ferent. It might well be that very few actual displacements would be necessary, and that those displaced would not find it impossible to obtain other employment. Something of this kind happened in England, for the first year of the amalgamation, 1923, was one in which British railway traffic was at an unusually high level, owing to the difficulties on the Continent in the Ruhr district.

So it may be concluded that the best possible way to solve this problem is by negotiations and agreement between the managements and the labor organizations. So far as agencies of the Government can promote such an agreement or assist in the process of arriving at its terms, by legislation or otherwise, they ought to do so.

If, however, an agreement proves impossible, the plan of accomplishing by legislation the result desired ought not to be abandoned. The question of constitutionality is by no means so clear that the attempt to do what the public interest requires ought to be forsaken on that account. The Coordinator is of the opinion, as he was last year, that the Dismissal Compensation Bill which he then recommended is sound in plan and principle. He will be glad to confer either with the railroads or their employees, or both, in an endeavor to put this bill in the best practicable form.

CHANGES IN RAILROAD LAW

With one exception, no occasion has arisen for changing the recommendations heretofore made with respect to amendments to what is now Part I of the Interstate Commerce Act. The exception relates to the proposed bill to restore the fourth section to the form which it had prior to the legislation of 1920. If this were done, it would remove the following limitations upon the granting of fourth-section relief which were added by the Transportation Act, 1920:

(a) That the Commission shall not permit the establishment of any charge to or from the more distant point that is not reasonably compensatory for the service performed.

(b) That if a circuitous rail line or route is, because of such circuity, granted authority to meet the charge of a more direct line or route to or from competitive points and to maintain higher charges to or from intermediate points on its line, the authority shall not include intermediate points as to which the haul of the petitioning line or route is not longer than that of the direct line or route between the competitive points.

(c) That no such authorization shall be granted on account of merely potential water competition not actually in existence.

The reasons for such amendment were fully discussed in the second report of the Coordinator (S. Doc. 152, 73d Cong. 2d sess.), at pages 66-72. The elimination of (b) was regarded as important, but not the elimination of (a) or (c).

The reason for eliminating the clause described in (b), which is known as the equidistant clause, is briefly that it has given rise to serious practical difficulties in the administration of the section. In this connection reference may be made to Commodity Rates on Lumber and Other Forest Products (151 I. C. C. 763), which sets forth these difficulties in detail and the differing views which commissioners have entertained as to the interpretation and application of this clause. The underlying principle is one which the Commission endeavored to apply in the administration of the section prior to the

insertion of the clause in 1920, and which it would in any event have continued to apply in order to avoid violations of sections 1 and 3 of the Act. A meticulous application of this principle, however, as distinguished from a reasonable application, creates practical difficulties in the designing of rate structures and the publication of the rates in reasonably simple tariff form which are well-nigh insuperable and ought by all means to be avoided. They have been avoided by a construction of the law which some commissioners believe to be valid and other do not. A sound conclusion is that the clause is unnecessary and undesirable and ought to be eliminated.

The clause described in (c) has caused no difficulties, but embodies a principle which was uniformly followed in the administration of the section before the clause was inserted in 1920. To make it fully applicable to present conditions, the word "water" should be eliminated, so that it may relate to all forms of potential competition.

The elimination of the clause described in (a) was favored on the ground that it was a "provision of indefinite and uncertain meaning" which "adds nothing but controversy" to the section. It was felt that in the absence of this clause, the Commission could be trusted to administer the section in harmony with the interpretation which it had placed upon the clause (see p. 14 of this report), that interpretation being "in harmony with the spirit and intent of the entire

act."

However, upon further consideration and in view of the discussion of this matter which has taken place before committees of Congress, it appears that there is danger that the elimination, both of (a) and of (c), might be construed by the courts as evidence of an intent to change the policy heretofore followed by the Commission in the administration of the section. This is a danger which ought to be avoided, especially if the legislation for the further regulation of water carriers which has been recommended is enacted. If that legislation is not enacted, there may, as has already been indicated, be reason for relaxing the regulation of the railroads so that they may be in a comparable position with the water carriers with respect to competition. Upon the assumption that the water carriers will be brought under further regulation, the change in the fourth section should be confined to the elimination of the clause described in (b). In this connection, it should be said that the railroads appear to attach unwarranted importance, even from their own point of view, to the emasculation of the fourth section which they have proposed. All that they could hope to gain would be an opportunity to obtain additional traffic on a very low basis of rates yielding some slight margin over so-called out-of-pocket cost. However, such cost is a fluctuating thing, dependent in part on whether or not it is necessary to operate more trains to carry the additional traffic. If more trains become necessary, out-of-pocket cost rises sharply. Furthermore, if the railroads are permitted to make rates on this basis, the water lines must be permitted to do likewise, and in their case it often happens that it will pay to take on additional traffic at inconsequential rates rather than to ship ballast which pays nothing. The prospects are, therefore, that unrestrained rate warfare will leave the railroads with an out-of-pocket loss and impoverish both groups of carriers. It may be that the railroads believe that they can endure such warfare longer than the water lines.

OTHER MATTERS

In previous reports reference has been made to a study, undertaken by the Coordinator, of the extent to which different forms of transportation are in effect subsidized, directly or indirectly, by the Federal, State, or municipal governments; whether this results in unfair or uneconomic competition; and, if so, whether this condition can and should be remedied. This study embraces the railroads, the water carriers, the highway motor carriers, and the air carriers.

The predictions made in the previous reports that the results of this study would be ready for publication in the near future have not been made good. In the endeavor to present the facts with the utmost accuracy, tentative drafts of various sections of the report have been sent to interested parties known to have knowledge of the subject, in order to elicit comments and criticisms. This process has taken time and has made necessary various supplementary investigations, but has been justified by the results. The report, which will be detailed and voluminous, will be published as a separate document, and certainly before the term of office of the Coordinator expires on June 16, 1936.

The same may be said of a study undertaken by the Coordinator in collaboration with the Department of Labor, of wages and working conditions among the transportation agencies other than the railroads, making such comparisons as may properly be made with railroad wages and working conditions. It has been going through a process similar to that described above in connection with the subsidy report.

A separate report will also, in all probability, be issued in regard to a plan of unemployment compensation for transportation employees, supplementing certain provisions of the Social Security Act but imposing no additional financial burden on the carriers.

RECOMMENDATIONS

The recommendations of the report may be summarized as follows: 1. Enact the legislation for the Federal regulation of water carriers as set forth in the bill now pending in the Senate (S. 1632, as reported by the Senate Committee on Interstate Commerce).

2. Enact the legislation for the Federal regulation of "wharfingers" which will be set forth in the bill soon to be presented.

3. In the event that recommendation (1) is followed, enact legislation for the reorganization of the Interstate Commerce Commission along the general lines set forth in S. 1635 and H. R. 5365 (74th Cong., 1st sess.).

4. Enact legislation for the creation of a Coordinator of Transportation associated with the Interstate Commerce Commission along the general lines set forth in S. 1635 and H. R. 5365 (74th Cong., 1st sess.).

5. Enact legislation providing for dismissal compensation for railroad employees displaced by coordination projects along the general lines set forth in S. 1630 and H. R. 5378 (74th Cong., 1st sess.).

6. Enact legislation enabling the Commission to prescribe minimum as well as maximum joint rail-water rates, and to establish

through railroad routes where deemed necessary in the public interest regardless of the "short-hauling" of any carrier, as set forth in S. 1636 and H. R. 5364 (74th Cong., 1st sess.).

7. Enact legislation amending Section 4 of Part 1, Interstate Commerce Act, by eliminating the so-called "equi-distant" clause.

8. Enact legislation shortening the statutory periods of limitation with respect to reparation claims against railroads to 1 year in the case of overcharges (and undercharges) and to 90 days in the case of all other claims.

JOSEPH B. EASTMAN Federal Coordinator of Transportation.