lines say that they have not been able to get their normal purchases either.

Mr. RODDEWIG. But under conditions as they are now, because the tire companies do not sell to us, as a result of tires we have not bought in a particular State they become available for other truck lines in that State.

There is a monthly quota that each ration board has, and if we do not buy because the tire company does not sell to us at a ration board, that measns that the other companies will get that many more tires in that particular month for themselves.

Mr. CASE. You say you have not been making money on these truck lines in their operation. From what sources will you pay the expenses? Colonel JOHNSON, What is that?

SOURCE OF FUNDS FOR OPERATIONS

Mr. CASE. You say you have not been making money on these truck lines in their operation. From what source would you pay the expenses of operating the lines, if not from the money received from the operation of them?

Colonel JOHNSON. We have $5,000,000, and we expected to spend it in about 6 weeks. However, we only spent about $800,000, and what they do not make we make up out of that fund.

Mr. CASE. What do you make it up from?

Colonel JOHNSON. Out of this $5,000,000.

Mr. CASE. From where did you get that $5,000,000?
Colonel JOHNSON. From the President's emergency fund.
Mr. CASE. From the President's emergency fund?

Colonel JOHNSON. Yes, sir.

Mr. CASE. For what was that money made available?
Colonel JOHNSON. For the operating of 103 truck lines.

Mr. CASE. For paying all expenses necessary to their operation?
Colonel JOHNSON. That is right.

QUESTION AS TO AUTHORITY OF OFFICE OF DEFENSE TRANSPORTATION TO PAY STATE USE TAXES

Mr. CASE. In the payment of these expenses, you include the compensation of employees as a legitimate expense?

Colonel JOHNSON. You mean pay of employees for wages?
Mr. CASE. Yes.

Colonel JOHNSON. Yes, sir; why, sure.

Mr. CASE. What distinction do you make between compensation of employees, and compensation for the use of highways?

Colonel JOHNSON. Well, when the Federal Government does not pay it, and I am the Federal Government, I just do not pay it.

That has been taken to the Attorney General and to the White House, and everywhere, but to Congress, and I told these gentlemen from these States that I did not intend to pay it unless Congress passes a law telling me to pay it.

I am not going to pay Federal funds out for the purpose of making up a deficit in freight rates allowed by a State in a State.

Mr. Byrnes wrote a letter to me and said that that was a matter I could decide, and he thought I was perfectly within my rights.

I think it would take an act of Congress to clear my conscience to pay out Federal funds for the use of highways, when the Post Office Department does not pay, the Treasury does not pay, the Army does not pay and no other Federal activity pays it. I am not going to pay it out of this Federal fund until the Congress of the United States tells me to do it.

Mr. CASE. As a matter of fact did not the Attorney General tell you that the authority vested in you by the orders was broad enough to permit the payment of those highway compensation fees?

Colonel JOHNSON. Somebody up there said that, but nobody signed his name to it, and even if he did, I would not pay it, because I do not think it is right, and I am not going to pay it.

Mr. CASE. As a matter of fact, did not the Attorney General hold that the terms of the War Powers Act and all other acts under which the President acted were broad enough to permit the waiver of Federal immunity in commercial operations?

Colonel JOHNSON. It may be broad enough, but it is not broad enough for me to pay out Federal money that we have, and I am not going to do it until this Congress tells me to do it.

Mr. CASE. Did not the Attorney General advise you that you could pay them?

Colonel JOHNSON. He never signed any letter telling me that.
Mr. RODDEWIG. He never told us anything in writing.
Colonel JOHNSON. He has never signed anything to me.
Mr. CASE. Did he advise you to that effect orally?

Colonel JOHNSON. Oh, I think somebody said up there it could be done, so my attorney tells me, but I will tell you if he had written it and signed it and said I could do it I would not do it. I just would not pay it.

Mr. CASE. Was this information given to you by the Attorney General, or a representative of the Attorney General?

Colonel JOHNSON. It came to me from my general counsel, or some body in the Attorney General's office. He said the powers were broad enough that I might pay it. That is what I understand.

Mr. CASE. And you hold that the use of the highways in the several States where licensing fees are proportionate to the weight of the trucks using those highways, and which are designed for the purpose of compensating the States for the wear and tear involved in the maintenance of those highways is not a proper expense of your operation of commercial truck lines?

Colonel JOHNSON. I am operating those truck lines as a Federal Government activity, and the Federal Government pays no such license fees. This is a Federal Government activity. Therefore, in my opinion they should not be paid.

Mr. CASE. You stated that you pay the ad valorem tax?

Colonel JOHNSON. Yes.

Mr. CASE. Why do you pay the ad valorem tax?

Colonel JOHNSON. That is a lien against the property I am operating. That is not the Federal Government, it is a lien against that property.

Mr. CASE. Does the Government pay ad valorem tax on property that it has in the States?

Colonel JOHNSON. You mean on post offices, and so forth?

Mr. CASE. Yes.

Colonel JOHNSON. I am advised that they do not, but this is not Federal property. It belongs to those people, and your ad valorem tax is a lien on that property that we operate.

Mr. CASE. What will be the situation of these truck lines when your operation is over and you turn them back and the States have a lien against the operation for operating on the highways without a license? Colonel JOHNSON. I am going to do my best to make my lien supersede that of the State and get the Federal Government's money back. I will try. I do not know whether I will be successful, but I am going to try to turn every nickel of this $5,000,000 back into the Government's pocket, if I can.

Mr. CASE. Do you receive petitions from the people of the country and give them any consideration?

Colonel JOHNSON. Sure.

Mr. CASE. Did you write a letter to Senator Reed, commenting upon a petition addressed to you by the Kansas City Board of Trade, in which you replied that:

It is a little discouraging that a group of men such as you, without any general knowledge of transportation difficulties, would attempt a solution by allocating yourselves a profitable and easy transportation road which would, if followed, paralyze the whole transportation situation and have an immediate effect on the war effort and would result in ultimate disadvantage to yourselves.

and then say:

It would seem to me that you would appreciate that you are presumptuous to make such recommendations. I consider you so.

Colonel JOHNSON. Yes; I surely did, and I still think so. There was a bunch of men out in Kansas interested in profitable transactions in the grain business, and they had the temerity to tell me that I should turn the railroads of America, in this freeze, in this emergency, for their solution, by appointing three men with full authority for all the railroads in America. I said it was presumptuous and I still say so. I wrote it to the same man that wrote to me about it, not to Senator Reed.

Mr. CASE. I just wondered if you actually wrote a letter like that.