expect an amendment to come from the other that is ill-considered and that might hurt somebody.

Mr. O'CONNOR. By doing what? I know nothing about this, I will say.

Mr. RAYBURN. The regulation of a thing that might be destructive, especially when you deal with the vast question of transportation. And let me say this: Nearly nineteen years ago, I became a member of this committee. It is the only committee upon which I have ever served. I served four years on a committee of common carriers in the Texas Legislature and the other two years, when I was there as speaker, I served on no committee. I felt very much more confident in speaking upon transportation 19 years ago than I do now. After listening to the experts and fundamentalists on this question for all of these years, I have, just in the last few years, had dawn on me the vastness of this question. And now every time I approach a question of transportation or regulation of the instrumentalities engaged in interstate commerce, I approach it with more humility than I did 19 years ago-and for this reason, because I know that congresses and legislatures should not act hurriedly upon these questions that involve, in the railroad field, $23,000,000,000 of property; in the utility field, untold billions of property. Without information and without the development of the facts of the ownership, the capitalization, and the interrelationships of these companies to each other and to the public, I hesitate even to take up for hearing the bills that are now pending before our committee.

Mr. GARRETT. From your former investigation, I understand from your statement, your committee has determined now who owns the railroads?

Mr. RAYBURN. Yes, sir.

Mr. GARRETT. Having determined that fact, has your committee reached any conclusion as to what ought to be done about them?

Mr. RAYBURN. We have, and I have a bill pending to put the investigation and acquisition of railroads by holding companies under the Interstate Commerce Commission. In other words, here is what has been done, Mr. Garrett. In 1920, the Congress, in the transportation act, passed a permissive consolidation bill repealing the antitrust laws as far as they applied to bringing together parallel competing carriers. That was so that the railroads could consolidate with the consent of the Interstate Commerce Commission. There have been some consolidations under that, but some of the railroads that wanted to consolidate without the consent of the commission, thinking probably that they could not consolidate with the consent of the commission, through the device of the holding company, went out, and, outside of that law and unregulated, acquired control of a vast number of railroads and in that wise defeating the orderly consolidation of the railroads and going against the plan of the commission for the orderly consolidation of the railroads in the United States.

Mr. GARRETT. In your investigation and determination as to who owns the railroads of the country and their holding auxiliaries, did your committee go into the question of the fairness or the unfairness of rates-passenger and freight rates?

Mr. RAYBURN. No, sir.

Mr. GARRETT. You have made no investigation as to rates?

Mr. RAYBURN. No, sir.

Mr. GARRETT. They have never made that investigation ?
Mr. RAYBURN. No, sir.

Mr. GARRETT. Does this investigation you now propose contemplate going into the question of rates?

Mr. RAYBURN. No, sir.

Mr. GARRETT. As to whether they are fair and just throughout the United States?

Mr. RAYBURN. No, sir.

Mr. GARRETT. Well, does it not occur to the chairman of the Committee on Interstate and Foreign Commerce that if there is the complaint that I hear, and see in the press a good deal about, the unfairness of rates in certain sections of the country as against certain other sections of the country, how are we ever going to legislate on that subject unless your committee develops some facts in that respect—unless it is going to be the policy of Congress never to interfere with the question of rates, but leave that entirely and absolutely with the Interstate Commerce Commission?

Mr. RAYBURN. That must be the case, Mr. Garrett, to leave it with the Interstate Commerce Commission; because the Congress can not be an expert body on rates. There are not only thousands of rates, but there are hundreds of thousands of rates fixed by the Interstate Commerce Commission in the transportation field with reference to railroads. In 1887-and I think a man from your State, John H. Ragon, had as much to do with the passage of the interstate commerce act as anybody in Congress-the Congress became convinced that it could not handle these technical matters and it turned them over to the Interstate Commerce Commission and created the Interstate Commerce Commission in 1887. And of course these technical matters of fixing rates, were turned over to them and with their great corps of technical experts they have been doing this business. Whether rightly or wrongly, that is another matter. Now some of these matters about which we desire information here are unregulated as to rates by anybody. We would like to determine the facts, to look into some of these abuses, and our committee, in all probability, would make the recommendation to Congress in those matters that they be put under the jurisdiction of the Interstate Commerce Commission, like we are making the recommendation now that the acquisition of one railroad by another, through a holding company, be not allowed without the consent of the Interstate Commerce Commission.

Mr. Cox. This investigation that your committee suggests it be permitted to conduct would not be a duplication of anything that was done by the Senate?

Mr. RAYBURN. No.

Mr. SABATH. Is not the Federal Trade Commission investigating the power companies and the ramifications in connection with the various power companies?

Mr. RAYBURN. The Federal Trade Commission's investigation has gone, more than any other one thing, into the political activities of utilities. They have already published twenty volumes. They have enough testimony in their files to complete sixty volumes. They have been going for three years and are not anything like through yet. We, primarily, want to investigate the ownership and control.

Mr. Cox. Is not the disclosure of ownership just one of the important discoveries you are interested in making?

Mr. RAYBURN. Exactly. But, as I say, the Federal Trade Commission has had hearings loud and long for three years now, and I do not think there will be many people who will wade through a hundred volumes to find out what they are doing.

Mr. SABATH. And they try many of their cases in the newspapers. Mr. RAYBURN. Well, I was in this room on the subcommittee when the Federal Trade Commission was born.

Mr. PURNELL. I assume your committee is unanimous in this request?

Mr. RAYBURN. The committee was not unanimous. Two gentlemen voted against it and at first said they intended to appear here and oppose this; but

Mr. PURNELL. Who are they?

Mr. RAYBURN. Mr. Beck and Mr. Wyant-but after thinking it over again, they said they had no desire to appear and were perfectly willing to have the investigation made. Mr. Beck told me yesterday afternoon and Mr. Wyant told me the day before they are perfectly willing for the investigation to be conducted.

Mr. Cox. I wonder if it would be possible to disclose the basis of their objections?

Mr. RAYBURN. Well I think Mr. Wyant did not say anything in committee about what his objections were. Mr. Beck made some statement and expressed some fears, but I think he is entirely convinced now that they are not well enough founded for him to resist this investigation.

Mr. MICHENER. As a matter of fact, Mr. Rayburn, sooner or later we are going to have legislation dealing with these various things and your purpose is to be prepared to deal with those matters in the proper judicial way?

Mr. RAYBURN. Yes.

Mr. MICHENER. And the same man, Doctor Splawn, will conduct the investigation?

Mr. RAYBURN. Doctor Splawn, allow me to say, is an economist of the highest type. He is, in my opinion, one of the great transportation experts of the country. He was a teacher in economics in the university in our State; he was a railroad commissioner in our State; he was president of the University of Texas until he resigned and he had been through all of that by the time he was 45 years of

age.

Mr. MICHENER. He is a very capable man.

Mr. RAYBURN. I think he is one of the ablest, one of the fairest, and one of the most just men in the Government.

Mr. MICHNER. And the investigation which has been conducted under his direction has been conducted on a plane higher than the ordinary investigation?

Mr. RAYBURN. It could not have been conducted on any higher plane.

Mr. MICHENER. Any one who will inspect it, as I have, will agree that is the fact.

Mr. RAYBURN. It could not have been conducted on a higher plane and there is not a railroad company in the United States or a hold

ing company that he investigated that had any complaint whatever about his manner and method of investigation.

Mr. PURNELL. Personally, I feel if this investigation serves no other purpose than to prevent half-baked and ill-considered legislation in the House, or Senate, as far as that is concerned, it would serve a good purpose.

Mr. MICHENER. And we are fortunate in having at the head of the Interstate Commerce Committee a man who views the matter as the chairman does.

Mr. PURNELL. I agree with that.

Mr. MICHENER. I, for one, am for the investigation if the chairman wants it.

Mr. RAYBURN. Thank you very much. Now, if the committee will permit, I would like you to hear the ex-chairman of the committee, Mr. Parker.

The CHAIRMAN. I am going to ask all of you gentleman to be as brief as you can.

STATEMENT OF HON. JAMES S. PARKER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

Mr. PARKER. I simply have before me the investigation that was made of the railroad situation when I was chairman, as to the ownership of the railroads. I do not know how many of you have taken the trouble to look into this, but those who have I think will agree and I am not speaking now in a chesty way at all, in an egotistical way, because I did not do it; it was done by Doctor Splawn, under the direction of Mr. Rayburn and myself-I think you will agree you will find more information regarding the ownership of the railroads in these volumes right here [indicating] than you can find in any other publication in the world. The New York Times, for instance-and that certainly is not a Republican papergave us page after page of space indicating what we had found out. Mr. Rayburn, for instance, spoke of the interlocking directorates. You have heard a good deal about that. If you will turn to the third volume, you will find an alphabetical list of every man who is a director in a class A railroad; because we did not go into anything but class A railroads, that is, railroads that do a billion dollars worth of business a year. That takes in about 95 per cent of the railroads. For every single one of them, you will find every single corporation he was a director in, and you can figure the interlocking directorates. As Mr. Rayburn said, the 30 largest stockholders are listed, not by name, but by their holdings. It was no one's business whether it was Mr. Smith or Mr. Jones who owns a thousand shares of stock, but how much do the 30 largest stockholders own, or do they control.

You will find, in two railroads in the United States, that Curtis James controls one railroad, and you will find the Waters family in the South controls the Atlantic Coast Line; but outside of that, you will find that there is no concentrated control of any railroad in the United States. For instance, you think of the New York Central as being a Vanderbilt road. The facts show that the combined holdings of the Vanderbilts in the New York Central road are less than

5 per cent of the voting stock. It is a tremendous amount; do not misunderstand me, but I am talking now of control. They own less than 5 per cent of the stock in the New York Central lines. Mr. SABATH. Does the report indicate or show the amount of stock that is owned by the directors who actually control the railroad? Mr. PARKER. Oh, no; unless they are in the 30 largest.

Mr. SABATH. Have you come across this information, or these facts, that in many instances these directors hardly own any stock at all! Mr. PARKER. That is perfectly true.

Mr. SABATH. Still they control?

Mr. PARKER. Oh, yes.

Mr. SABATH. By manipulation and by various means?

Mr. PARKER. Oh, I think you are wrong, Mr. Sabath, about manipulation.

Mr. SABATH. Well, being in a position to acquire proxies from the people, as it is done.

Mr. PARKER. That is true. The best illustration there is the Pennsylvania Railroad. The Pennsylvania is probably the most widely held corporation in the United States in the railroad field. The 30 largest stockholders in the Pennsylvania have less than 10 per cent, if my memory serves me right. Now, if you have any Pennsylvania stock, suppose you have 100 shares, for instance, they paying their dividends and going on in good shape and you send in your proxy. You do not care much who the directors are, (I am speaking now of the public at large); as long as the corporation is well managed, they send in their proxies and, of course, that is the way the railroads are controlled.

Mr. SABATH. Is it summarized in your report; have you made a report on the hearings?

Mr. PARKER. Have we what?

Mr. SABATH. Have you made any recommendations in view of the vast information you have?

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Mr. PARKER. Absolutely; yes. Mr. Rayburn has a bill now before the House for putting holding companies under the Interstate Commerce Commission, which was recommended by the Interstate Commerce Commission. We wanted to see whether we thought it was a wise thing to do. The facts developed in these hearings developed without question, it was the wise thing to do; because there are a great many railroads that are owned entirely by a holding company. Take, for instance, the New York Central. The New York Central is a holding company. They own the New York Central lines. On the cars, you will see New York Central Lines." They own the New York Central, which is the original New York Central line running to Buffalo; they own the Harlem that goes up to Chatham, where it hits the Boston & Albany; they own the Big Four, about 95 per cent; they own about 95 per cent of the Lake Shore; they own about 97 per cent of the Michigan Central. They own it, but it is all run under the name of the New York Central. I am finding no fault; I am only stating the facts. They own that, but that is what comprises the New York Central lines. Of course the New York Central is a holding company.

Mr. GARRETT. Right there: Under this consolidation act and grouping of railroads, does not the New York Central take over all