We have been authorized under the Second World War Act to grant without formal hearing the applications to start new operations and those are being handled at the rate of about 350 a month. The bulk of them are trucks, but we have had to do it.

Mr. CASE. You say busses and trucks. Does the same policy apply as to bus transportation?

Mr. ROGERS. Yes. With the decline of passenger-car transportation the for-hire transportation facilities have been called upon to carry heavier traffic.

LOCOMOTIVE ACCIDENTS

Mr. ROGERS. In regard to locomotive accidents, I think a very important factor to be borne in mind is that over the last 20 years the number of locomotives decreased even as the accidents decreased. About 20 years ago we had about 70,000 locomotives-at one time about 71.000-and every one of them going. That is now down below 50.000. Of course, the locomotives have been increased in size.

Mr. MAHAFFIE. Going back to page 94 of our annual report, I noticed this information is given by percentages, showing the in

crease

Mr. CASE. That is, in percentages?

Mr. MAHAFFIE. Relative increase in the percentage for the year 1942 as against 1941.

On locomotives, the increase in 1942 over 1941 you have 45.1 percent in locomotive accidents.

OVERTIME AND HOURLY BASIS PAY OF EMPLOYEES

(See p. 104)

Mr. CASE. Going back to the salary increases made: You have been operating on the 40-hour-week basis?

Mr. MAHAFFIE. We have been on a 44-hour-week basis, I think, since last summer.

Mr. CASE. You went on 44 hours; were the 4 hours overtime? Mr. MAHAFFIE. No.

Mr. CASE. That was straight time?

Mr. MAHAFFE. Yes.

Mr. CASE. What is the explanation of the change in the salary expenditures? If my figures are correct, in an increase from 40 to 48 hours that would mean an increase of one-fifth or 20 percent in time.

Mr. BARTEL. I think that is correct.

Mr. CASE. To increase the salary pay roll for time and a half, for additional eight hours would be 12 hours or an increase of 30 percent over the 40-hour pay requirement. In other words, the estimated increase of $1,000,000 for salary requirements due to the salary pay bill would mean that the base salaries would be $3.333.000. In other words, an increase of $1,000,000 is on the basis, $3,333,000, which is something less than half your total salary expenditures. Mr. MAHAFFIE. You have in mind, of course, Congressman, that the increased pay goes only to the people getting less than $2,900. Mr. CASE. No; less than $5,000.

Mr. MAHAFFIE. Yes.

Mr. CASE. Less than $5,000, but not to exceed $5,000.
Mr. MAHAFFIE. Yes.

Mr. CASE. The point I was leading up to was this: What is the value of this increase if it is not accompanied by a decrease in the number of persons? Is the work increasing so you need that number?

Mr. BARTEL. That is the matter we are now giving consideration in connection with a questionnaire which the Budget put out, and this entire matter is being given study.

Mr. CASE. In the report could it be suggested to them the decrease or increase in personnel be offset in the increased time?

Mr. BARTEL. Yes; the questionnaire contemplates that. It is partially offset; that is, mainly what they have in mind to try to determine to what extent it will be offset by a reduction in personnel.

Mr. CASE. If you are able to accomplish a reduction in personnel, then that will reduce your estimates an additional $1,000,000 for additional salary requirements?

Mr. BARTEL. If it results in reducing personnel, that would be true. Mr. CASE. Do you think that the additional 8 hours will not result in reduction of personnel?

Mr. BARTEL. We have so many vacancies in our organization at the present time that we are having difficulty in filling them, and there is not only the question of the difficulty of filling the positions but there is also the promotions which must be made under the Ramspeck bill for which there is no provision made in the estimates submitted to the Congress by the Budget except in connection with inspection and safety.

Mr. CASE. What about your salary estimates for personal services; does that take into consideration promotions?

Mr. BARTEL. Any increases or promotions have to be absorbed. Mr. CASE. Or made up through lapses?

Mr. BARTEL. They will have to be taken care of out of lapses.

Mr. ROGERS. I think one point that should be born in mind is the amount of overtime we have been putting in.

Mr. FITZPATRICK. And the personnel did not receive any compensation for overtime in the past.

Mr. ROGERS. No, and we put in over 100,000 hours.

Mr. FITZPATRICK. If you had not put in the overtime, you would have had to increase your personnel to do the work. Mr. ROGERS. That is right.

BUREAU OF VALUATION

(See p. 98)

Mr. CASE. With respect to the Bureau of Valuation, I noticed the proposal carried in the Budget is the same exactly as it was last year; there is a slight increase over the 1942 fiscal year. The work on the original valuation of property was completed some time ago, was it not?

Mr. MILLER. I might say, Mr. Chairman, that I have prepared a statement and I believe this is a good point to offer it, which is

supplementary to the secretary's statement and is also supplementary to the statement I made last year, found on page 105 in the hearing before the Subcommittee on Appropriations in the hearings of December 11, 1941, and I want to point out the desire in this statement is particularly to call attention to the amount of war work we are doing, which does throw our work on keeping the valuations up to date further back. For example, we have done a lot of work for the Maritime Commission, for the Army and the Navy, and we are saving the Government a lot of money with our work, but that is putting our regular work back considerably. I think that is the question you have in mind.

Mr. WOODRUM. You would like to put the statement in the record? Mr. MILLER. Yes; I would like to make this statement a part of the record.

Mr. WOODRUM. It may be included in the record. (The statement referred to follows:)

The recommendation of the Director of the Budget for the appropriation for the Bureau of Valuation is $649.000 for the fiscal year 1944. The appropriation for this year, 1943, is $649,927.

I am here to support the need of the recommended appropriation and to give you every assurance that we need every dollar of it.

War work. and reduced appropriations in recent years, are making the Bureau's condition critical now. Our staff in the last 12 years has been reduced from more than 900 to less than 200 persons. Our key technicians and much of our staff are crowded with war work.

They are saving the Nation far more than the appropriation here under consideration.

The bureau is an active "war agency."

First: The regular work of the Bureau:

The appropriations for carrying on the valuation of railroads, pipe lines, and allied common carriers subject to the act, and keeping the property records, inventories, data, and information as near current as possible with the staff permitted by appropriations during the past decade, have been as follows:

Congress (Sec. 19a (b) fifth (f)) requires the Commission to keep informed of all changes in cost, investment, condition, use, classification, ownership, etc., constantly going on in the more than 20 billion dollar railroad and pipe-line properties to which the Valuation Act applies, and which require the Commission to "have available at all times the information deemed by it to be necessary to revise and correct its previous inventories, classifications, and values." The Bureau of Valuation is the Commission's administrative organization for this work. To meet the mandate "to have available at all times" the information designated by law. the Bureau has evolved a system of continous records and inventories which are designed to enable it to introduce, without delay, valuation exhibits, data, and information in the various cases coming before it.

Such valuation records and exhibits, and the testimony based on them, must be of approximate currency for practical uses and to carry probative weight. They must carry the assurance of integrity, that is, they must be properly policed and checked; otherwise they are vulnerable to attack. The door is open for error when, to bridge periods for which the checked records of property changes are not available, the Bureau has to have recourse to unchecked reports and the routine annual reports of the carriers, and bridge such gaps by "statements of money changes."

Exhibits are introduced in various sorts of proceedings before the Commission. Among them are rate and cost analyses cases; divisions of switching and terminal-charge adjustments; joint rail and barge rate adjustments; reorganization of carriers involved in, or coming out of, bankrutcy or receivership; furnishing original cost bases for opening of books of reorganization of new companies; adjusting deficit settlements with carriers under section 204; making studies of maintenance and depreciation; adjusting oil gathering charges and trunk line transportation rates by pipe lines, etc.

The valuation exhibits and testimony referred to above generally present lump-sum figures. The work necessary to produce them does not reduce the procedures necessary in connection with determining costs, values, etc., broken down by primary accounts as referred to hereafter.

We should keep approximately current in posting inventories and carrying forward the details of changes. Up to this time the Bureau has felt that it is on safe ground-at all events, its exhibits have not been seriously challenged by anyone and on subsequent check of later and more complete reports they are seldom found to be materially out of line. However, the greater the lag in posting inventories and records, the greater is the element of possible error and challenge and there is a lessening of probative weight. We are now saying that the impairment line is in sight. Unless something is done to meet the situation that confronts us, that which has been gained by expenditure of years of work and money will, at least, be greatly impaired.

Another consideration: When records are not kept posted there is often a duplication of work-i.e., (1) current short notice use, sometimes requiring special, hurried, and expensive field checking and, later, (2) going over the same reports again in posting inventories and records.

There is considerable lag in the work of keeping underlying data current. This is shown by the four chattached. Progress, or the reverse, is measured of the ti in terms of mile-years,' which will be used in the analysis of what is happening— and has happened.

On June 30, 1941, there was an accumulation of 2,731,000 mile-years of reports of property changes that had not been completely audited and consolidated with basic reports of original cost to date. This 2,731,000 mile-year lag was equivalent to a shade under 11 calendar years behind currency. This lag has extended somewhat during the past fiscal year. Chart No. 1 herewith submitted shows the lag is up from 2,731,000 to 2,828,000 (partly estimated) mile-years or a lag of 11 calendar years.

Of the total accumulation of 2,828,000 mile-years as of June 30, 1942, the carriers have filed reports as of June 1, 1942, for all except 406,268 mile-years which includes returns for the calendar year 1941. However, the reports made by field examiners covering reports filed have not been audited and digested and detailed summaries of original cost prepared. The reasons are (1) inadequate departmental staff, and (2) that limited staff has been called on to respond to special assignments. These field reports and field checked records are available for use-and are used and supplemented by use of the "money factor"-in making special studies; but the Commisison is not on as safe ground as it would be if it used finally corrected and posted data.

The graph shows that unless this is corrected the prospects are for a lag of approximately 31⁄2 million mile-years, or 14 calendar years behind currency by June 30, 1947. This would be very serious especially at a time whenusually at the end or following a great war-there is a period of fundamental or greatly disturbing readjustments.

This is, in fact, a dismal picture. It may well raise the question of how the Bureau, in exhibits filed in various proceedings, is able to show original cost, and what justifies statements that, as a result of keeping the record of property changes subsequent to basic valuation, the Bureau has come into possession of the original cost of about 75 percent of the property.

1 Mile-year is a measure of work based on miles of main or route lines. If, for example, a 100-mile railroad (or pipe line) is 5 years in arrears in reporting, or the Bureau in posting its records, there is a lag of 500 mile-years. If the records are then brought up 3 years, there is a gain of 300 mile-years. Hence mile-years is miles times years. In the case of railroads an arbitrary figure of 250,000 mile-years is used as representative of the main-line mileage for the country as a whole, though main-line mileage has dropped from somewhat more than 250,000 miles to approximately 237,000 miles in recent years; but total track is in excess of 400,000 miles, and the 250,000 miles also covers all equipment. Taking all things into consideration, it is adopted as a constant base.

The answer is found, in large part, in chart No. 2. It shows that the carriers' reports and the bureau's field inspectors are ahead of the auditing and correcting "departmental staff" that posts the records and inventories.

Under stimulation of the Bureau the carriers generally have brought their reports of property changes up to January 1, 1942. Because of inadequate staff and limited travel and per diem allowances, the bureau has not been able to field check and police them up so closely. These reports, checked or unchecked as the case may be with individual railroads, are available, however, for use in meeting calls.

Chart No. 3 shows the trend of progress or, rather, reverses in recent years, of the engineers in posting inventories to date. As of June 30, 1941, there was a lag of 2,340,349 mile-years, or a little short of 10 calendar years in carrying changes in the physical properties into corrected inventories. This lag increased to 2,455,000 (partly estimated) mile-years as of June 30, 1942, and is headed for-based on the performance of the past fiscal year—a lag of more than 3,000,000 mile-years by June 30, 1947, or 12 calendar years. If based on the performance of the last 3 years, there would be a lag of approximately 2,800,000 mile-years, or 11 calendar years by June 30, 1947-12 years is more likely.

Chart No. 4 covers the activities of the land section. On June 30, 1941, the lag in posting land inventories had amounted to 1.911,714 mile-years, or approximately 7% calendar years. Chart No. 4, attached, shows the lag is practically the same for 1942, but, on the basis of the performance of the last 3 years, the indications are an accumulation of approximately 2,000.000 mileyears lag, or 8 full calendar years lag, by June 30, 1947. It is appreciated that the charts do not reflect the effect of a 48-hour week. Giving effect to the increased hours by estimating future progress by adding to progress actually made during the 3 years ended June 30, 1942, in proportion to the ratio of the 48-hour week to the 39 and 44-hourarsons.

June 30, 1947 (41⁄2 years hence), as indicated below:

Accounting Section:

Original cost__

work would be behind on

632,542

(2.5)

2,626, 078

(10.5)

1,776, 403

(7.1)

Checking returns of property changes. Engineering Section: Bringing inventories to date____ Land Section: Bringing inventories to date....

I now want to bring out the fact that the Bureau has developed into a very considerable war work agency whose operations result in large savings and protection against hold-ups. It is called upon to participate actively in war work through requests received from the Army, Navy, Maritime Commission, Department of Justice, Office of Defense Transportation, Defense Plant Corporation, and other war agencies.

The calls are for appraisals; valuations; checking of valuations and appraisals; for ascertainment of fair-value bases for purchases, leases and contracts; for various consultations in connection with the taking over of lands, properties, etc., for war purposes and for witnesses in litigation arising therefrom; and in connection with the construction and operation of pipe lines and transportation of oil and its products. The requests have even gone to the extent of supervising plans for the construction, at great savings, of a railroad to meet difficult situations in one of the great shipbuilding areas. All of these calls are responded to in line with the Commission's policy of contributing all effort to winning the war, and under the provisions of the Economy Act (U. S. C., title 31, sec. 686).

One of the reasons underlying the calls made by the war agencies on the Bureau may be indicated by a communication dated January 4, 1943, received from Admiral Land of the Maritime Commission while response to this inquiry was being prepared. He calls attention to the fact that the Maritime Commission has invested in land and fixtures many millions of dollars and

says:

"It has become a matter of public necessity for the Maritime Commission to secure complete and quickly understandable inventory of land and fixtures utilized by shipyards by the Commission. The excellent reports heretofore made to the Commission by members of the staff of the Interstate Commerce Com