trucks, tractors, semitrailers, and trailers used in the transportation of passengers or property, and which vehicles carry identification plates as prescribed by the rules and regulations of the Commission issued pursuant to section 224 (a).

(2) No conveyance made or given on or after the effective date of this section, which affects the title to, or interest in, any such motor vehicle, or any portion thereof, shall be valid in respect of such motor vehicle or portion thereof against any person other than the person by whom the conveyance is made or given, his heir or devisee, and any person having actual notice therof, until such conveyance is recorded in the office of the secretary of the Commission. Every such conveyance so recorded in the office of the secretary of the Commission shall be valid as to all persons without further recordation. Any instrument, recordation of which is permitted by the provisions of this section, shall take effect from the date of its recordation, and not from the date of its execution.

(3) No conveyance shall be recorded unless it states the interest in the motor vehicle of the person by whom such conveyance is made or given or, in the case of a contract of conditional sale, the interest of the vendor, and states the interest transferred by the conveyance, and unless it shall have been acknowledged before a notary public or other officer authorized by law of the United States, or of a State, Territory, or possession thereof, or the District of Columbia, to take acknowledgment of deeds.

(4) The Commission shall record conveyances delivered to it in the order of their reception, in files to be kept for that purpose, and indexed to show—(a) the identifying description of the motor vehicle; (b) the names of the parties to the conveyance; (c) the time and date of reception of the instrument and the time and date of recordation thereof; (d) the interest in the motor vehicle transferred by the conveyance; and (e) if such conveyance is made as security for indebtedness, the amount and date of maturity of such indebtedness.

(5) The Commission is authorized to provide by regulation for the endorsement upon certificates of registration, or motor vehicle certificates, of information with respect to the ownership of the motor vehicle for which each certificate is issued, for the recording of discharges and satisfactions of recorded instruments and other transactions affecting title to, or interest in, motor vehicle, and for such other records, proceedings, and details as may be necessary to facilitate the determination of the rights of parties dealing with such motor vehicle.

(6) Nothing in this section shall be construed to supersede the motor vehicle title registration laws of the States and the District of Columbia insofar as such laws apply to motor-vehicle titles for the purposes of identification in the issuing of license plates and the prevention of thefts of motor vehicles.

The Commission is hereby authorized to make such rules and regulations as may be necessary to administer the provisions of this section and to fix reasonable fees for the services performed. All moneys so collected shall be paid into the Treasury of the United States.

This section shall become effective 30 days after approval.

PROPOSED AMENDMENT TO MOTOR CARRIER ACT, 1935

Section - Change the numbers of section 225 to 225 (a). Section: Amend section 225 (a) by adding paragraphs (b), (c), (d), and (e), as follows:

(b) Until such time as Congress shall have enacted specific legislation for prescribing uniform standards of equipment of motor vehicles engaged in interstate commerce, the Commission is authorized and directed to determine the need for emergency regulations of sizes and weights of motor vehicles and combinations of motor vehicles and if in its judgment such need exists, it is hereby authorized and empowered to prescribe reasonable regulations for the promotion of safety, protection of the highways, adequate public service, the prevention of discriminations, and to effectuate any other provisions of this part, but such regulations shall be applicable only to routes on the system of Federal-aid highways and shall give due consideration to the recommendations of the Secretary of Agriculture as determined under paragraphs (c) and (d) of this section.

(c) The Secretary of Agriculture is hereby directed to furnish the Commission from time to time, as may be requested, reports indicating the reason

able capacity ratings of routes on the system of Federal-aid highways or portions of such routes together with such recommendations respecting proper axle loads, axle spacing, wheel loads, and types and sizes of tires, length, height, width, and gross weight of motor vehicles and combinations of motor vehicles as he may determine to be necessary to afford reasonable protection to the highways and to the use of the highways by the public.

(d) In determining reasonable recommendations covering the subjects enumerated in paragraph (b), the Secretary of Agriculture shall cooperate with the department of the interested State, having jurisdiction over the construction and maintenance of highways, and render to the Commission a report concurred in by such highway department and if such highway department fails to cooperate or fails to concur, then the Secretary of Agriculture shall transmit his own report to the Commission and the Commission shall prescribe regulations in reasonable conformance with the report of the Secretary of Agriculture: Provided, however, That the said State department shall have the same right of appeal from the orders or regulations of the Commission as is accorded other parties.

(e) In addition to the penalties and remedies otherwise provided in this part for willful violations of the orders of the Commission, there is specifically reserved to the State concurrent jurisdiction to enforce all necessary regulations under the police powers of the States, respecting sizes and weights, which are not inconsistent with the provisions of this part or the orders or regulations prescribed by the Commission.

LAWS AND APPROPRIATIONS RELATING TO FEDERAL AID IN CONSTRUCTION OF ROADSPROPOSED PROVISIONS

To the bill, H. R.

"To amend the Federal Highway Act, approved July 11, 1916, as amended and supplemented, and for other purposes," viz: "SEC. That section 8 of the act of November 9, 1921, chapter 119, is hereby amended to read as follows:

"SEC. 8. Character of construction, etc., required-Approval of Secretary of Agriculture.-Only such types, width, thickness, strength, and character of surface and of highway and kinds of materials shall be adopted for the construction, reconstruction, repair, and maintenance of any highway which is a part of the interstate and intercounty systems as shall be agreed upon by the Secretary of Agriculture, and the State department having jurisdiction over the construction and maintenance of highways, to establish the minimum carrying capacity of such highways in the interest of safety, the promotion of interstate commerce, the prevention of discriminations between persons and places, the promotion of means for national defense, and the effectuation of the general purposes of this act. The Secretary of Agriculture shall not approve any project submitted by any State for the construction, reconstruction, repair and maintenance of any such highway unless and until he shall find with respect to such State that it has agreed to comply with the specifications approved by him in respect to the types, width, thickness, and strength of such construction, reconstruction, repair, and maintenance.'"

Until such time as Congress shall have enacted specific legislation for prescribing uniform standards of equipment of motor vehicles engaged in interstate commerce, the Secretary of Agriculture is hereby authorized and directed to furnish the Interstate Commerce Commission with all information relating to the capacity of said highways and the Interstate Commerce Commission shall give due consideration to the capacity ratings of highways, as reported by the Secretary of Agriculture, in prescribing sizes and weights of motor vehicles used in interstate commerce, for the purpose of promoting safety of the public, preservation of the highways or effectuating any of the provisions of the Motor Carrier Act, 1935.

In addition to the penalties and remedies otherwise provided in the Motor Carrier Act, 1935, for willful violations of the orders of the Interstate Commerce Commission, there is hereby specifically reserved to the States concurrent jurisdiction to enforce all reasonable regulations, respecting sizes and weights of motor vehicles not inconsistent with the provisions of the Motor Carrier Act, 1935, or such regulations as may be prescribed by the Interstate Commerce Commission.

STATE RESTRICTIONS ON INTERSTATE COMMERCE

During my testimony, I pointed out the difficulties which motor carriers encounter as they cross State lines due to conflicting State requirements with respect to length, width, height, tire equipment, and other matters affecting the operation of carriers engaged in interstate commerce.

I was asked if I had any suggestions to make looking toward a solution or alleviation of these difficulties. The main highways of all of the States have been constructed in part with Federal-aid money and generally in accordance with plans which were submitted to the United States Bureau of Public Roads before the project was approved. There is substantial uniformity in the standards of highways designed to meet certain conditions. In the United States the gross weights allowed by the States range from 18,000 pounds to over 100,000 pounds. The length ranges from 27 feet to 85 feet; the height from 11 feet to no limit. It is now generally recognized that gross weight has practically no relationship to the preservation of the highways. The standard now applied in the States which seeks to do the job along proper lines is the axle or wheel load regulation. On high-pressure pneumatic tires the highways are generally constructed for 16,000 pounds per axle, and on low-pressure pneumatic tires 18,000 pounds per axle. Solid tires are not used on long-distance hauling. The different types of highway construction are generally selected according to the density of traffic rather than the weight.

All highways will withstand safely the 16 and 18 thousand pounds per axle limitations so long as the density of traffic does not exceed that which the type was designed to meet. In other words, it is not the weight of a single vehicle but the number of vehicles which determines the type of highway. The best type of construction is employed where there is the greatest use.

The heaviest loads we have record of as moving by truck include a 16-inch gun weighing 272,000 pounds for the United States which was carried to a point on the Pacific coast, and recently we moved, for the United States, on a truck, a 66,000 pound switching engine from Ft. Bliss to railroad repair shops.

We ask that you amend section 225 of the Motor Carrier Act by adding: “If the Commission finds that there is need for such regulation, it shall prescribe reasonable regulations which shall be subject to such reasonable exceptions, in particular cases as the States may find to be necessary, from time to time, to protect the highways and including bridges."

As alternative suggestions the following proposals are submitted. (Note to Reporter-copy first "B" and then "C".)

Mr. BEALL. Mr. Chairman, on the other parts which I have not touched, I think I can very well handle in extension of my remarks. I wish to say that I deeply appreciate the patience and consideration shown by all members of the committee.

The CHAIRMAN. We thank you very much, Mr. Beall.

The committee will stand adjourned until 10 o'clock tomorrow morning.

(Thereupon, at 11:50 a. m., the committee adjourned to meet the following morning, Friday, February 17, 1939, at 10 a. m.)

Mr. ELTON J. LAYTON,

AMERICAN TRUCKING ASSOCIATIONS, INC.,
Washington, D. C., February 24, 1939.

Clerk, House Committee on Interstate and Foreign Commerce,

House Office Building, Washington, D. C.

Re: Testimony of J. Ninian Beall in connection with H. R. 2531. DEAR MR. LAYTON: Pursuant to requests by members of the committee, I submit herewith certain information and ask that it be included in extension of remarks, in accordance with permission granted by the chairman. I am enclosing 25 extra copies for distribution to the committee members.

Respectfully,

J. NINIAN BEALL, General Counsel.

EXTENSION OF REMARKS BY J. NINIAN BEALL

Pursuant to request by the Committee on Interstate and Foreign Commerce, I submit a summary, with brief analysis, of the considerations underlying suggestions which I made, during the course of my testimony, with reference to giving consideration to the economic worth of railroads as a basis for rate making and finance cases.

In order that there may be no confusion between the basis which I suggest and some of the surveys which have been made, I should like to emphasize that I have given consideration to the operating portions of railroads and not to railroad system as a whole. Generally, entire railroads or railroad systems have been grouped in some of the studies, for the purpose of segregating the strong from the weak roads, but such a plan has little in common with the suggestions which I made, except that they are interesting for comparison purposes in showing the composite result.

To illustrate the point, a railroad system which is in good financial condition may have in it a certain amount of mileage which has little or no economic value, but because of the earning capacity of the good mileage, the losses on the poor mileage are absorbed without impairing the financial position of the company as a whole. In other cases, involving railroads in receivership, such railroads generally were organized by including a certain portion of good mileage, representing sound value, to which was added, by various means and for various purposes, too much poor mileage with little or no sound value.

The distinction between system solvency and system bankruptcy depends, to a large extent, on the amount of unsound lines which the sound lines are required to carry. I have approached the subject on the principle that the economic worth of a line has a separate existence and is separately ascertainable, independent of system consolidations. The volume of tonnage moving over particular lines indicates the economic worth of each line, regardless of whether the tonnage is originated, delivered, or wholly interline.

The $12,800,000,000 estimate which I have suggested as representing the economic worth of railroads, represents approximately 70 percent of the par value of the stocks and bonds. I divided the aggregate railroad plant into three groups. The first group with one-third of the mileage represents sound value to the extent of 100 percent of the cost to reproduce and includes all elements of value recognized by law. The second group consisting of one third, was given a value of 50 cents on the dollar. And the third group was given a value of 20 cents on the dollar, which was largely predicated on salvage. Consideration was given to the differences in the physical characteristics of each class and allowances were made in the estimates which varied from $30,000 to $125,000 per mile. I make a distinction between tearing up railroads and tearing up the securities, represented by the unsound lines, to the extent that they are unsound. In approaching the matter from this angle, it would not follow that any of the mileage in the 50-percent group would have to be abandoned, nor that all of the unsound mileage in the third group would have to be abandoned.

EX PARTE 123, 226 I. C. C. 41

In this case, at page 64, the Commission included in its report a grouping of railroad systems by mileage according to financial status, and placed 28 percent in the sound group, 42 percent in the "problem" group, and 30 percent in the receivership group.

The Commission also pointed out, at page 60, that they were under a duty to report values in a particular way, "although the Constitution does not protect against all business hazards (Montana Public Service Commission v. Great Northern Utilities Co., 289 U. S. 130)." At page 63, the percent of return on value. as determined by the statutory rule is shown. The result invites the inquiry as to whether the return might not be quite adequate on the basis of sound value, considering the quantity of capital involved.

REPORT OF EMERGENCY BOARD

(Appointed September 27, 1938)

This board was appointed by the President to consider the wage dispute between the carriers and their employees. At the hearing, the employees introduced exhibit 65 in which they had segregated, by companies, the lines which

were classified as sound, "problem," and receivership lines. At page 28 of the board's report, are shown the names of some of the important "problem" roads. That list is significant in that such roads as the Baltimore & Ohio and Southern are included. It is a matter of common knowledge that both of these systems include some of the best railroad mileage in the United States. The obvious answer is that they have too many thin-traffic lines to support without scaling down the fixed charges on the thin-traffic lines. On page 49, the board found:

"Some adjustments are now taking place through the processes of reorganization. The unusual percentage of carriers now in receivership or trusteeship thus need not necessarily disturb one. It may, indeed, be desirable from a broad standpoint that that percentage should increase, provided only that the processes of reorganization will result in real and not makeshift readjustments. No sacrifices of note need be asked for to preserve values that already have been long dead and whose burial is now merely a matter of the proper amenities of finance."

ECONOMIC VALUE V. VALUE FOR RATE-MAKING PURPOSES

The Commission has recognized that its values for rate-making purposes are the result of the arbitrary rule laid down by Congress in section 19 (a), and later made a part of the 1920 revision of section 15 (a). In many reports the Commission pointed out that values for rate-making purposes have little if any relationship to economic value. The Commission has disregarded value for rate making purposes when it passed on finance cases and was not bound by the rule in section 19 (a). To illustrate the point, the following comparisons between economic value and value for rate-making purposes are shown--both being Interstate Commerce Commission figures.

Ulster & Delaware Railroad, value for rate-making purposes, $6,468,019 (110 I. C. C. 335). Economic value, $2,500,000 (175 I. C. C. 65). The economic value represents 39 percent of the value for rate-making purposes.

Boyne City, Gaylord & Alpena Railroad was valued for rate-making purposes at $1,706,500 (119 I. C. C. 778). The economic value was fixed at $230,000 (180 I. C. C. 538). The economic value represents 14 percent of the rate-making value. Chicago, Attica & Southern was valued for rate-making purposes at $3,382,104 (— I. C. C. —). The economic value was $165,000 (187 I. C. C. 527), or 5 percent of the rate-making value.

The Southern Railway in Mississippi was valued for rate-making purposes at $4,470,534 (84 I. C. C. 253). The carrier claimed a value of $6,948,549, or 55 percent more than the Interstate Commerce Commission valuation. This line was voluntarily sold to the Columbus and Greenville Railroad for $35,000 (86 I. C. C. 153). The sale price was 0.08 percent of the Interstate Commerce Commission value and 0.05 percent of the value claimed by the railroad.

The Alabama, Birmingham & Atlantic Railroad was valued for rate-making purposes at $23,000,000. It was constructed in 1907 at a cost of about $33,000,000, as estimated by the Commission, and at a cost of about $40,000,000, as estimated by the carrier. Commissioner Porter, in a dissenting opinion, said that the economic value could not possibly be as much as $10,000,000 and he had this to say with respect to the unsoundness of the value for rate-making purposes:

"Sanction for the excessive finding of value is supposed to be found in the belief that it can do no harm and that its effect will be only to permit a carrier to earn on that value, if it can. *** The fact is that most of the benefits of a swollen rate base, accorded to the Atlanta, Birmingham & Atlantic, will go to other carriers in the Southern group. The 'rate base' or the 'base for fixing rates' for the Atlanta, Birmingham & Atlantic is not determined by the value of its property but by the value of all the carriers in the group. The excessive value in this case, of probably more than $10,000,000, increases the rate base not merely of the Atlanta, Birmingham & Atlantic but of all other carriers in the group. There is no possibility that the Atlanta, Birmingham & Atlantic will ever have a chance to get into the recapture class or to earn a return on as much as $10,000,000, and therefore its benefit from the swollen rate base would be only a trifle. The other carriers in the group whose rates will be increased by the excessive value assigned to the Atlanta, Birmingham & Atlantic will have their earnings increased by 5.75 percent on 10 or 15 million dollars, or perhaps 700 or 800 thousand dollars per year not because of their own value but because of the fictitious value assigned to the Atlanta, Birmingham & Atlantic. Thus in fixing