INVESTIGATION OF FEDERAL REGULATION OF POWER

TUESDAY, FEBRUARY 18, 1930

UNITED STATES SENATE,

COMMITTEE ON INTERSTATE COMMERCE,

Washington, D. C.

The committee met at 10 o'clock a. m., pursuant to call, in room 416, Senate Office Building, Senator James Couzens (chairman) presiding. Present: Senators Couzens (chairman), Metcalf, Brookhart, Glenn, Kean, Pine, Dill, Wheeler, and Wagner.

Present also: William C. Green, special counsel to the committee. The CHAIRMAN. The committee will come to order, please. (Senate Resolution No. 80, which was referred to the Committee on Interstate Commerce, is here printed in full, as follows:)

[S. Res. 80, Seventy-first Congress, first session]

Resolved, That the Committee on Interstate Commerce, or any duly authorized subcommittee thereof, is hereby authorized and directed to (1) investigate the relationship existing between the different kinds of communication services used in interstate and foreign commerce, including radio, telephone, telegraph, and all kinds of wireless and cable services so used, and transmission of power by wire or wireless; (2) to investigate the connection, relationship, and ownership and control of corporations and persons engaged in carrying on interstate and foreign communication services and to investigate their trade practices and trade activities, including contracts and stock ownership; and (3) to investigate any and all other connections, relationships, and activities of persons or corporations engaged in interstate and foreign communications by either wire or wireless, as the committee may deem necessary.

The committee is hereby authorized and directed to make the aforesaid investigations for the purpose of reporting legislation to the Senate for the purpose of controlling and regulating interstate and foreign commerce by radio, telephone, telegraph, and/or any or all other form or forms of communication or transmission of power by either wire or wireless.

For the purposes of this resolution the committee, or any duly authorized subcommittee thereof, is authorized to hold hearings, to sit and act at such times and places during the sessions and recesses of the Senate until the final report is submitted, to employ such clerical and other assistants, to require by subpoena or otherwise the attendance of such witnesses and the production of such books, papers, and documents, to administer such oaths, and to take such testimony and make such expenditures as it deems advisable. Every person who, having been summoned as a witness by authority of said committee or any subcommittee thereof, willfully makes default or who, having appeared, refuses to answer any question pertinent to the investigation herein authorized shall be liable to the penalties provided by section 102 of the Revised Statutes of the United States. The cost of stenographic services to report such hearings shall not be in excess of 25 cents per hundred words. The expenses of the committee or subcommittee, which shall not exceed $15,000, shall be paid from the contingent fund of the Senate upon vouchers approved by the chairman.

The committee, on January 11, passed the following resolution: Resolved, That the chairman of this committee request the individual members of the Federal Power Commission to forthwith furnish to this committee copies of all memoranda and opinions sent directly to them by the secretary, solicitor, 1

general counsel, assistant general counsel, and chief accountant of the commission since June 1, 1929.

Further resolved, That the chairman of this committee request the secretary of the Federal Power Commission to forthwith furnish to this committee copies of all memoranda and opinions from the general counsel, assistant general counsel, solicitor, and chief accountant of said commission, and from such secretary to the persons last referred to, since June 1, 1929.

I wrote the Federal Power Commission as instructed, and on January 24, the Secretary of War wrote a letter to the chairman, in which he said:

Agreeable with the promise in my letter of January 17, there are transmitted herewith the data requested by the resolution of the Interstate Commerce Committee, quoted in your letter of January 11.

We are anxious to render all the constructive aid possible to the committee in its consideration of Senate bill 6, and a careful search has been made of the records of the commission in the endeavor to provide all the information contemplated by the resolution. The only papers withheld consist of several memoranda of a confidential nature pertaining to cases now under consideration by the commission. If these should be made public before such cases are concluded, the public interest would be seriously affected.

The documents referred to are here on the table and were received at the time the Secretary of War said he would send them, and during the interim the counsel for the committee, Mr. Green, has gone carefully over the papers and has made a memorandum of what he finds among the papers which he thinks would be of interest to the comHe has addressed a communication to the chairman making his comments, copies of which have been handed around to a few of the Senators, because we had only one taken off, but the Senators may look at these.

As a result of this we thought we would start these hearings by having the general counsel, Mr. Russell, here to testify. We only subpoenaed Mr. Russell at this time because we did not know how long it would take to dispose of his testimony, and we have notified the other members of the Power Commission staff that they might be present to-day and that at a later date we would subpoena them to testify. When we get through with Mr. Russell we will have the other members of the staff referred to in these communications here. The chairman has received another letter from the Secretary of War, dated January 30, 1930, reading as follows:

In response to Mr. Green's telephonic request to the commission's office you are advised that the confidential memoranda, mentioned in my letter of January 24, pertain to applications for the Flathead and Cumberland Falls sites in Montana and Kentucky, respectively, and to personal matters.

Senator DILL. What is there about all these data that is so confidential, affecting a power site? I am interested in this.

The CHAIRMAN. You can question the staff down there regarding that, because the chairman has no information on it.

Senator DILL. We ought to have the staff up here.

The CHAIRMAN. We will have it up here if the committee will be patient.

Senator WHEELER. Let me say this to the committee, that the chairman of the Indian Committee sent down for certain copies of files, and they sent them up with a ban of secrecy. So far as I am concerned, they are public records and they should be public records, and there was not anything in them that could possibly interfere, in my judgment, with the exercise by the Power Commission of their

functions or that would in the slightest degree be against public interest by letting them be known. They held public hearings upon this Flathead proposition for weeks.

Senator DILL. What I can not understand is the view of this body which is charged with leasing the public domain that it wants to keep secret the basis on which leases are made after they are made. The CHAIRMAN. The Senators will have plenty of opportunity to question the staff, because I made the statement that all of the employees down there, starting with the solicitor, the assistant solicitor, the auditor, and the secretary and all are going to follow Mr. Russell; and if the committee desires to have Mr. Hurley here, who wrote these letters, the committee, of course, can have him.

Senator WHEELER. Let me say, in fairness to the Secretary of War, that he is just simply following precedent set by his predecessor. The CHAIRMAN. Is Mr. Russell here?

Mr. RUSSELL. Yes, sir.

The CHAIRMAN. Please be sworn.

(The witness was duly sworn by the chairman of the committee.) TESTIMONY OF CHARLES A RUSSELL, SOLICITOR, FEDERAL POWER COMMISSION, WASHINGTON, D. C.

The CHAIRMAN. Please give the reporter your full name, address, and occupation.

Mr. RUSSELL. Charles A. Russell; I am at present solicitor for the Federal Power Commission, residing in Washington, D. C., temporarily.

The CHAIRMAN. It might help the committee, Mr. Russell, if you would tell us just what your past experience has been with the Government.

Mr. RUSSELL. To simplify the matter and possibly to shorten it, Senator, I have here a copy of my application to the Federal Power Commission at the time I was appointed, which contains a complete statement of my experience in public-utility work, attached to which are letters from the judges of the Supreme Court of Montana and other jurisdictions and letters from the chairman of the Interstate Commerce Commission and from the assistant solicitor under whom I was employed in the Interstate Commerce Commission, and I would be very glad to offer that, if you care to have it, as a part of the statement of my experience and qualifications and the recommendations

The CHAIRMAN. I think it might simplify the matter if you would read your application to the Federal Power Commission, and we will consider the others later. They seem to be rather voluminous. Mr. RUSSELL. Do you want me to read the whole application? The CHAIRMAN. Yes; just your application.

Mr. RUSSELL. The application is dated January 19, 1929, addressed to Mr. O. C. Merrill, executive secretary, Federal Power Commission, Washington, D. C., and reads as follows:

DEAR MR. MERRILL: Supplementing conversation had with you yesterday, with reference to the position of chief counsel to the Federal Power Commission, I am submitting herewith in support of my application, information that you suggested be given you.

I graduated from the Illinois College of Law in 1901 and for a few years subsequent was employed by established law firms in the general practice in Wisconsin. During that time I became interested in the regulation of public utilities and

delivered many speeches on the regulation of public utilities and advocated the valuation of such utilities as a basis of establishing rates for service. This was in 1902 to 1905.

In 1905 I was appointed city statistician of the city of Superior, Wis., the duties of which were to advise the common council and city officials of the activities of the public utilities of the city, particularly with reference to gas, water, electric, and telephone matters. Later this work involved the regulation of street-car utilities and establishment of rates thereon. In addition to those duties, I was in charge of a traffic bureau performing the usual services in that connection, but more particularly directed to a comparison of freight rates, public utilities rates, railroad rates, and other matters throughout the United States. During that time the Wisconsin Legislature passed the first railroad regulation legislation and I had a part in the preparation of the bill that was finally passed in 1905. In 1907 I took part in the preparation of the bill for the regulation of all the utilities of the State of Wisconsin, the duties of which were turned over to the railroad and warehouse commission, the chairman of which, during the greater portion of that time was Mr. B. H. Meyer who now is and has been a member of the Interstate Commerce Commission since 1911.

In 1908 I returned to private practice and from then until 1915 I was engaged quite extensively in appearances before the Wisconsin commission and the Minnesota commission, involving matters of regulation of public utilities, particularly with reference to gas, water, electric, and telephone utilities. I also appeared in a number of cases relating to railroad applications for certificates of necessity and convenience and actually tried a great many cases on the question of condemnation of property for public use. During that time I also appeared as special counsel to a legislative committee investigating the relation of the railroads to the elevators and an investigation of the handling and distribution of farm products. During the year 1914, I was also employed by the municipalities of the State of Minnesota in the proceeding involving the establishment of taxes to be paid upon iron ores in the State of Minnesota that involved valuation of minerals and the transportation of such minerals to the point of use or manufacture.

In 1913 and 1914 I lectured in a number of cities of the central Northwest on the regulation and control of public utilities and while my speeches on these subjects were largely printed by the newspapers at that time I never thought them of sufficient importance to retain copies.

In 1911 and 1912 became interested as attorney for different interests who had purchased lands in the arid west under irrigation projects that resulted in many appearances before the courts of Montana on such irrigation matters, the result of which was that in 1915 I permanently moved to Montana and established my residence at Missoula.

During the next 10 years in my private practice, I appeared in a great many cases involving regulation of public utilities and in many more instances litigation involving water rights, power rights, condemnation proceedings relating to the same, and was called into nearly every case in that territory involving public utility regulation.

During the years from 1908 to 1925 I practiced before the State courts of Wisconsin, Minnesots, and Montana. I also prepared, tried, argued, and presented cases in the Federal courts of those States as well as the States of Iowa, North Dakota and Idaho. This litigation involved appeals to the appellant courts of the United States and as a result, I prepared such appeals and argued numerous cases before the circuit courts of appeal of the eighth and ninth circuits and also prepared appeals from those courts to the United States Supreme Court. None of the latter, however, involved public utility_regulation.

In 1923 I suffered a long period of illness. Upon my recovery during the next year I found my law practice had been demolished, and due to the financial condition of the State of Montana at that time, I lost everything I had and was required to seek another location and begin anew.

In the spring of 1925 I was solicited to apply to the Interstate Commerce Commission as an expert on the valuation of railroads. As a result of that application I was, in the month of July, appointed attorney for the Interstate Commerce Commission for that purpose.

Senator WHEELER. What year was that?

Mr. RUSSELL. 1925.

I was inducted into the Federal service on the 17th day of August, 1925, in the P-4 grade under civil service regulations.

In 1926 I was advanced to senior attorney and in 1927 my salary was increasde in that grade, and in 1928 was advanced to principal attorney, which position I now hold at a salary of $6,000 per year.

During my service of three and a half years with the Interstate Commerce Commission I have been continually engaged in the trial of valuation and recapture cases. Among the cases assigned to me were the Lehigh Valley, Central Railroad of New Jersey, the Wheeling & Lake Erie, the Sioux Lines, the Northern Pacific Railroad Co., the Southern Pacific Co., the Mississippi Central, the Baltimore & Ohio, and many other smaller roads.

I recently completed the valuation hearing of the Southern Pacific Co. and am now preparing a brief for the Bureau of Valuation in that case. I am also assigned charge of the valuation of the Baltimore & Ohio Railroad, the hearing upon which begins next Monday, the 21st. I have also been assigned as counselor in the valuation of the Western Union Telegraph Co., testimony regarding which valuation has been on before the commission for nine weeks subsequent to October 8 and is now in adjournment.

Necessarily, in all of the work that I have had to do with reference to the valuation of public utilities, I have absorbed a great deal of the engineering and accounting difficulties met in the solving of these problems, and, as to how well I have absorbed that information can best be expressed by those who are my superiors in the Interstate Commerce Commission.

My application with the Civil Service Commission carries with it copies of numerous briefs prepared by me during my practice in Montana, and should you care to examine them I imagine the Civil Service Commission can furnish them to you.

In all of this work I have always been attorney for the municipalities involved or individuals representing the public and in no instance have I ever appeared for any public utility corporation, according to my best recollection.

In other words, my views are the Government's views of every question, and while I have had offers to go into private practice since coming to Washington, to take up the side of the corporations, I have so far refused such employment because of the fact it is rather late in life for me to change those views and I would prefer to remain in the Government service if the salary inducements are such as to enable me to do so.

I am attaching hereto copies of letters written by members of the Supreme Court of Montana, one district judge, and one attorney. These letters are on file in Mr. Commissioner Lewis's office and I have no doubt but what you will be permitted to examine them.

I might suggest, that in order to inform yourself of the work that I have been doing since coming to the commission that inquiry be directed to Mr. Commissioner E. I. Lewis; Mr. C. F. Staples, director of valuation; Mr. O. E. Sweet, assistant general solicitor; and to Mr. C. C. Witt, supervising engineer.

I should also add that the work I now have in charge for the commission can and will be completed by July 1. I know that before that time there will be other work assigned to me unless I inform them of intended resignation and, therefore, in justice to the commission, I would appreciate knowing as early as possible if this application is considered. The question of salary is, of course, important. I would not feel like leaving my present employment for other work at the same salary. I appreciate that in the Power Commission's present situation that no considerable increase can be expected at once, and therefore, with the expectancy of additional compensation commensurate with the duties performed, I am willing to make the change at such increase at the present time as can be legitimately made, all of which is done with the further expectation that if assigned to this position, it is my intention to permanently remain in that position, for the reasons already stated.

Yours respectfully,

CHARLES A. RUSSELL.

The CHAIRMAN. Senator Wheeler, you may ask Mr. Russell, if you choose, what he knows about this private memoranda.

Senator WHEELER. Do you know what these private memoranda consist of?

Mr. RUSSELL. I do not, no; I had nothing to do with the preparation of it, and I would not know anything about it.

Senator WHEELER. There are files in connection with the application filed by the Rocky Mountain Power Co.