Commissioner AITCHISON. And dispatchers, telegraphers, and station employees. Senator CUMMINS. Who are directly connected with the movement of trains? Commissioner AITCHISON. Yes, sir. Senator CUMMINS. I want to call your attention to another subject. You have been connected, in a way, with the proceedings for the valuation of the railways for some time, have you not? Commissioner AITCHISON. Yes, sir. Senator CUMMINS. Since when, and in what capacity? Commissioner AITCHISON. I was first a member of the committee of the State Railway Commissioners appointed in November, 1915, which had to do generally with the Federal valuation, and I continued as a member of that committee until my nomination was sent in as a member of the Interstate Commerce Commission. From May until I was nominated as a member of the Interstate Commerce Commission, I was the legal representative of that committee of state railway commissioners in Washington, and kept in close touch with the work. Now I am a member of Division 1 of the Interstate Commerce Commission, which has administrative charge of the valuation work. Senator CUMMINS. In your opinion, how long would it be, if the commission were free to go along with the work, before they would arrive at a valuation of the railways of the country? Commissioner AITCHISON. I should answer that by saying it depends absolutely on the legal departments of the carriers, because they have it in their power to do as I am convinced they have in the past, delay the progress of the valuation work very materially. I do not say this a deliberate policy, but rather the effect of trying all these valuation proceedings as lawsuits. Senator CUMMINS. I am assuming that there would be the right kind of cooperation, either voluntary or involuntary. Senator POINDEXTER. I would like to understand that, briefly. How do the legal departments of the roads delay that work; how have they delayed the work of valuation? Commissioner AITCHISON. I think they have pressed their claims to an absurd extent. Questions have been argued, reargued and argued again before the commission, and it has only been recently that the commission has been able to get a case submitted. Senator POINDEXTER. Is not the procedure before the commission? Commissioner AITCHISON. Under the control of the commission, yes; but I was not on the commission then. Senator CUMMINS. Assuming that in the future there will be the right kind of cooperation and the utmost speed, how long will it be? Commissioner AITCHISON. Up to the present time the field work of inventorying has been done on approximately 150,000 miles of main line out of 250,000 miles of main line in the country. The commission is working now with approximately 60 field parties, and continuing with that number, by the 1st of January, 1920, the remaining 100,000 miles will be covered. This includes large carriers and small carriers. On many of the large roads the field work has been done now, but the result has not been put in the shape of tentative reports, for the reason that it has seemed that until the first cases were submitted and decided by the commission it would involve a waste of work and effort to put the results in the shape of tentative reports, which might have to be upset as the result of the decision of the commission on the first case. Of course, the roadway and the trackway parties do not have all the inventory work. There is somewhat of a lag there, which is taken up by the other people, as they come after the roadway party. The ability of the commission to complete its inventory work depends not solely upon the force which the Government can put in, but the valuation act requires the cooperation of the carriers, and the carriers must be relied upon to supply a large amount of data in the first instance from their own records, and therefore the ability of the carriers to do that to a certain extent measures the speed which the Government has been able to make, and can make. We could take all 60 parties and throw them onto the Pennsylvania system, but the trouble would be that the Pennsylvania Road would not be able to accommodate those parties and keep up its part of the undertaking which Congress has imposed upon it, to cooperate with the commission and furnish the information necessary to keep a large number of men at work. Senator CUMMINS. As I understand it, the commission has not rendered an opinion in reference to the valuation of any road, as yet? Commissioner AITCHISON. The three typical early roads were submitted about two weeks ago. Senator CUMMINS. Was an opinion rendered? Commissioner AITCHISON. No; they were submitted to the commission, and the reports are in preparation on those. Senator CUMMINS. The Bureau organized by the commission for the work, of which Judge Prouty is the head, has reported its conclusions with regard to certain roads? Commissioner AITCHISON. Yes, sir; and it has a large number of others that are in abeyance, awaiting something from the commission as to what should be included. Senator CUMMINS. I do not want to anticipate any opinion or decision of the commission, nor to ask you what your judgment is with regard to anything upon which you must finally pass as a member of the commission; but I would like to know your opinion, and that of the other members of the commission who are here, with respect to this question: Assuming that the principles which have been adopted by the committee on valuation, for which, of course, the commission is not responsible, shall be finally accepted by the commission, what will be the aggregate value of all the railroads in the country. Commissioner AITCHISON. I will have to ask to be excused from hazarding an answer to that question, not because of a desire to avoid an answer or for any of the reasons you suggested, but because I do not think any human being can tell at this time. Senator CUMMINS. I did not know but that in view of the fact that you had been familiar with the work of the valuation committee and have gone into the subject somewhat fully, that its work could be fairly projected to the end, and the outcome reasonably known. Senator TOWNSEND. Do I understand correctly, that this valuation is to be made of a certain date? Commissioner AITCHISON. It is being made as of different dates. The roads are being taken as of different periods. However, the prices applied so far and I am thinking of what the Bureau of Valuation has done, rather than the commission-the Bureau of Valuation has applied prices as of 1914, taking that as a normal price year; and the explanation made is that if it should be desired later to increase the cost values because of increases in prices of material and labor, that can be more readily done if the carriers are all on a common basis, than if part of their lines are on a basis of the 1917 figures and part of them on a basis of 1915 or 1914 figures. Senator TOWNSEND. So, that your final report will have to be brought down to the date of the report? Commissioner AITCHISON. The law contemplates that the valuation shall be kept up to date, and that can be done with the exception of fluctuations in the prices of material and labor by means of the additions and betterments accounts of the carriers, now kept in accordance with law and reported to us. We are getting that information right along. Senator CUMMINS. Confining my question to roads that have been reported upon by the committee on valuation, what is the relation of the report of the committee in reference to the valuation, as compared with the book value or investment account? Commissioner AITCHISON. Of course you have touched on the fundamental question as to whether the act contemplates that a single value shall be fixed or that the three costs and other values and elements of value shall be determined. Senator POINDEXTER. What do you mean by the three costs? Commissioner AITCHISON. The three costs are the reproduction cost new, the cost of reproduction less depreciation, and the original cost to date. Senator CUMMINS. The committee has adopted, with respect to all properties, unless it be real property, the view that it shall be the cost of reproduction, less depreciation, has it not? Commissioner AITCHISON. No, sir. The Bureau of Valuation has taken the view in the tentative reports made by it that it should report these three costs, what it finds as to other elements of valueand they have not found any yet-and stop at that, leaving the question as to which of these values shall be taken in the ordinary rate case or condemnation, capitalization, or the like, to be determined when the question arises. Senator CUMMINS. Now, can you furnish to the committee the report of the Bureau of Valuation, so far as the roads that are involved are included in that report? Commissioner AITCHISON. I can, but I think your question, in order to condense the record, will need modification. I take it you want the totals of the three costs rather than the voluminous valuation of each road. Senator CUMMINS. I think it will be better if you can furnish the total. Commissioner AITCHISON. Perhaps I can best do that by seeing that you are supplied with copies of the notices sent to the carriers. Senator CUMMINS. Those would show the totals in the case of each road, of the three bases that have been reported upon? Commissioner AITCHISON. Yes, sir. Senator CUMMINS. And these reports will also show or the notice will show the book value or the investment account as shown by the railroads? Commissioner AITCHISON. If they do not, that will appear in the accounting report, where the general balance sheet is set up, and I can get that figure and put it in for you. Senator CUMMINS. I wish you would furnish that. Senator KELLOGG. To what roads does that apply? Commissioner AITCHISON. That applies to the Texas Midland, the Atlanta, Birmingham & Atlantic, the Kansas City Southern System, the Winston-Salem Southbound, and the New Orleans, Texas & Mexico. The following statement contrasts the Mexico, and Elgin, Joliet & Eastern so-called book values or investment accounts of certain carriers with sums reported by the engineering and land sections of the Bureau of Valuation of the Interstate Commerce Commission, covering the reproduction cost, new, of road and equipment and the present value of lands as measured by the value of similar adjoining or adjacent lands. These figures are compiled by the Bureau of Valuation from the tentative reports made in the six cases mentioned. As the result of conference between the bureau and the carriers, certain joint recommendations have been made which will slightly increase the reproduction and land-value figures as reported and carried into the table, if the recommendations are accepted by the commission. Kansas City Southern Ry. Co. (including Texarkana & Fort Smith Ry. Co. Kansas City Southern subsidiaries (including Fort Smith & Van Buren Winston-Salem Southbound Ry. Co. New Orleans, Texas & Mexico R. R. Co... Total. 1,507, 729 $23,808, 772 $53,325,751 4,776,769 5,788, 710 2,748, 171 2, 155, 316 3,618,694 The foregoing statement does not show certain lands reported by the land section as noncarrier lands. In some cases these lands, or parts of them, are included in the investment account of the carrier, showing investment in road and equipment. The present value of these lands is reported by the land section as follows: Atlanta, Birmingham & Atlantic R. R. Co.. Georgia Terminal Co__‒‒‒ Alabama Terminal R. R. Co_-_. Texas Midland R. R.. Subsidiary companies named in preceding table. Kansas City Southern Ry. Co.. Winston-Salem Southbound Ry. Co--- New Orleans, Texas & Mexico R. R. Co- Elgin, Joliet & Eastern R. R. Co______ $145, 203 853, 811 166, 438 10, 342 132, 312 133, 369 105, 310 15, 759 524, 074 Chicago, Lake Shore & Eastern Ry. Co---.- 137,206 The classification of these lands as between carrier and noncarrier and the present values as reported will be changed somewhat if the joint recommendations of the Bureau of Valuation and the carriers are accepted in certain of the cases mentioned. Senator KELLOGG. Do you consider those roads fairly representative of the railroads of the United States? Commissioner AITCHISON. Oh, no. Senator KELLOGG. Then they would not give us any idea at all of what the other roads would be worth? Commissioner AITCHISON. The Kansas City Southern is the most representative and the Winston-Salem Southbound is the most recently constructed. Senator KELLOGG. But you do not consider them fairly representative of the main mileage of the United States? Commissioner AITCHISON. Not of the class 1 roads, although some of them are class 1 roads. Senator KELLOGG. The class 1 roads include 97 per cent of the roads? Commissioner AITCHISON. Yes. Senator KELLOGG. Then we could not form much of an idea as to the value of the railroads from those on which you have completed the valuation? Commissioner AITCHISON. Not from those concerning which tentative reports have been given. Senator POINDEXTER. And do these reports include as one of the items the original cost? Commissioner AITCHISON. Where that is obtainable. Senator CUMMINS. Your reports will show the book value or the investment accounts of all the railroads, will they not? Commissioner AITCHISON. Yes, sir. Senator CUMMINS. That is, your annual reports? Commissioner AITCHISON. Yes, sir. May I be permitted to say this, in connection with your question as to the time when the valuation will be completed: Manifestly a different question will be presented as to procedure and time if the work which the Bureau of Valuation is doing is to be used for Government purposes in a condemnation suit. Section 19a of the act to regulate commerce provides that the result shall be prima facie evidence in proceedings before the commission and in actions in court arising out of the act to regulate commerce. That manifestly does not include condemnation cases, and consequently it would require legislation to make the findings of the commission prima facie evidence in condemnation cases. But on the other hand, if the work of the Bureau of Valuation were desired by the Government, so that our experts would be called as witnesses on behalf of the Government by the United States district attorney who might be trying the case, manifestly much of this delay I spoke about in getting submissions in cases tried as lawsuits would be entirely avoided, and much of the report writing and the service of notices and the filing of protests and the taking of testimony on the exceptions would be done in court in the first instance rather than before the commission. Senator CUMMINS. The whole point of my inquiry is this: Assume we had to ascertain as nearly as we could the value of the use of all the railroad property in the United States, how soon could we expect |