Mr. STEVENSON. The circuit court of appeals passed on the EschCummings Act and made a rather ridiculous decision; but I have no doubt he is more familiar with this than I am.

Mr. Cass. Mr. Congressman, I am quite familiar with that decision. Of course, under the transportation act, to extend a railroad you must first have the consent and approval, in the form of a certificate of convenience and necessity, from the Interstate Commerce Commission. In the section requiring the certificate from the commission is an exclusion clause, which excludes street railways, suburban and interurban electric railroads, unless operated as a part of a general steam railroad system of transportation.

The Piedmont & Northern was conceived and built as an interurban electric railroad. It was unfinished in the middle; I mean by that, that the two end sections were built, leaving a gap of substantially 50 miles in length in the middle; when the war came on, the Piedmont & Northern was taken under Federal control the same as all steam railroads were taken under-and, by the way, gentlemen, many electric-not many, but a number of electric railroads in this country were under Federal control the same as steam roads.

Following the war, the Piedmont & Northern decided that they wanted to build in this gap, making the railroad one whole railroad instead of two separate railroads, and they considered themselves as being an interurban electric railroad and decided to go ahead and build, without first having obtained the consent and permission of the Interstate Commerce Commission, believing themselves excluded by the exclusion language in the transportation act.

The commission heard that they were-the Interstate Commerce Commission heard that they were going to build an addition to that property, and notified them that they must apply to the commission for a certificate. This was an informal notification. They did apply to the commission for a certificate, not waiving, however, their right in respect of the exclusion language contained in section 1 of the interstate commerce act. The commission, after a long series of hearings, finally determined that they should not build the extension and would not issue the certificate. The Piedmont & Northern took the commission's decision to the courts and it went to the Supreme Court of the United States, where the Supreme Court said the question was moot; because, if the Piedmont & Northern was, in fact, excluded, as an interurban, it had the right to go ahead and build the extension without regard to the commission. It warned them, however, that it might be stopped by an injunction, and again the case would go to the Supreme Court.

Thereupon, they did start the construction of it. They were enjoined by the Interstate Commerce Commission, and the case is now pending, I think, in the circuit court of appeals; the district court having held that the Piedmont & Northern was not an interurban electric railroad, and thereby excluded by the language, but was a commercial electric railroad-some other kind of electric railroad, rather than the classes that were excluded; as a matter of fact, a kind of electric railroad that nobody had ever heard of until it was conceived by the commission.

I think that states the case.

Mr. STEVENSON. My recollection is that the circuit court of appeals has already acted, and it is in the Supreme Court of the United States now.

Mr. CASS. The last I knew of it, Mr. Congressman, it had not yet reached the Supreme Court.

Mr. STEVENSON. Well, it is now in the Supreme Court. It is right in my district; and that exception was put in it under my contention, as I tried to take care of that railroad at the time, and we had two hours' debate on the thing here in the House, and Mr. Esch said, "Now, just wait until in the morning and we will draw an amendment that will protect those railroads."

And he and I together prepared that amendment, and Mr. Esch himself moved to put it in, and it was put in, and that was the very road that we had in mind, although there were many others in the same situation.

Mr. CASS. You thought it was an interurban?

Mr. STEVENSON. Yes.

Mr. CASS. Of course, an interurban engaged in interstate commerce is substantially the same kind of railroad as a steam railroad. Mr. STRONG. Does this railroad handle freight?

Mr. CASS. One hundred thousand carloads a year is handled by the Piedmont & Northern.

Mr. STRONG. How long is it?

Mr. CASS. About 165 miles, all told.

The CHAIRMAN. Mr. Stevenson, when was that case decided by the circuit court of appeals?

Mr. STEVENSON. I do not know, but I learned the other day that the record had been filed in the United States Supreme Court.

Mr. STRONG. Do you have the same need for assistance under a bill of this kind as

Mr. CASS. Identically the same need as all rail transportation. We are equally affected by the present economic condition. I think it can be taken, without any question at all, that every rail carrier in the country engaged in interstate commerce is in exactly the same shape as any other rail carrier.

Mr. GOLDSBOROUGH. Do you care to express an opinion as to why only steam railroads were included in this?

Mr. CASS. I would not want to do that, Mr. Congressman. I have heard some things that have not been very pleasant, and I wanted to bring to the committee's attention really what they were doing to this great industry, if you utilize the words "steam railroad."

Mr. GOLDSBOROUGH. You see, Mr. Cass, my question seems to me is pertinent, because one of the things we have got to do, or have got to try to do, is to find out what the motivating force is back of the different provisions of the original bill presented to us; and it would help us a great deal in deciding what was going to be done with the money after it becomes available, to know the forces back of the legislation. That is the reason I asked you; it was not to be facetious at all.

Mr. Cass. I did not consider it facetious, Mr. Congressman. I merely did not want to repeat the matter that I had heard.

Mr. MCFADDEN. May I suggest, Mr. Chairman, that the witness has raised a very pertinent question. I am just wondering in that connection if it is not beyond taking care of the necessary needs here

possibly of the railroad consolidation, the control of the short lines, and the electric lines, and placing them in a forced position to come into the consolidation through the control of loans or advances.

I am not unmindful of the fact that in 1907, in the panic of 1907, when there was a great need for cash, and clearing-house certificates were resorted to, that in New York there was a special clearing-house committee which passed upon the securities that were issued as the basis of the clearing-house certificates; that there was a sifting out of the chaff, and only those securities were accepted for the clearinghouse certificates which the men who at that time controlled the situation wanted to accept. It had this result, that those securities that were not accepted were thrown out and were depreciated in value.

I am wondering whether, in the operation of this emergency institution, if these electric railroads and short-line roads might not be placed in an unfavorable position if they were not included and had the right to get relief under this bill that is proposed to the large

lines.

The CHAIRMAN. Mr. Cass had made a suggestion in that connection, that the inference to be drawn from the provisions of the bill, if applicable to one class of roads and exclusive of the other, might, in itself, have a detrimental effect upon the securities of the roads that are excluded.

Mr. MCFADDEN. I think that is exactly the question involved.

The CHAIRMAN. And that presents a matter, of course, that seems to me to be worthy of consideration in the hands of this committee, before we pass finally on that phase of the situation.

Mr. MCFADDEN. I do not wish to embarrass the witness, but inasmuch as this conversation has taken place here, is not that one of the fears of your organization?

Mr. CAss. Well, of course, Mr. Congressman, we can see real harm to our industry by the use of the words "steam railroads," direct harm, in that it singles out one kind of railroad in this country that is engaged in a certain kind of business, and endeavors to help it, and it leaves all of this other class of railroads, that are doing almost identically the same thing, but perhaps not to as great an extent, out on the doorstep in the cold.

I may say this: The language as used in the bill, "steam railroads engaged in interstate commerce," includes within its provisions between five and six hundred class 2 and class 3 steam roads.

You understand, I am not objecting to that at all; I think it is important that they be included; but I think it is equally important that electric railroads that are engaged in interstate commerce be also included; and the indirect effect of being left out, affirmatively left out, is just going to be a hard slap at our present outstanding securities as well as a refusal to give us any help, if we can qualify in the discretion of the board for help.

Mr. STEVENSON. I see there on page 22, lines 16 and 17, of the Senate amended bill, that they have amended it to make loans to or aid in financing temporarily the railroads engaged in interstate

commerce.

Mr. CASS. I presented the subject to the Senate subcommittee, and in that draft as reported to the Senate, which I understand is this

committee print S. 1-if this has been reported as the final report and it reported it without an amendment, it would read as Congressman Stevenson says, "the temporary financing of railroads engaged in interstate commerce." The word "steam has been eliminated.

Mr. BRAND. Would that amendment take care of your situation? Mr. Cass. Absolutely it would; yes, sir.

The CHAIRMAN. Well, I had purposed to suggest an amendment designed to accomplish the same result, when we reached the bill for amendment, in case it is the judgment of the committee that electric railways should be embraced in the legislation.

So far as I am concerned and my understanding of the matter is concerned, I should think it should be; but I have not consulted the other members of the committee as to what the judgment of the committee might finally be upon that point; but I had already determined in my own mind that that language should be clarified, if it is desired to include electric railways.

I think it would be well, as I suggested a moment ago, Mr. Cass, if you could make a statement in detail to the committee, and that you should include some statement as to the facts and figures, as you may see fit, setting forth the investments in these roads, and electric roads, and mileages, and so on, and such other data as should be included in it, in order that the rest of the matter may be better understood.

Mr. Cass. I know that. I have given you, Mr. Chairman, only round figures.

The CHAIRMAN. It occurred to me that you might desire to answer that; and if you do, you have the privilege of putting it in the record.

Mr. CASS. I might call the committee's attention to this fact: That the Interstate Commerce Commission issues an annual report from its bureau of statistics on electric railways reporting to the commission. That annual report is put out in the fall, about this time every year, and it contains about all of the information, I think, that the annual report with regard to steam railroads contains.

The CHAIRMAN. If you permit me to suggest, I would say it might be well for you to look over that report and see that there is added to your statement just the amount of those figures that are pertinent and desirable.

Mr. Cass. I will be very glad to do that.

The CHAIRMAN. And let it come in in connection with your statement.

Mr. HANCOCK. Mr. Cass, have the securities of the companies which you represent suffered to the same extent as the securities of the steam railroads?

Mr. CASS. Just exactly the same, Mr. Congressman.

Mr. HANCOCK. Are they held by the investing public largely?
Mr. CASS. Yes.

Mr. HANCOCK. Just in the same way that the securities of the steam railroads are held?

Mr. CASS. Yes; exactly the same, savings banks and the public. Mr. HANCOCK. And insurance companies?

Mr. CASS. Yes; and insurance companies.

Mr. STRONG. Are there any of your roads growing up to be called trunk lines, or are they all short lines?

Mr. Cass. I do not know. Most of the electric railroads reporting to the commission are class 2 and class 3 railroads. You see, there are about five or six hundred class 2 and class 3 steam railroads; but we do have a number of electric railroads reporting to the commission with several hundred miles of railroad, and I do not suppose they could be classed as trunk lines, like the New York Central and the Pennsylvania; but, for instance, the Illinois Traction Co. is an interstate railroad with five or six hundred miles of track in the State of Illinois.

Mr. STRONG. That is rather an interurban road?

Mr. CASS. That is a road that performs all classes of service.
Mr. STRONG. Is it narrow gauge?

Mr. CASS. No; it has standard cars and standard locomotives, standard railroad equipment, just as all the other steam railroads in Illinois. We have a railroad running from Cincinnati to Lake Erie called Cincinnati & Lake Erie, that is electric, and it has 300 miles of track with all electric equipment. We have quite a number of electric railroads reporting to the commission with more than 100 miles of track.

The CHAIRMAN. Mr. Cass, let me ask you if there are railroads engaged in interstate commerce that are operated otherwise than by steam or electricity?

Mr. CASS. Well, there are some class 2 and class 3 railroads in this country that are partially operated by steam and partially operated by gasoline motors. There are running on some of the trunk lines in this country to-day gasoline motor cars in the passenger service.

I do not like to raise a question, a technical question, in regard to this subject, but if you want to get into the technical end of what a steam railroad is-you raised, Mr. Congressman, yesterday a question as to what the Pennsylvania Railroad might be. Now, certainly the Pennsylvania Railroad, or its electrified section, is not operated by steam; it is an electric railroad on its electrified section. Whereas, the Long Island Railroad is largely an electric railroad. The West Jersey & Seashore is an electric railroad, and so on, the country over. So that you might well consider, if there is any question in your mind as to whether or not, if you leave this word "steam" in the bill, the electrified sections of these great trunk lines might be included in the provisions for steam roads. Certainly they are not steam railroads. They might be a part of the steam railroad company, but they are not steam railroads. There is the Milwaukee road in the West, with 600 miles of electric railroad, and yet it is also a steam railroad.

Mr. STEWART. And the Great Northern.

Mr. CASS. Yes; the Great Northern is the part owner of two or three exclusively electric railroads in the West.

The CHAIRMAN. Well, you would not infer that in framing this legislation, or in framing this bill, that it was assumed that only steam railroads would need relief attempted to be provided for by this bill.

Mr. CASS. Personally, I think that the word "steam" railroads was put in this bill in order to avoid the trouble of even considering the electric railroads in connection with the relief to be afforded.

The CHAIRMAN. Would it be your idea that they have been set apart to not share in the relief?