Railroad Labor Board; car service, which term includes the use, control, supply, movement, distribution, exchange, interchange, and return of locomotives, cars, and other vehicles used in the transportation of property, including special types of equipment, and the supply of trains; certificates of public convenience and necessity in re construction of a new line or extension of a line; abandonment of lines; requirement that carriers shall provide themselves with safe and adequate facilities for performing as common carriers their car service; the pooling of freights of different and competing railroads; consolidation of the railway properties of the continental United States into a limited number of systems; to the consolidation of the properties of two or more carriers; consolidation of express companies; consolidation of telephone companies; issuance of stocks and bonds; physical connections between the lines of rail carriers and docks; fixing rates to earn fair return upon the aggregate value of railway property of carriers held for and used in the service of transportation; disposition of net railway operating income in reserve fund; general railroad contingent fund, and how such funds may be expended and leasing of equipment or facilities purchased from contingent fund; retention of excess earnings from newly constructed lines of railroad; issuance of securities; assumption of obligations; installation after investigation and by order of automatic train safety or train control device or other safety devices which comply with specifications and requirements to be prescribed by the commission upon the whole or any part of a railroad, etc.

MONTHLY EXPENDITURES.

The CHAIRMAN. You have enumerated the monthly cost, beginning with July, at $169,000; for August, $168,000; and for September, $172,000, making an aggregate of $509,000, four times which would amount to $2,036,000. Deducting that amount from $1,900,000, would leave $136,000 as the deficiency instead of $300,000, if you kept on at the same rate for the rest of the year.

Mr. MCGINTY. That is the reason I gave you the detailed or classified expenditures for the year. I will give you a few of our expenditures on certain items for the first three months. For instance, stationery, supplies, office furniture, mechanical office equipment, and other equipment, and various other items under this classified statement here, you will find that we have not had to purchase any during the first three months. Later on in this year the present supply will become exhausted and we will have to begin making purchases of these articles for our current use.

The CHAIRMAN. So you will not be able to say that the figures you have just given us are an underestimate?

Mr. MCGINTY. They are not an underestimate by any means, but an arbitrary amount which the commission has told the heads of offices and chiefs of bureaus they must keep within this year, that positively, it would not ask Congress for a further deficiency, and they must keep down to that amount.

The CHAIRMAN. How do your expenditures for the first three months compare with the allotments that you made on the 1st of July? I understood you to say that you made your allotment upon the basis of $2,100,000, when you had only $1,900,000. Now, you

have been spending at the rate of $2,036,000, and you are asking for a deficiency of $300,000, which would not be justified by the facts.

Mr. MCGINTY. I had not understood that as an allotment as I now understand it. In referring to the allotment of July 1, I thought of it as covering the salaries of the various offices of the commission. Mr. KELLEY. What were the expenditures for July?

Mr. McGINTY. $169,330. So far as I can recall, we have never made an allotment by taking the appropriation and allotting it and saying what amount shall go for any specific purpose. Are we supposed to do that?

The CHAIRMAN. You are supposed to allot the entire appropriation so as to cover your activities by quarters.

Mr. MCGINTY. Am I right in considering this detailed statement of expenditures here, showing what we will expend for such and such items, as an allotment?

The CHAIRMAN. Yes; I suppose if you should set that out at the first of the year as the amount you would expend for each of those activities, that would probably be your allotment.

Mr. KELLEY. If you divided that appropriation by 12, you would have about $160,000 per month. You have run over that amount. by about $9,000 per month, I take it.

Mr. MCGINTY. The chairman does not mean, as I understand him, that we are to allot it into 12 equal parts, but that we should allot it by amounts to cover the expenditures of the respective activities? The CHAIRMAN. For instance, if you have 13 divisions and you divided the $1,900,000 into 13 parts, that would be an allotment. If you did not do that, of course, you did not make an allotment. Now, if you did not waive your allotment, you are spending money regardless of what the appropriation was and in violation of the law. You must waive your allotment in writing.

Mr. SISSON. Stating the reasons for it.

The CHAIRMAN. Here is the law on the subject:

All appropriations made for contingent expenses or other general purposes, except appropriations made in fulfillment of contract obligations expressly authorized by law, or for objects required or authorized by law without reference to the amounts annually appropriated therefor, shall, on or before the beginning of each fiscal year, be so apportioned by monthly or other allotments as to prevent expenditures in one portion of the year which may necessitate deficiency or additional appropriations to complete the service of the fiscal year for which said appropriations are made; and all such apportionments shall be adhered to and shall not be waived or modified except upon the happening of some extraordinary emergency, or unusual circumstance which could not be anticipated at the time of making such apportionment, but this provision shall not apply to the contingent appropriations of the Senate or House of Representatives.

Mr. SISSON. We excepted ourselves, you see.

The CHAIRMAN. Of course, we very seldom have anything. Unless some extraordinary condition should arise, we would not have any. That is what the law provides.

Mr. MCGINTY. We certainly will comply with the law. We will know it in the future, but it is going to be most difficult to make the apportionment in view of the fluctuation in our work. For instance, Congress may pass one resolution necessitating an investigation by the commission that may cost anywhere from $1,000 to $50,000, and we do not know what additional activities will be placed upon us.

Mr. SISSON. The act provides for that. If an extraordinary condition should arise, that would be a reason for creating a deficiency. Mr. McGINTY. I was speaking about making an apportionment in advance.

Mr. SISSON. Suppose sometime after the allotment is made an act is passed which requires additional service from you. Under those circumstances, you would waive the allotment, and spend more money in one quarter than in another, and in your waiver you would state that owing to the passage of this act it became necessary to take from the last quarter certain funds.

Mr. MCGINTY. With whom should we file that waiver?

The CHAIRMAN. It is supposed to be reported in writing to Congress, through the Speaker of the House of Representatives.

Mr. MCGINTY. In the annual report?

The CHAIRMAN. No; you must report it to Congress.

Mr. SISSON. I think the custom has been to state the reasons in writing at the beginning of the session.

The CHAIRMAN. The act says:

The same shall be waived or modified in writing by the head of such executive department or other Government establishment having control of the expenditure, and the reasons therefor shall be fully set forth in each particular case and communica ted to Congress in connection with estimates for any additional appropriations required

on account thereof.

Mr. BYRNS. I was about to say that it was reported to Congress when they submitted their estimates for the deficiencies.

The CHAIRMAN. Of course, they would not have to make a report unless they came here for deficiencies. There would be no violation of the apportionment unless they did create a deficiency.

Mr. SISSON. Laws are passed here so rapidly that it is utterly impossible to keep up with all of them. If you keep up with the ones relating to your own department, you will be doing well.

The CHAIRMAN. There is this to be taken into consideration, and I say it in the most kindly spirit: When a department fails to carry out the law and goes on without respect to what the appropriation may be and spends money in excess of the authority granted, they come here and say to us that they must have more, and the mere fact that we allow it makes us a culpable as they are, because we ourselves then ignore the law by allowing the deficiency. It seems to me that we should be law observers and not law violators.

Mr. MCGINTY. We are sorry to have given you trouble in that regard, but we were proceeding with the duty that had been delegated to us by Congress. You put on us more duties at one time than ever before, and we attempted to recruit our present force in a way that would enable us to take care of them. On June 30, we were proceeding upon the basis of an appropriation of $2,100,000. We just tried to go on and take care of the duties delegated to us by law with the knowledge that we would come here at the first opportunity with a deficiency estimate and ask you whether, or not, we should continue, and, if so, whether you would give us a deficiency appropriation in the necessary amount to do so. If not, we will then simply have to curtail our activities and expenditures and not be able to do all that we felt was required of us.

The CHAIRMAN. The proper spirit in which to enter upon that phase of the case would be to determine at the beginning of the year

to conform to the appropriation that was made instead of continuing on upon the basis of an appropriation that had been exhausted in the previous year.

Mr. MCGINTY. When you say that you do not mean that we should have curtailed our work and force to the basis of the $1,900,000 appropriation, but you mean that we should have waived the allotment and report to you the reasons therefor.

Mr. SISSON. No; you must take the appropriation given you by Congress and try to get through the year. If nothing extraordinary happens, you must under the law get through with what Congress gives you, even if you have to curtail.

Mr. MCGINTY. Then you do mean that we should have reduced. our force to keep within the $1,900,000 at the beginning of the year? Mr. SISSON. Absolutely; from the very first.

The CHAIRMAN. That is the purpose of the appropriation. The consensus of the opinion of Congress was that $1,900,000 was the limit beyond which you ought not to be permitted to go. If you could not perform all of your functions with $1,900,000, then you could say, "We have performed such functions as the $1,900,000 would pay for." Then, if that did not meet with the approval of the general public, you would have some argument to come back with, but you have none now.

Mr. MOGINTY. You would be the first one to jump on us if we did that.

The CHAIRMAN. No, I would not.

Mr. McGINTY. If we had curtailed our force enough to come within that $1,900,000, it would have meant the cutting out, for instance, of this newly created Bureau of Finance.

The CHAIRMAN. You can not tell what it would be. You would have to figure that out. Let us take another case: Suppose you were the president of a big corporation, and we were setting around here as the board of directors, or suppose each one of us was the head of a division in the corporation, each charged with the responsibility of managing that division successfully. Now, suppose I, as the head of one of the divisions, came to you as president of the organization and said, "In order to develop the thing that I have in mind, and which I think will result in the expansion of the business and be beneficial to the general outcome, I think I ought to have the right to spend $100,000." Well, of course you would say, "We will look into it." Each one of the heads of divisions would come around and ask for the same thing, and you would say that you would look into it.

Now, would you be pretty sure that they would not spend any part of the money for the things they had in mind until you had looked into it and had given them authority to do it. That is exactly what we want you people to do. We are supposed to be here to speak for the people, or we are the board of directors and you people are the heads of divisions. We expect you to comply with the mandates of the board, and not for the board to comply with the mandates of the heads of departments.

Mr. McGINTY. I appreciate very much what you say, and I am sure the commission will. It is my duty to keep the commission advised on all those matters, but I confess that I did not know any.

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thing about any apportionment or allotment as between activities. I did not know that was required.

The CHAIRMAN. There must be some orderly method of procedure. Mr. MCGINTY. I have been the secretary of the commission since 1913, and I was. brought up in the work prior to that time under others handling these matters. I thought we were doing the right thing.

The CHAIRMAN. You have been doing a wonderful work down there, but this one particular thing on which you have fallen down affects the welfare of the taxpayers.

Mr. McGINTY. We will not fall down again in regard to allotment. Mr. KELLEY. I do not know whether it has been brought out exactly or not, but I think it would be a good idea to have in the record a statement of some kind showing the expenditures you anticipate that you will have to make as a result of these new activities which you have not had heretofore, or did not have during the months of July, August, and September, and also a statement showing about what amount would be required for each. What we want is a statement of the actual expenditures over and above those for the three months mentioned.

Mr. MCGINTY. I will furnish that by a comparative statement of last year's expenditures and the proposed expenditures of this year, as follows, but as previously stated, in view of the many additional duties delegated to the commission by the Congress it will not be possible to show the additional amount which will be required for each.

The CHAIRMAN. To enable the Interstate Commerce Commission to keep informed regarding and to enforce compliance with the acts to promote the safety of employees and travelers upon railroads, etc., you are asking $36,400. Is this in connection with the public acts to which you called our attention a few moments ago? Mr. McGINTY. No, sir; this is for safety entirely.

The CHAIRMAN. You are asking for $36,400 for this purpose. Mr. MCGINTY. Yes, sir. The same condition prevails here as under the general appropriation. As an illustration, our appropriation last year was $336,000, and that was cut this year to $313,600. Now, under the $336,000 appropriation we expended $333,092.52, and in order to keep within the appropriation of $336,000 it was necessary for us to place our entire inspection force on leave of absence without pay during the last half of June. By doing that we not only kept within the the $336,000, but had an unexpended balance of