STATEMENT OF LUTHER M. WALTER, NATIONAL INDUSTRIAL TRAFFIC LEAGUE

The CHAIRMAN. Mr. Walter, you represent the National Industrial Traffic League?

Mr. WALTER. I do.

The CHAIRMAN. The same league for which Mr. Fulbright made a statement this morning?

Mr. WALTER. Yes.

The CHAIRMAN. If you want to add anything to the statement he made we will be glad to have you do it.

Mr. WALTER. I will do it just as briefly as possible. I appreciate the opportunity to be heard. I have no prepared statement.

For more than two-thirds of the Commission's 50 years I have been engaged in that work, transportation, either with the Commission as an attorney, examiner, or in the practice of the law representing all parties in interest, shippers, carriers, and so forth. While I have been general counsel for the National Industrial Traffic League since about 1910 continuously, I have represented railroads, and today I happen to be trustee of the Chicago & Great Western. I do know something of the work of regulating transportation.

The Constitution dividing the powers either legislative, executive, and judicial, placed on this Congress the power, the duty of regulating commerce. For 50 years there was nothing done on that, and for the past 50 years, as your agent, the Commission has worked on it, and you have heard enough said as to the character of that work.

I am particularly concerned lest the same character of investigation be made and reported to the President under this bill as was made by the Brownlow-Gulick committee. They frankly told you that they were working for the purpose of tightening up the Executive power, they were not working for the legislative power, and yet they admitted at the same time that they were not advised as to the character of work of the independent agencies. They said it would take a period of perhaps 2 or 3 years to do that. Yet, on that sort of an investigation, a report is made to you recommending that you give to the Executive the broadest kind of powers.

Now why should not you make the investigation? The President, an overworked, burdened man, with the greatest and best intentions in the world, with a heart full of sympathy, and all that, with so much to do, how is he going to do the work of passing upon what should be transferred from the Interstate Commerce Commission to some other department? Why should not you gentlemen, representing the legislative power, conduct the investigation and determine, and then change the law? Why should you, as the successors of 150 years of Senators, turn over to the Executive the power to do all of these things and put it beyond your control, except by a two-thirds vote to get it back? Why should you do that?

We appeal to you here to put in this bill a provision that it shall not apply to those agencies which have been created by Congress to regulate commerce-that they shall be left free.

When this Commission was first proposed it made a report to the Secretary of the Interior, but in 2 years they said: "No; we do not have anything to do with it. Report direct to Congress." From that time to this reports have been made direct to you.

In every sense of the term they are the agents of the Senate and House, and they are not agents of the executive department. The work to be done in the regulation of safety of passengers and employees cannot be done better anywhere than in the Interstate Commerce Commission. Their record is just as fine as any department could hope to achieve. Now, if they have made a record in those small matters you might transfer them to somebody else, but I am particularly concerned with the system of powers, of balances and checks, and this is one of those bills that strikes it down, and when you pass this bill you abdicate duties which the Constitution puts upon you. We are opposed to that. We are especially opposed because it puts onto the Interstate Commerce Commission the overwhelming hand that strikes down, first, its strength of body, its ability to use funds, and then its personnel, and then divides up the work.

In section 12 of the Interstate Commerce Act you make it the duty of the Commission to enforce all provisions of the Interstate Commerce Act. If you pass this bill, then you make it possible for the President to distribute it. If he himself could hear, investigate, and make up his mind, that would be a different situation, but you are not doing that, and the open hearings, the chance to meet these proposals, to explore, cannot be had. Those passions for unanimity would make the investigation, make the report to be consummated in a promulgation which nobody can meet and stop.

I know that those who have to do with the Interstate Commerce Commission are vitally opposed to this act. They believe Congress has done a wise thing. It has developed successfully for periods of years until we have an administration of the transportations of the country. You are now about to pass a similar law on air and perhaps on water. The whole policy of the Congress to preserve all forms of transportation depends upon your agent. It should not be weakened; it should not have any influence on it.

And so, for the Commission itself, but moreover for the separation of the powers and for the preservation in the Congress, in the Senate and in the House, what Congress put in your hands, the regulation of commerce, we oppose the proposed bill.

Senator BYRD. Mr. Chairman, I would like to make a statement. The CHAIRMAN. Very well.

Senator BYRD. On Thursday, according to the record, Mr. Gulick, a member of the President's committee, testified that the committee did not recommend the abolition or the transfer of any specific independent regulatory agency or commission.

Now the record of the executive sessions, on page 79, discloses that Mr. Gulick was asked: "You definitely recommend that every single agency of the Government be tied into one of these 12 departments?” He answered: "That is right." He then was asked: "That is your recommendation; that is the basis of your reorganization plan?" He answered: "We believe that is necessary." Then he was asked specifically whether the Securities and Exchange Commission would come under the Treasury Department, and he answered: "I suppose if it were found after a study that it was primarily a fiscal agency, that would be the logical place to bring it in, in a semiautonomous position." Later on Thursday in the open session of this committee, Dr. Gulick was asked whether it was the recommendation of the President's committee that power be given to separate the administrative functions

from the judicial functions. Dr. Gulick's answer was, on page 224 of the record, "No." And then he added this explanation: "It is the recommendation of the committee that the power be given, not that the power be exercised."

Further, on page 21 of the executive session hearings, Mr. Brownlow, another member of the President's committee, said of a tentative draft of a bill he had there:

It is our idea that the recommendations in the report are carried forward in this bill.

Section 1, subsection (g) of that draft, Mr. Chairman, according to the record reads:

To segregate in any agency of the Government regulatory functions from those of an administrative and executive character and to transfer any such functions from one agency to another and segregate such functions in the receiving agency.

Still further, Mr. Chairman, on page 24 of the independent regulatory commission supplement to the President's report, the committee says:

The greatest difficulty to be encountered in setting up the suggested plan (which now is in S. 2700) is that of dividing the work of the independent commission between the judicial section and the administrative section. If it is to achieve its purpose and be workable, this division of labor must be clean-cut.

Now, on top of all of that, Thursday, as the record will show on page 224, wanting to be absolutely sure that I understood Mr. Gulick correctly, I again asked him this question:

Does your committee, after investigation, think it advisable to separate the judicial functions and administrative functions of these quasi-judicial agencies? Mr. Gulick replied:

The answer is "No" when you state it in those broad terms.

Later, on Thursday (p. 228), Mr. Gulick was asked if there was any one commission where he thought the administrative function should be separated from the judicial function, and he replied:

In virtually all the commissions we think the problem should be given very careful consideration.

Further down on the same page, Mr. Gulick said:

We think that the functions should be separated within the structure of the commissions.

I then asked the witness to state in his own way what he proposed relative to dividing administrative functions from the judicial.

He replied:

The broad scope cannot be answered, except in terms of the specific organizations, because some commissions should be treated in one way and some in another.

Naturally the next question should have dealt in terms of a specific organization, and I asked him what he would recommend to be done in the case of the Interstate Commerce Commission.

Mr. Gulick replied:

I do not know.

Whereupon, I gave up questioning him and resorted to the record and report where I found the Interstate Commerce Commission. figured in virtually every discussion of this phase of the report.

The report of the President's committee, on page 38, began its discussion by a citation to the Interstate Commerce Commission. The

independent regulatory commission supplement to the original report says:

No clear analysis of the job done by the regulatory commission, viewed in the light of its complete independence, can fail to emphasize a sharp conflict of principle involved in its make-up and functions→

and cites as an example the power of the Interstate Commerce Commission to decide reparation cases.

The report continues by saying the Commission is given another class of duties called quasi-judicial because they are both discretionary and judicial. The Commission determines policy by the same process by which it judges the rights of parties. The vast bulk of the regulatory Commission job is of this kind, it says. That, it seems to me, states very clearly that whatever problem is found in the Interstate Commerce Commission, is more or less typical.

The same report a little further down goes on to say:

* * *

The Interstate Commerce Commission has broad control over the whole transportation system. The Interstate Commerce Commission has a number of functions that involve policy determination, among them rate making in its general phases. * * Consolidations and mergers of railroads are under the Commission's jurisdiction. It is authorized to formulate plans for the consolidation of railroads into groups and report these plans to Congress. It has further power to sanction consolidations, mergers, and purchases of railroads if it finds that these will be in harmony with the plan for consolidation of railway properties established pursuant to section 3 of the Interstate Commerce Commission act as amended and will promote public interest. * * * Commission also has important authority in matters relating to competition between railroads and water carriers and between railroads and motor carriers, authority over the construction of new lines and the abandonment of old ones, and power of the issuance of railroad securities.

The

So we see the Interstate Commerce Commission has been studied in detail.

On page 29 of the same report the President's committee says:

The most trenchant criticism directed against the Interstate Commerce Commission is that its task is so vast and so intricate that the broad problems of planning and policy can receive less and less attention from the overburdened Commissioners. It seems reasonable to expect that the division of labor between the proposed administrative and judicial functions would provide better opportunities for broad planning and closer scrutiny of efficiency of the administrative work. The same division of labor would make it easier to merge within a department the administrative or judicial sections doing similar jobs.

In the light of the record and of the report of the committee of which Mr. Gulick is an illustrious member, there was some justification for my questions which Mr. Gulick was apparently unwilling to give answers to based upon what he and his associates had argued. The CHAIRMAN. We will take a recess until 10 o'clock in the morning.

(Whereupon, at the hour of 3:30 p. m., the committee recessed until 10 a. m. of the following day, Tuesday, Aug. 10, 1937.)

(The following statement was submitted by the railroad brotherhoods:)

Hon. JAMES F. BYRNES,

LABOR BUILDING, Washington, D. C., August 11, 1937.

Chairman, Select Committee on Government Organization,

Washington, D. C.

DEAR MR. CHAIRMAN: For more than two-thirds of a century our organizations have been endeavoring to provide adequate protection to railway employees in their hazardous occupation of operating locomotives and trains. In this we have

9757-37-17

not only a humanitarian but a financial interest because our organizations carry the insurance of their members and are called upon to pay many millions of dollars per annum for injury and death of their members resulting from the hazardous nature of their occupation.

The history of our attempts to obtain legislation that would require adequate protection shows that prior to the creation of the Interstate Commerce Commission in our efforts were almost futile, but with the creation of that Commission which, as defined by the Supreme Court, is a body of experts "created by law and informed by experience", we were able to secure sympathetic and intelligent consideration and assistance in obtaining legislation to provide protection to railway employees and the traveling public. The activities of railway employees in this direction together with the support and advice of the Commission resulted in the enactment of a group of laws for the promotion of safety on railroads, all of which are administered by the Commission. Under the authority conferred by such laws. a national safety organization working under the direction of the Commission has been created which is second to none in the Federal Government and which has so increased the safety of railroad travel that it is now recognized as being the safest known means of transportation.

Safety on the railroads has for almost half a century been regulated by the Interstate Commerce Commission. Bureaus have been established by the Commission to administer the laws for the protection of travelers and employees on railroads, such as the safety appliance acts, the Locomotive Inspection Act, the Hours of Service Act, etc. Into the organization of these bureaus politics is not allowed to enter. Every employee in all of these bureaus, including the chiefs or directors, have been appointed under the classified civil-service rules and this even includes the Commissioner in charge. Every applicant for the position of inspector must have had years of practical railroad experience before being allowed to take the examination, and when appointed can only be removed for cause. Their work speaks for itself and will compare favorably with that of any organization in or outside of Government service, and we believe this to be largely due to the complete absence of politics or political influence in the organization of the Commission.

We are critizing no other bureau or department, but the facts are of record and we do not want any of the functions of the Interstate Commerce Commission or any of these safety organizations transferred to any executive department headed by a political appointee which will make possible conditions such as are described in the testimony in the hearing Safety in Air, Senate Resolution 146, and in the hearings covering safety of life and property at sea with respect to the Mohawk and the Morro Castle disasters.

For almost half a century the Interstate Commerce Commission has been in charge of the administration of all laws "for the promotion of safety of employees and travelers on railroads." The administration of these laws has been placed under the direction of that Commission because of its expert knowledge of railroad operation and equipment and all safety appliances required by such laws are specifically covered by orders of that Commission. These laws were enacted and the rules established pursuant thereto were promulgated upon the urgent request of, and in cooperation with, the railway employees of the country, and we have now pending before the Commission a number of formal proceedings in which we are seeking additional rules for the promotion of safety on railroads. Certainly changes which vitally affect the administration of such laws should not. be made.

We respectfully submit that any proposal to dismember the Interstate Commerce Commission and transfer any portion of its activities to other departments will produce not economy, but waste of time and money, will produce not efficiency, but inefficiency, and that the effect of such a reorganization will be merely to transfer governmental powers from a body trained and aothorized to exercise them to a department without training or experience in the premises and more or less under political domination.

The Interstate Commerce Commission has had jurisdiction over railroads for half a century. During that period no accident has been shown to have resulted from failure of the Commission to actively administer the safety laws. No breath of scandal has arisen in connection with the work of the Commission. No intimation of inefficiency or waste has ever been made with respect to any of the work of the Commission. For more than two-thirds of a century our organizations have been striving to provide by law protection to their members: