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struction implicates one of the recurring phases of our federalism and involves striking a balance between national and state authority in one of the most sensitive areas of government.

To be sure, in recent years Congress has from time to time exercised authority over purely intrastate activities of an interstate carrier when, in the judgment of Congress, an interstate carrier constituted, as a matter of economic fact, a single organism and could not effectively be regulated as to some of its interstate phases without drawing local business within the regulated sphere.* But such absorption of state authority is a delicate exercise of legislative policy in achieving a wise accommodation between the needs of central control and the lively maintenance of local institutions.5 Therefore, in construing legislation this court has disfavored inroads by implication on state authority and resolutely confined restrictions upon the traditional power of states to regulate their local transportation to the plain mandate of Congress. Minnesota Rate Cases, 230 U. S. 352; cf. Kelly v. Washington ex rel. Foss Co., 302 U. S. 1.

The dependence of local communities on local railroad services has for decades placed control over their curtailment within the regulatory authorities of the states."

'E. g., The Shreveport Cases, 234 U. S. 342; Railroad Comm'n of Wisconsin v. Chicago, B. & Q. R. Co., 257 U. S. 563. See I Sharfman, "The Interstate Commerce Commission," pp. 82-86, 219–225. For the careful observance of state interests in applying the Shreveport doctrine, see Illinois Central R. Co. v. Public Utilities Comm'n, 245 U. S. 493 and Florida v. United States, 282 U. S. 194.

'See Clark, "The Rise of a New Federalism," passim.

The controlling Massachusetts statute has been in force since 1911. But Massachusetts has exercised control over its railroads through administrative machinery ever since the famous Adams Commission in 1869. See First Annual Report, Board of Railroad Commissioners of Massachusetts, Public Document No. 40, pp. 3-12 (1870); Hadley, "Railroad Transportation" (1885 ed.) pp. 136-139.

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Even when the Transportation Act in 1920 gave the Interstate Commerce Commission power to permit abandonment of local lines when the over-riding interests of interstate commerce required it, Colorado v. United States, 271 U. S. 153,' this was not deemed to confer upon the Commission jurisdiction over curtailments of service and partial discontinuances. Public Convenience Application of Kansas City Southern Ry., 94 I. C. C. 691; see Proposed Abandonment, Morris & Essex Co., 175 I. C. C. 49. If this old and familiar power of the states was withdrawn when Congress gave district courts bankruptcy powers over railroads, we ought to find language fitting for so drastic a change.

We are asked to find it in § 77 (a) granting to the bankruptcy court "exclusive jurisdiction of the debtor and its property wherever located," and in § 77 (c) (2) permitting the trustees, subject to the court's control, "to operate the business of the debtor." In order to expedite the reorganization of insolvent railroads, such broad and general provisions doubtless suffice to confer

9

'For illustration of the scrupulous regard for local authority and local interests shown by the Commission in the exercise of its control over abandonments, see II Sharfman, "The Interstate Commerce Commission," pp. 264-269.

'Section 77 (a), 47 Stat. 1474, as amended in 1935 by 49 Stat. 911, 11 U. S. C. § 205 (a) provides so far as here relevant: "If the petition is so approved, the court in which such order is entered shall, during the pendency of the proceedings under this section and for the purposes thereof, have exclusive jurisdiction of the debtor and its property wherever located, and shall have and may exercise in addition to the powers conferred by this section all the powers, not inconsistent with this section, which a Federal court would have had if it had appointed a receiver in equity of the property of the debtor for any purpose."

"The trustee or trustees so appointed . . . shall have . . . subject to the control of the judge and the jurisdiction of the Commission as provided... the power to operate the business of the debtor." § 77 (c) (2), 47 Stat. 1475, as amended by 49 Stat. 914-15, 11 U. S. C. § 205 (c) (2).

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upon the district courts power appropriate for adjusting property rights in the railroad debtor's estate and, as to such rights, beyond that in ordinary bankruptcy proceedings. Cf. Continental Bank v. Chicago, R. I. & P. Ry. Co., 294 U. S. 648. But the District Court claimed power over the carrier's relation to the state. It has become the settled social policy both of the states and the nation to entrust the type of public interest here in question to expert administrative agencies because of "the notion," as Judge Learned Hand pointed out below, "that a judge is not qualified for such duties." 10

Not only is there no specific grant of the power which the District Court exercised, but the historic background of 77, the considerations governing Congress in its enactment, and the scheme of the legislation as disclosed by its specific provisions reject the claim. Until the amendment of March 3, 1933, railroads were outside the Bankruptcy Act." But the long history of federal railroad receiverships, with the conflicts they frequently engendered between the federal courts and the public, left an enduring conviction that a railroad was not like an ordinary insolvent estate. Also an insolvent railroad, it was realized, required the oversight of agencies specially charged with the public interest represented by the transportation system. Indeed, when, in the depth of

10 See Converse v. Massachusetts, 101 F. 2d 48, at 51. "See H. Rep. No. 1897, 72d Congress, 2d Session, p. 5.

"See Chapter XXII "Railroad Receiverships" in I Gresham, "The Life of Walter Quintin Gresham," pp. 366-378; Jacobs "The Interstate Commerce Commission and Interstate Railroad Reorganizations," 45 Harv. L. Rev. 855; Lowenthal "The Investor Pays." See also remarks by Senator Wheeler, as Chairman of the Committee on Interstate Commerce, introducing the amendment of 1935, 79 Cong. Rec., Pt. 13, p. 13764.

79

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the depression, legislation was deemed urgent to meet the grave crisis confronting the railroads, there was a strong sentiment in Congress to withdraw from the courts control over insolvent railroads and lodge it with the Interstate Commerce Commission.13 Congress stopped short of this remedy. But the whole scheme of § 77 leaves no doubt that Congress did not mean to grant to the district courts the same scope as to bankrupt roads that they may have in dealing with other bankrupt estates.

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The judicial process in bankruptcy proceedings under § 77 is, as it were, brigaded with the administrative process of the Commission. From the requirement of ratification by the Commission of the trustees appointed by the court to the Commission's approval of the court's plan of reorganization the authority of the court is intertwined. with that of the Commission." Thus, in § 77 (c) and

13

See 76 Cong. Rec., Pt. 5, p. 5358 (remarks of Representative LaGuardia): "I would like to see the entire reorganization taken from the courts and placed in the Interstate Commerce Commission." The suggestion for administrative receiverships originated with the late Chief Justice Taft, when Circuit Judge, in an address before the American Bar Association. Taft, "Recent Criticism of the Federal Judiciary," Reports of the American Bar Association (1895) 237, 264.

14

Section 77 (c) (1) requires the appointment of trustees to be ratified by the Commission; § 77 (c) (2) gives the Commission supervision over the compensation paid to trustees and their counsel; § 77 (c) (3) permits the issuance of trustees' certificates only with the Commission's approval; § 77 (c) (9) permits the Commission, on request of the court, to investigate facts pertaining to mismanagement of the debtor; § 77 (c) (10) empowers the Commission to set up accounts for the allocation of earnings among the various portions of the debtor's lines; § 77 (c) (11) empowers the Commission to file reports as to the debtor's property, prospective earnings, etc., and gives to the facts stated in such reports a presumption of correctness; § 77 (c) (12) gives the Commission supervision over allowances for the expenses of

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§ 77 (0) the power of the district courts to permit abandonments is specifically conditioned on authorization of such abandonments by the Commission. In view of the judicial history of railroad receiverships and the extent to which § 77 made judicial action dependent on approval by the Interstate Commerce Commission, it would violate the traditional respect of Congress for local interests and for the administrative process to imply power in a single judge to disregard state law over local activities of a carrier the governance of which Congress has withheld even from the Interstate Commerce Commission, except as part of a complete plan of reorganization for an insolvent road.15 About a fourth of the railroad mileage of

various parties in interest in connection with the reorganization proceedings; §§ 77 (d) and 77 (e) give to the Commission control over any proposed plan of reorganization; § 77 (p) gives to the Commission control over the solicitation of proxies or deposit agreements.

See also H. Rep. No. 1897, 72d Congress, 2d Session, pp. 5-6; H. Rep. No. 1283, 74th Congress, 1st Session, pp. 3-5; 3. Rep. No. 1336, 74th Cong., 1st Session, pp. 4-6; Report, Federal Coordinator of Transportation, 1934, H. Doc. No. 89, 74th Cong., 1st Session, pp. 100101; 76 Cong. Rec., Pt. 5, pp. 5108-5110; 79 Cong. Rec., Pt. 12, p. 13301, Pt. 13, pp. 13764, 13767.

15 "Upon confirmation of the plan, the debtor and any other corporation or corporations organized or to be organized for the purpose of carrying out the plan, shall have full power and authority to, and shali put into effect and carry out the plan and the orders of the judge relative thereto... the laws of any State or the decision or order of any State authority to the contrary notwithstanding." § 77 (f).

The records of the Interstate Commerce Commission disclose that eight plans of reorganization have thus far been filed with the District Court in the New Haven proceedings and transmitted to the Interstate Commerce Commission. Proceedings before the Commission had progressed to the point where an examiner's report was filed; but the report was withdrawn for further hearings. The present record fails to show what, if any, disposition of the Old Colony lines any of these plans proposed to make.