manded by the public good, they ought to be granted, because we can not adhere to the Montesquieu doctrine of the arbitrary and complete division of governmental powers. I recognize that. But to give to a commission of 11 men, few if any of whom have had any practical experience in railroading, the powers you have already granted to them, and then to give them this power, to run an inquisitorial investigation with 2,000 employees throughout the country, as to whether Mr. Curtis James ought to hold his stock in more than one carrier or whether this insurance company or that, or the Morgan banking house, or an investment company, or the Penn road corporation ought to continue to hold 21 per cent of the New England stock-to give them that power is Government ownership in everything but in name.

There is little left if you deny the States the rights to determine the conditions of the ownership of stock and the right of individuals when they have acquired stock, to exercise the voting privilege of the stock.

As I said, if these investment companies or holding companies or great investors in railroad securities in any way obstruct the flow of commerce by destroying competition, not only are you justified in stopping it when done by the mere ownership of stock and its privileges but you have done it. It is a curious thing that in all these hearings there never was a suggestion that the free flow of commerce was in any way affected by the two systems, the Van Sweringen and the Penn Road, if you can call the Penn Road a system.

I do not want to go into that any further, because I want to give time to my colleagues, Mr. Cooper and Mr. Wyant, who also have some views to express. You have listened very patiently to me, but I only say do stop, look, and listen. Nobody in this room has any greater regard and, I may say, affection for Chairman Rayburn than I have. The disposition to give him what he wants is natural and human. But after all, what is really behind this request, of which Mr. Rayburn is a medium, is the insensate ambition of the Interstate Commerce Commission and particularly of Mr. Eastman for more power and ever more power. And if this bill becomes a law, then the charters of the States in respect to railroads are only waste paper, because the last right of an owner of property with respect to railroad investments has been put subject to the discretion of the Interstate Commerce Commission as to whether the holding of that stock is in the public interest.

Now, it may be said the commission is a wise and conservative body; it will not abuse the right. But I think there are some members around this committee table who have the old-fashioned idea of the English-speaking race that we are not concerned so much with power in the abstract as with the possibility of the abuse of

power.

I do not know how many members of this committee have read the very great book by Lord Chief Justice Hewitt of England, called the New Despotism, in which he shows that the very foundations of the English Constitution have been subverted by Parliament abdicating its duties to administrators; and he points out that the action of those administrators are rarely the action of the men high up; they are always the little underlings as to whom there can be no responsibility.

That is just as true of the Interstate Commerce Commission. They divide up into sections and then they assign something to one member of the commission. He assigns this to an underpaid examiner. This examiner runs through the country and reports facts. The 1 commissioner accepts the facts. The section of 3 does; the commission of 11 accepts the facts. So that in the last analysis, the most important property rights in this country are determined not infrequently by a little $3.000 clerk upon whose judgment the commission has relied in the particular matter.

Now, I think it is time to stop. I think it is time for Republicans and Democrats alike to have some respect for the ancient limitations of this Government and say,

We will not, except upon considerations of imperative necessity, grant any more power over railroad investments to the Interstate Commerce Commission. The CHAIRMAN. We thank you for your statement, Mr. Beck. We shall be glad to hear Mr. Cooper of Ohio.

STATEMENT OF HON. JOHN G. COOPER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO

Mr. COOPER. Mr. Chairman and members of the committee: I feel that I should not take up too much of your time after the splendid statement that has just been made by my colleague, Mr. Beck. He expressed my views very forcibly. While I am not in a position to argue the constitutional side of this proposition, yet I agree with everything that he has said.

I was one of the members of the committee who opposed joining these two bills together. Just for what reason that was done, I do not know.

The holding company bill was considered some time ago. It was first introduced by Mr. Parker when he was chairman of our committee. Just what was back of that investigation, I do not know. I have been told that certain parties were very much disturbed about other railroads acquiring property through the holding companies, and they thought some investigation ought to be made of that condition by Congress.

I am in favor of the repeal of section 15a, the recapture clause. I would like to see Congress take some action on that during this

session.

Mr. Cox. Now?

Mr. COOPER. Yes, at the present time. I am in favor of that. There were only about five men who appeared before the committtee in favor of this holding company bill; Doctor Splawn, who was the attorney who had been employed by the committee when Mr. Parker was chairman; Commissioner Eastman; Lawrence R. Wilder, Frederick K. Fay, and Samuel Silverman.

The hearings will show that Mr. Wilder appeared before our committee and made some misstatements of fact. He mentioned things that it was afterwards brought out were not true at all.

There were a great many men who appeared before the committee opposed to the bill; Mr. Alfred P. Thom, representing the railroads; I do not know whether Mr. Fulbright opposed it or not-I forget. But I know he appeared before the committee.

Mr. RAYBURN. I will say for the information of the committee that Mr. Thom did not appear opposed to the holding company bill

and Mr. Fulbright, as to any appearance that he made, was in favor of it.

Mr. COOPER. Mr. Potter, a former member of the Interstate Commerce Commission, appeared before the committee as against the bill and there were others who were opposed to the bill.

As I said, Mr. Beck has made a very clear statement. I see no reason why these two bills should be coupled together. The chairman of the committee and Mr. Parker know that we considered this holding company bill for more than a year before we took up the repeal of section 15a. We considered the hearings and passed upon the bill in our committee, before we passed upon section 15a.

But, for some reason, the reporting of this holding company bill was held back so that the two could be coupled together.

I agree with Mr. Beck when he said that if you bring these two measures in, coupled together, it is going to precipitate a fight in the House. I believe the best way to repeal section 15a, if we want to get that through at this session, is to separate these two measures. Also: Is this the time, as Mr. Beck has suggested, for Congress to take any action which might seriously interfere with the recovery of the railroads? While we are passing through a great economic depression, I think I can safely make this statement, that there is no other industry in the country to-day that has suffered quite as much as the railroads during this economic depression. Of course, there are other things that have caused the railroads to suffer. A new mode of transportation, the truck, the automobile, and the bus, has jumped in and taken away from them a great deal of their traffic revenue. This new mode of transportation can operate without any regulation or supervision or control by the Interstate Commerce Commission; that is, if they are engaged in interstate

commerce.

I think that Congress would do better if they would do something to try and bring this new mode of transportation under regulation, just as the railroads are, instead of passing a bill like this holding company bill that might seriously affect the financial recovery of the railroads at this time.

As Mr. Beck said, the railroads pay a million dollars a day in taxes and the valuation of their properties is about twenty-five billions of dollars. I think that is the Interstate Commerce Commission's estimate. It is not the railroads' estimate.

There is one county in my Congressional district in which the railroads pay more than 50 per cent of the total taxes collected by the county.

What is the condition of the railroads to-day? For instance, at Newcastle, Pa., just over the State line, the railroads have had to abandon their divisional offices.

There is no other industry in the country, I say, that has been hit quite as hard as the railroads.

There are several hundred thousand railroad employees seeking work to-day. To pass this holding company bill now, it seems to me, would have a very serious effect on the recovery of our railroads. Mr. SABATH. You do not charge that the railroad companies have suffered due to anything that Congress has done since the passage of the Esch-Cummins bill, do you?

Mr. COOPER. No. But I do charge this, that there is no other industry in the country to-day that is regulated and held down as much as the railroad companies are. They can hardly drive a spike in a tie unless it is under Federal regulation and supervision. Mr. SABATH. Yet you are pleading for more power and more regulation: you are suggesting that the bus lines and the trucks also be put under the jurisdiction of the Interstate Commerce Commis

sion.

Mr. COOPER. I think as long as the railroads, who are faced with this competition of these other systems of transportation, are under Federal regulation and supervision, their competitors ought to be under the same supervision.

I do not know whether these two measures could be separated or not. But the vote in the committee was very close-the vote on putting these two propositions together. I think there was a difference of about three votes, if I remember correctly.

The CHAIRMAN. It will be necessary, gentlemen, to conclude the hearings this morning at a quarter before 12; I merely make this suggestion in the interest of fairly dividing the time.

Mr. COOPER. Mr. Chairman, I am going to surrender the floor now. Mr. Hoch, I believe, has a short statement to present to the committee.

The CHAIRMAN. The committee contemplates an executive session, which is quite necessary this morning.

Mr. COOPER. As I said in the beginning, Mr. Beck has very clearly stated my_position on the measure in a more forceful and clearer way than I am able to do myself.

Mr. MCMILLAN. Let me ask you this question, apropos of the question propounded by the gentleman from Illinois about the action of Congress. What, if anything, has happened to the railroads as a result of the action of Congress. All these regulations that you speak of and these restrictions that are thrown around the railroads are either directly or indirectly due to acts of Congress, are they not?

Mr. COOPER. Why certainly.

Mr. SABATH. I was referring in my question to legislation passed since the Esch-Cummins bill was enacted.

Mr. COOPER. I thank you, gentlemen, for your courtesy and pattience.

Mr. BECK. Mr. Chairman, may I say that Judge Wyant was here yesterday to address the committee in support of the views that Mr. Cooper and I have expressed, but for some reason he is prevented from being present to-day.

The CHAIRMAN. We shall be glad to hear Mr. Hoch at this time. STATEMENT OF HON. HOMER HOCH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KANSAS

Mr. HOCH. Mr. Chairman and members of the committee: The time is very short. This whole question involves so many considerations that one feels at a loss what to say in such a brief

time.

I am only here because I thought it fair to the committee, in view of the fact that I joined with four other members of the committee in presentation of certain minority views, to give this committee our viewpoint very briefly.

In the first place, let me say that I agree entirely with what Mr. Beck and Mr. Cooper have said about the joining of those two bills. I think that was unfortunate. However, they are here before you as one measure. They do involve propositions that are in no way related as far their essence is concerned.

Those who joined with me in the minority views are in favor of the holding company bill.

We favor that feature of the bill having to do with the holding companies. There were two bills, one dealing with holding companies, and one dealing with the repeal of section 15a. Those who joined with me in the minority bill are in favor of the holding company bill.

Mr. GARRETT. Are you opposed to the repeal of the recapture clause?

Mr. Hocн. That is what I am going mainly to discuss very briefly.

Let me say briefly, with reference to the holding company bill, that stripped of all these what might be called incidentals, I think the main issue involved there is whether Congress shall make effective the policy already in force in the transportation act dealing with the subject of consolidations.

Congress in the transportation act put in motion legislation leading toward a situation where we would have the railroads of this country bound together in a comparatively few systems, well balanced, and able to compete with each other upon a fairly equal basis. In my view, a consummation of that sort is the main protection against the Government ownership of railroads, and if we do not bring the railroads of this country into a comparatively few wellbalanced systems, we will have continued demoralization, more likely to lead to Government ownership of railroads which I should certainly greatly deplore.

Now, the law provided that the commission, after hearings, should promulgate a plan which, in their judgment, would represent the public interest, with reference to the allocation of these roads and they did that and they promulgated this plan. There were 19 or 20 systems.

Now, these holding companies have gone ahead in what I regard absolutely as a flouting of the commission, and a flouting of the will of Congress in doing indirectly what Congress has already said they shall not do directly.

I might illustrate that to you by giving you just one illustration and then I will pass from that point. I will give you an illustration from my own country. The Interstate Commerce Commission decided that in the public interest, as far as the Middle West was concerned, a system should be built up about the Missouri Pacific Railroad, which cuts through Kansas and through my own district. The Van Sweringens, without the approval of the commission, without even coming to the commission, secured 51 per cent of the stock of the Missouri Pacific Railroad, absolutely controlling that road, in violation of what the commission has held was the public interest of our section of the country. I say that Congress should either repeal entirely the consolidation provisions of the law or it should make effective the law which we now have and not permit these concerns to do indirectly what we have said they shall not do directly.