1942: Interstate Commerce Commission

Transportation was the first of the great industries of the country to be affected by the imminence of war and finally by the war itself. As a consequence, the work of the Interstate Commerce Commission in 1942 was, in great measure, directly related to problems arising from wartime conditions. Government supervision and control of transportation were intensified by the operations of new agencies, such as the Office of Defense Transportation, War Production Board, and Office of Price Administration. All of these fast-functioning instruments of government have made much use of the Commission's statistical data and its organization for obtaining facts with respect to transportation matters and have called upon the Commission's staff to supply much information having direct relation to operations.

Economic conditions have had positive effects in 1942 upon carrier earnings and expenses. An increase in wages granted railroad employees late in 1941, was followed by a request from railroads for an increase in freight rates and passenger fares to offset such increases as well as other increases in operating expenses. The Commission authorized an increase in railroad passenger fares of 10 per cent, effective Feb. 10, 1942, and an increase in freight rates effective Mar. 18, 1942 (248 I.C.C. 545). The increase in freight rates was 6 per cent generally, but only 3 per cent on certain basic products, with small specific increases on coal and coke, and no increase on iron ore. These increases averaged about 4.6 per cent.

The Commission's Bureau of Service continued and expanded its work of expediting movements of traffic. During the eleven-month period, January to November, over 30 service orders were issued directing carriers to accord joint use of certain important terminals, to divert traffic from congested routes and to take certain other emergency actions affecting car service.

Highway transportation by motor carriers has also created problems of administration to the Commission in this year of war. The matters presented have dealt with requests for emergency operating authority and with conditions arising from the urgent need for conserving essential materials and the necessity for utilizing truck capacity to the fullest possible extent. The Commission has issued more than 4,000 authorizations for emergency operation. It has also ordered motor carriers of property to disregard routing instructions in bills of lading and to move freight in compliance with the orders of the Office of Defense Transportation.

In this year this jurisdiction of the Interstate Commerce Commission over transportation agencies was further expanded by the enactment of a statute, approved May 16, 1942 (U. S. Code, Title 49, Sec. 1001 et seq.), which added Part IV to the Interstate Commerce Act. This part gives the Commission broad regulatory authority over freight forwarders comparable in scope with its authority over carriers by rail, by motor vehicle, and by water. Freight forwarders assemble and consolidate shipments of freight, dispatch it by railroad or other common carrier to destination, and there distribute it to the various consignees.

Their functions and operations are important factors in the transportation field. The shipper employing a forwarder is afforded a service under which the forwarder assumes full responsibility for the shipment from the point of origin to the point of final delivery and utilizes the services of common carriers by rail, by motor truck, or by water to the best advantage. Applications for permits to operate have been filed by 154 forwarders.

The duties of the Bureau of Water Carriers were extended in 1942 to include administration of the new Part IV of the Act regulating freight forwarders.

In connection with the issuance of authority to carriers by water to engage in such service, their operations have been divided into five classes, dependent upon the type of vessels used. (1) Self-propelled vessels; (2) non-self-propelled vessels (barge-line service); (3) towing vessels; (4) vessels rented to others, and (5) sailing vessels. The number of applications filed by water carriers to continue or to institute operations was 932 at the close of 1942. Because of the broad scope of the exemptions in the act, probably the major portion of the freight carried on inland waters is not subject to regulation by the Commission. The exemptions are such as to exclude from regulation the principal movements of coal, bulk petroleum, bulk grain, and iron ore.

Important accounting and statistical orders were issued in 1942. Among them are orders requiring railroad companies, beginning with 1943, to introduce a system of accounting for depreciation of road property.

During this year the reorganization of the Wabash, in receivership since 1931, was completed. Reorganization of the Minneapolis & St. Louis, in receivership since 1923, is nearing completion. During the year, plans for the reorganization of three railroads were returned to the Commission by the court for further consideration, and the plans for four roads have been carried to the Supreme Court.

1941: Interstate Commerce Commission

Especially noteworthy in 1941 was the organization within the Commission of a new bureau of water carriers to have charge of the administrative work connected with the widened jurisdiction over such carriers. The number of applications received for common carrier certificates or contract carrier permits to operate over waterways covering operations in effect Feb. 1, 1941, was 747. In addition there have been 109 applications for authority to engage in new operations as water carriers. Also, 397 applications for exemptions were filed. Tariffs of common carriers by water and minimum rate schedules of contract carriers were required to be filed March 1. District supervisors for water carriers have been appointed at San Francisco, Chicago, and New Orleans.

The impact of National Defense activity was felt especially in the Commission's Bureau of Service. It was necessary to increase greatly the field force of that bureau to investigate matters relating to the proper use, supply, movement, and interchange of freight cars in transportation service.

In the field of accounting requirements the most noteworthy developments were the recommendation by the Bureau of Accounts of a revised uniform system of accounts for carriers by water and the recommendation that the mandatory depreciation charges be extended to cover fixed property of railroads as well as the equipment now covered, both to be made effective Jan. 1, 1942.

Reorganization of railroads placed in control of the courts as a result of financial difficulties in the recent depression is steadily proceeding. In 1941 the Commission approved plans for the reorganization of the St. Louis Southwestern, the Fort Dodge, Des Moines & Southern, the Alabama, Tennessee & Northern, and the Fonda, Johnstown & Gloversville under section 77 of the Bankruptcy Act.

The Commission submitted to creditors, and in some cases to stockholders, for acceptance or rejection, plans approved by the Commission and the courts for the reorganization of the Erie, the Chicago & North Western, the Fort Dodge, Des Moines & Southern, the Kansas City, Kaw Valley & Western, and the Missouri Pacific. Three new proceedings for reorganization were instituted during the year.

During 1941, hearings were begun in the comprehensive investigation of class rates and freight classifications. This involves such matters as differences in freight levels in the various rate territories, methods to be used in constructing interterritorial class rates, percentage relations among the various classes in the rate structure, and the establishment throughout the country of a simplified and more nearly uniform classification of freight, as well as the relation of the various classifications applicable to rail, motor, and water transportation. Among the exhibits introduced in this proceeding by a witness for the Commission is one which undertakes to show what it costs the railways to carry freight per 100 pounds for various distances in each rate territory and for varying loads per car.

Another pending proceeding of general interest relates to the charges by pipe line companies for the interstate transportation of crude petroleum. In an opinion dated Dec. 23, 1940 (243 I.C.C. 115), the Commission indicated that these carriers should reduce their bases of rates by percentages averaging 24.46 per cent, but ranging for individual companies from 3.75 to 55.01 per cent, the purpose being to limit earnings of the carriers to approximately 8 per cent on the value of their property. The case has been reopened for further hearing.

Extended consideration was also given to the rates on refined petroleum charged by rail carriers and by pipe lines from mid-continent territory to certain points in western trunk-line territory, Illinois and Indiana. By a decision of March 11, 1941, these rates by railroad were reduced about 10 per cent (243 I.C.C. 589). The proceeding is of special interest because of the discussion of 'multiple-car rates'; that is, rates made lower if a minimum tender of 25 tank-car loads is made at one time. Such rates are proposed upon the ground that the cost of transportation should be less. They were not expressly approved by the majority in this proceeding.

The regulation of motor carriers continues to be one of the Commission's important activities. The Commission issued a special report upon the Federal regulation of sizes and weights of motor vehicles. It was found, although not unanimously, that a need existed for such regulation and it was recommended that the Commission be authorized to determine upon complaint whether State requirements are unduly burdensome.

On July 1, 1941, the Interstate Commerce Commission had 2,840 employees, of which 1,383 were assigned exclusively to motor carrier regulation. See also RAILROADS; TRANSPORTATION.

1940: Interstate Commerce Commission

The jurisdiction of the Commission was broadened and the existing law relating to interstate commerce was amended in important respects by the Transportation Act of 1940, approved Sept. 18, 1940. The Interstate Commerce Act now consists of three parts. The first relates to steam railways; the second to motor carriers; and the third, which is the new part, to water carriers. The jurisdiction of the Interstate Commerce Commission over water carriers before 1940 was confined to domestic common carriers engaged in interstate transportation partly by railroad and partly by water when both the rail and water carriers were used under a common control, management, or arrangement for a continuous carriage or shipment. The new act makes all domestic water carriers, except as noted below, subject to the same kind of comprehensive regulation which for years has been applied to railways, leaving to the Maritime Commission the regulation of carriers engaged in foreign commerce. Domestic water carriers are divided into three classes, common, contract, and private. The common carriers are those which hold themselves out to the general public to carry passengers or property, and with respect to them the regulation is to be most complete. Contract carriers engage in transportation under individual contracts or agreements. They must publish and observe schedules of minimum rates or charges, unless relieved by the Interstate Commerce Commission. Private carriers are not subject to regulation by the Interstate Commerce Commission. Specifically exempted from Interstate Commerce Commission regulation under the new act are the transportation by a water carrier of commodities in bulk when the cargo space is being used to carry not more than three such commodities, the transportation of liquid cargoes in bulk in tank vessels, and such other transportation by contract carriers which is not actually and substantially competitive with the transportation performed by common carriers. Common carriers by water must in the future obtain 'certificates of public convenience and necessity' before engaging in transportation, and contract carriers by water must have from the Interstate Commerce Commission 'permits' to operate. These provisions are similar to those in force in regard to motor carriers.

For the administration of this new Part III the Commission has announced the creation of a Bureau of Water Carriers, but that bureau will not be comparable in the range and volume of its activities with the Commission's Bureau of Motor Carriers. Some of the new functions will be distributed among other existing bureaus in the Commission to a much greater extent than obtains in the case of motor carrier regulation.

Amendments of the Interstate Commerce Act other than those relating particularly to water carriers are numerous. They can not all be noted here, but outstanding are the following: There is a comprehensive statement of 'National Transportation Policy' which, in brief, is to provide for fair and impartial regulation of all modes of transportation, to develop and coordinate their use, to preserve the inherent advantages of each without destructive competitive practices, and to encourage fair wages and equitable working conditions for their employees. The Commission is directed to make an investigation as to the lawfulness of existing rates in the classification territories and of their relation to each other. It is given greater discretion with respect to departures from the long and short haul clause. Its control over holding companies is extended somewhat without, however, being made as complete as that which the Commission has over operating companies. In the new act carriers are given more freedom in planning consolidations, but there must be equitable arrangement for protecting the interests of employees. In the revision of the Commission's procedure specific authority is given to it to refer its work to divisions of Commissioners, individual Commissioners, or to boards of employees. By order dated November 15, 1940, the Commission adopted an organization schedule and made assignments of work and functions among the present five divisions, individual commissioners, and sixteen bureaus. In the future, land grant carriers shall receive full commercial rates for transporting persons or property of the United States, except military or naval property or forces. Interesting also is the creation of an independent board of investigation and research to determine the relative economy and fitness of railways, motor carriers, and water carriers for transportation service, the extent to which each is receiving a subsidy from public funds, and the extent to which taxes are imposed on such carriers by agencies of government, Federal, State, and local.

Thus the year 1940 may be said to mark an attempt to perfect the Federal control of transportation agencies largely through the Interstate Commerce Commission. (See also TRANSPORTATION.)

1939: Interstate Commerce Commission

On July 1, 1939, the Commission made a redistribution of its functions within its own organization. The salient features of the new organization are as follows: The former practice of having the chairmanship rotate among the members, with a new chairman each year, was modified by electing a chairman for a term of 3 years. The eleven members under the new plan are grouped in five divisions, each with three regular members. Division 1 handles the principal administrative and business tasks and is headed by the chairman. This makes it possible to eliminate most of the standing committees previously existing. The rate work is divided between Divisions 2 and 3. Division 2 also has charge of valuation and various technical matters. Safety regulation is assigned to Division 3. Division 4 deals with finance matters, reorganizations, and intercorporate relations of carriers. Division 5 has charge of the major problems peculiar to motor carriers, but motor carrier rates, finances, and certain other subjects have been assigned to other divisions. The general nature of the changes indicates an attempt to distribute duties on a functional basis to a greater extent than heretofore. Increased authority was given to individual commissioners to dispose of certain matters. The various bureaus continue to report through an individual commissioner to a division or to the Commission. All matters decided by a commissioner or a division may finally come on appeal to the whole Commission.

Progress was made during the year in the work of reorganizing railroads. In the 12 months' period ended Oct. 31, 1939, plans of reorganizing two roads previously approved by the Commission were confirmed by the courts, and the Commission approved and issued reorganization plans for 3 other railroads. For 6 additional bankrupt roads tentatively proposed plans were made public, and hearings in various other such cases were concluded. Authority was granted the Baltimore & Ohio Railroad and the Lehigh Valley Railroad to take steps for a voluntary readjustment of their indebtedness. Acquisition of control of the Louisiana and Arkansas Railway by the Kansas City Southern Railway was approved, as was also the merger of the properties of the Gulf Mobile & Northern Railroad and the Mobile & Ohio Railroad.

There was a constant flow of decisions in rate cases. Of importance in 1939 was one permitting the Railway Express Agency to revise its rates to secure additional revenue (231 I.C.C. 471); another prescribed nonprejudicial rates on sugar between the South and East (234 I.C.C. 247); revised key rates were prescribed on all-rail class rate traffic between points in Southern and Western territories (231 I.C.C. 315); divisions of rates were prescribed between important groups of carrier (234 I.C.C., 135 and 175); and the Commission directed rail carriers to comply with the regulations relating to motor vehicles when substituting that type of service for rail service (232 I.C.C. 683). Further proceedings were had in 1939 designed to establish minimum motor carrier rates in various regions. Rules were prescribed to govern the transportation of household goods by motor vehicle common carriers (Ex Parte MC-19).

Of various opinions handed down by the U. S. Supreme Court in 1939 with respect to the powers of the Interstate Commerce Commission probably one of most general interest is Rochester Telephone Corp. vs. U. S. (307 U. S. 125). In this case the count held that negative as well as affirmative orders of the Commission are subject to review by the courts. This reversed earlier decisions on the same subject.

Further steps were taken in 1939 by the Interstate Commerce Commission to promote the safety of operation. It cooperated with the Association of American Railroads in the development of revised specifications for the structural design of new passenger train cars. Effective Sept. 1, 1939, new regulations regarding signal systems were prescribed. In the course of the inspection of steam locomotives, 9 per cent were found with defects that should have been corrected before the locomotives were put into service. Eleven service orders were issued modifying the regulations for the safe transportation of explosives and other dangerous articles. Revised safety regulations were adopted for motor carriers covering the qualification of drivers, the driving of the vehicles, parts and accessories, reporting of accidents, hours of service, and inspection and maintenance. Twenty safety inspectors were added to enforce these regulations in cooperation with the states. (See also RAILROADS.)

The staff of attorneys and special agents engaged in detecting and prosecuting violations of the law has been augmented. During 1939, 208 convictions were obtained against carriers and shippers for violation of the motor carrier act and appropriate decrees were entered in 76 cases. The fines imposed totaled $134,724. For violating other parts of the Interstate Commerce Act, 41 convictions or pleas of guilty were obtained with fines of $68,000.

In the valuation work, the year 1939 has brought to a close the making of inventories and basic valuations of practically all of the major oil and gasoline pipe line companies.

The statistical staff of the Commission was expanded in 1939 to develop more information regarding the cost of service of various classes of carriers.

For a more extended account of the Commission's activities in 1939, reference should be made to its 53rd Annual Report.

1938: Interstate Commerce Commission

The Interstate Commerce Commission, organized originally in 1887, is charged with the duty of regulating transportation agencies engaged in interstate commerce: namely, steam railways, electric railways, motor carriers, pipe lines and certain water lines. It consists of eleven members appointed by the President and confirmed by the Senate. It is one of the independent agencies in that it reports directly to Congress and not to a Cabinet Officer. On Nov. 1, 1938, it employed 2.531 persons, of whom 1,796 were stationed at Washington and 735 in field offices. The Commission formerly had jurisdiction over telephone and telegraph companies, but its regulatory duties with respect to these were transferred to the Federal Communications Commission by an Act passed in 1934. The Interstate Commerce Commission's duties with respect to air mail service were transferred to the newly created Civil Aeronautics Authority on Aug. 22, 1938. It now has 14 bureaus dealing respectively with Administration, Accounts. Finance, Formal Cases, Informal Cases. Inquiry (Prosecutions), Law (Other court proceedings). Locomotive Inspection, Motor Carriers, Safety Service, Statistics, Traffic, and Valuation.

The most notable event in the recent history of the Commission was the extension of its jurisdiction by the Motor Carrier Act, 1935, to cover transportation by motor carriers engaged in interstate and foreign commerce. This act is known also as Part II of the Interstate Commerce Act. It applies to common carriers, contract carriers, brokers, and, to a limited extent, to private carriers. Amendments intended to facilitate the administration of the Motor Carrier Act and to clarify certain provisions thereof were enacted in 1938. The regulatory duties with respect to the common-carrier trucks and buses are more complete than with reference to other motor carriers and relate to filing and publication of rates and charges, prevention of unreasonable, discriminatory, or preferential rates, supervision of security issues, control of mergers or other unifications, uniform accounting, service, and safety. The execution of such duties is a vast undertaking owing to the many thousands of motor-carrier enterprises to be regulated.

During the year 1938 substantial progress was made toward disposing of the 93,364 applications for certificates, permits, and licenses, of which 20,617 have been approved, 42,670 denied or withdrawn, and 30,077 are pending. Regulations prescribing maximum hours of service for drivers of for-hire passenger carriers were made effective during the past year. The Motor Carrier Bureau employed 1,142 persons on Nov. 1, 1938, or 45 per cent of the total employed by the Commission.

In the year 1938, the Commission was actively engaged in considering plans for the reorganization of bankrupt railways in connection with proceedings under Section 77 of the Bankruptcy Act as amended. The reorganizations of two short-line railroads were completed, plans were approved for the reorganization of four large railroads, and hearings were concluded on others. On July 31, 1938, 31 per cent of the steam railway mileage was in the hands of the courts, either in receivership or in trusteeship under the bankruptcy act.

Service orders were issued in two emergencies during the year: one in July to promote the flow of traffic which was threatened with congestion on account of a dispute over trackage rights between Jackson and Paducah, Ky., and the other in September to expedite traffic in New England after the storm.

The inspection of locomotives, which began in 1911 and was extended in 1915 and 1924, was continued in 1938 and has resulted in largely eliminating the unnecessary hazards to employees engaged in operating the locomotives. The enforcement of laws designed to safeguard the lives of passengers and employees has been an important duty of the Commission since 1893, its powers in this respect having been extended from time to time. In 1937. Congress provided that carriers may not discontinue or materially modify installation of block signal systems, interlocking, and automatic train stop, train control, and cab signal devices without approval of the Commission.

The valuation of the railroads, at one time a major activity of the Commission, has been completed as to underlying reports, but in 1938 the work of keeping the valuations current was continued. A program of oil pipe line valuation was also carried on. The valuations are used in reorganization cases, rate cases, and for other purposes. In connection with a recent rate case decided in 1938, the value of the steam railways was found to be $20,988,000,000 as of Jan. 1. 1938 (Ex Parte 115, 229 I.C.C. 435, 451).

Among the outstanding rate decisions of 1938 are the following:

Ex Parte 123, Fifteen Per Cent Case (226 I.C.C. 41 and 229 I.C.C. 435) granted increases which, together with other increases in related proceedings in 1937, raised the freight rate level about 7.7 per cent.

Ex Parte 123, Eastern Passenger Fares in Coaches (227 I.C.C. 17) found unjustified proposed increased passenger fares in coaches, but on further hearing (227 I.C.C. 685) an increase to 2.5 cents a mile was permitted for a period of 18 months.

Pullman fares were increased 5 per cent by a decision dated June 20, 1938 (227 I.C.C. 644).

An opinion was issued on Oct. 11, 1938, in Docket No. 27,365. Freight Forwarding Investigation, pointing out abuses in that service.

One of the most important pending cases is No. 26,712. Rail and Barge Joint Rates, in which the reasonableness of the present differentials between all rail rates and corresponding rates by barge transportation is being investigated.

The Commission issues numerous publications, such as its annual report to Congress, opinions in the Interstate Commerce Commission Reports, Statistics of Railways, accident bulletins, and other periodical reports relating to traffic, employees, and various phases of the operations of common carriers.