latory agencies should be kept completely independent of the executive branch of the Government. They should remain as they originated and as we have always considered them, as true arms of Congress.

By way of preliminary, I want to say that our concern and our knowledge, insofar as the Maritime Commission is concerned, is not with that part of the work and functions of the Maritime Commission which has been referred to as the managing of a huge business. We are concerned with the regulatory functions of the Commission only. I do not admit by that that the part of the plan which transfers the business functions of the Commission is wise. We simply have no knowledge on that question. I want to say also that I realize, as was pointed out by the previous witness, that many of the things to which we object in plan No. 7 have already been accomplished insofar as the Maritime Commission is concerned. That does not lessen our objection to plan No. 7 at all. In fact, it strengthens our objection because of the fact that a second and what we regard as a far more dangerous step is being proposed here, and this is merely the handwriting on the wall so far as we are concerned.

The CHAIRMAN. What you mean to imply is that you anticipate that, following the adoption of this plan 21, if applicable to the Maritime Commission, the same procedure will be followed with reference to-in other words, it would follow plans on No. 7 and any other regulatory commission.

Mr. MORROW. That is not the sole objection. We object to the fundamental principle of the plan as it has reference to the Maritime Commission, but we object for the further reason that we do not want it extended to the Interstate Commerce Commission.

The CHAIRMAN. What I understand you to say in this referenceand others have expressed the same apprehensions-is that as to plan No. 7, and plans 8, 9, and 11, I believe, and 10 and 13, maybe I have forgotten the numbers exactly-you anticipate that after this initial plan goes into effect, the pending plan, there will be a follow-up plan on them similar to this one, similar to 21, placing them in the Department of Commerce.

Mr. MORROW. I think it is logical. I think we may expect it. The first step has been made in connection with the Maritime Commission. We are approaching the second step. I think the steps will continue.

We object to all three of the fundamental provisions of plan No. 21. We object to the first provision which abolishes the present five-man Commission and sets up a three man Board in the Department of Commerce.

We oppose the second provision which creates a Martime Administration headed by a Chairman who is going to be also the Chairman of the Maritime Board, and we object to the third provision setting up an Under Secretary of Commerce for Transportation.

On its face it may appear that we should logically object to only the first provision, being concerned with the regulatory functions, but these three things are so interrelated and so dependent upon each other that they cannot be considered separately, and I think when you consider all of them together that you cannot help but conclude that any real independence of the regulatory agency has been destroyed.

The first thing to consider is that this Maritime Board at the bottom of the plan would have two functions. That has been pointed out, and I need not labor the point. But they would be expected to

wear two hats, and then above that the Chairman of the Maritime Board would have three functions. As Chairman of this Maritime Administration, he would be solely responsible to the Secretary of Commerce. In his duties as Chairman and member of the Board, in carrying out the functions with respect to subsidy, he would only be subject to guidance by the Secretary, a rather nebulous_term. Finally, he would be supposed, as Chairman and member of the Board, to completely divorce himself from all of these considerations and exercise completely independent judgment as to regulatory matters. I think it is humanly impossible for any board so constituted, with a head having such duties, to have any measure of independence whatsoever.

Now, as to the third provision, creating an Under Secretary of Commerce for Transportation, I cannot be very specific, because the plan is not very specific in telling us what his duties are and what he is supposed to do.

The President's message refers to centering transportation programs in the Department of Commerce and states that the Secretary of Commerce will be looked to for leadership with respect to "transportation problems" and "development of over-all transportation policy."

Now, a lot depends, of course, on what is meant by transportation problems and by transportation policy; but as we have understood those terms in this country for a good many years, they are problems within the jurisdiction of Congress, not subject to the executive branch at all; and we are very much afraid that the Under Secretary of Transportation, whoever he might be, would not understand and would not apply that fundamental fact. In short, we are convinced that the practical and legal effect of this would be an abdication of some of the powers of Congress.

We think the end result of this whole plan would be to bury the regulatory functions of the Maritime Commission in a small and weak agency occupying a very subordinate position in a sprawling executive department.

I do not think you could expect any more efficiency, and I am sure we could say good-bye to any independence of the small regulatory agency at the bottom of this pyramided plan.

I think we must heed at this time the mandate of the Supreme Court, as quoted by Mr. Lea, in the case of Humphries against the United States where the Supreme Court has told us not only that these regulatory commissions should be kept independent but that they should be free from the probable or possible suspicion of executive interference.

I think the public is going to believe, whether it is true or whether it is not true, that the Maritime Board as set up by this plan will be an agency of the Department of Commerce in form as well as in name, and even if independence could be achieved I think the public confidence in the independence of the agency would be destroyed.

The other points I make in my prepared statement have been covered so well by the other witnesses that there is no point in my taking your time, Mr. Chairman, to go into them.

Thank you.

The CHAIRMAN. Thank you kindly.

(The statement referred to earlier is as follows:)

STATEMENT OF GILES MORROW, EXECUTIVE SECRETARY AND GENERAL COUNSEL, FREIGHT FORWARDERS INSTITUTE

My name is Giles Morrow. I appear as executive secretary and general counsel of the Freight Forwarders Institute to urge your favorable consideration of Senate Resolution 265.

The institute is a national organization representing freight forwarders as defined and regulated under part IV of the Interstate Commerce Act. Offices of the institute are located in the Dupont Circle Building, Washington, D. C.

I appeared before your committee on April 25, and testified in support of Senate Resolution 253, calling for rejection of plan No. 7, which would reorganize the Interstate Commerce Commission. At that time I stated that our opposition to plan No. 7 was based on a principle which had equal application to the other plans dealing with regulatory commissions.

Our position rests on what we consider to be the fundamental proposition that our quasi-legislative, quasi-judicial regulatory agencies should be kept completely independent of the executive branch of the Government. They should remain, as they were conceived and as they have been considered throughout their long history, as true "arms of Congress." The powers which they exercise in the regulation of transportation are constitutional powers, vested in the Congress and delegated by the Congress to the commissions.

Because we consider that plan No. 21 represents an even more advanced step than plan No. 7 toward impairing the independence of the Commissions, and breaking down the separation of powers upon which our Government is founded, we strongly support Senate Resolution 265.

Our interest is not academic. While the primary activities of the members of the institute are subject to regulation under the Interstate Commerce Act, many freight forwarders also conduct foreign operations, as to some of which they are subject to the laws administered by the Maritime Commission.

We are far more concerned with the questions of principle and policy involved than we are with the probable material effect which the reorganization might have on the administration of our affairs.

In the beginning I want to make two things clear. First, our concern is not with the activities of the Maritime Commission which have been described in the President's message as the managing of a huge business. We have no personal knowledge of the activities of the Commission having to do with the building of ships, or any of its activities other than those concerning regulation, and it is to the regulatory functions that our position is addressed.

Second, it is not our purpose to undertake a defense of the Commission against the criticism that has been directed at the way in which its affairs are managed. We think that shortcomings, if there have been shortcomings, in the way in which delegated functions have been carried out should not cause us to abandon a fundamental principle of Government. The way to cure ills is not to kill the patient.

Also by way of preliminary let me say that we realize many of the things to which we object in plan No. 7 have already been accomplished insofar as the present Maritime Commission is concerned, under an earlier reorganization plan. That does not lessen our objection to plan No. 7. The fact that a second and more advanced step in what we consider to be the wrong direction is now being proposed indicates to us that once we start in that direction there will be no turning back.

I want to direct attention specifically to three provisions of Reorganization Plan No. 21 which we consider particularly objectionable:

(1) The complete abolition of the present five-man Commission, and the establishment, in its stead, of a three-man Maritime Board within the Department of Commerce.

(2) Creation of a Maritime Administration, headed by the Chairman of the proposed Maritime Board, and under the complete jurisdiction of the Secretary of Commerce.

(3) Creation of an Under Secretary of Commerce for Transportation, to perform "such duties as the Secretary of Commerce shall prescribe."

On its face it might appear that only the first provision, transferring the ulatory functions of the Commission, raises any question of maintaining the ndence of the regulatory body. Ostensibly the creation of a Maritime tration and an Under Secretary of Commerce merely effect a separa

tion of executive from regulatory functions and provide machinery to administer the executive functions.

When we examine closer, however, we find that the three-pronged plan is so integrated, and so unified, that there is no clear-cut separation of powers and there can be no real independence for the regulatory agency.

First of all, the new Maritime Board would have two functions. It would have regulatory functions and subsidy award functions. In performing the regulatory functions the plan states, in section 106, that the Board shall be "independent of the Secretary of Commerce." But in administering all other functions, including subsidy functions, the Board, by the terms of the plan “shall be guided by the general policies of the Secretary of Commerce."

So that we start out with a Board, physically within the Department of Commerce, and which, by specific terms of the plan, is subject to policy guidance by the Secretary of Commerce as to a large and important part of its functions. Now look at the next procedural step. The Chairman of the Maritime Board, who is a Presidential appointee, and who has broad administrative powers in that position, is also made Maritime Administrator. In this latter position he will have under his jurisdiction what the President's message describes as "a vast business undertaking." In the carrying out of these functions it is provided that the Administrator "shall perform such duties as the Secretary of Commerce shall prescribe."

The Chairman of the Maritime Board, then, would occupy three roles. First, he would be Maritime Administrator, performing functions solely at the direction of the Secretary of Commerce. Undoubtedly this would be considered by everyone as the most important function of this man. Second, as Chairman and member of the Maritime Board he would preside over the administration of subsidy functions under the general policy guidance of the Secretary of Commerce. And finally, he would exercise quasi-legislative, quasi-judicial functions as a member and Chairman of the Board, and in this latter role would be expected to maintain complete independence from the executive branch.

It taxes the imagination to suppose that a board so constituted, presided over by a chairman who must wear so many hats, could or would have any real degree of independence.

Coming now to the third of the provisions to which we object-the creation of the office of Under Secretary of Commerce for Transportation-it is difficult to be specific because the plan is not specific as to the purpose or functions of such an executive.

As in the case of the Maritime Administrator, the plan merely provides that the Under Secretary shall "perform such duties as the Secretary of Commerce shall prescribe." The President's message speaks of centering transportation programs in the Department of Commerce, and states that the Secretary of Commerce will be looked to for leadership with respect to transportation problems and for the development of over-all transportation policy within the executive branch.

Of course, much depends upon what transportation problems and what transportation policy we are talking about, but as those terms are generally understood and applied in this country, they are matters for determination by Congress and not by the Executive. We very much fear that the Under Secretary for Transportation would neither understand nor apply this cardinal fact. In short, we are convinced that this move will, in practical and legal effect, amount to an abdication of powers by the Congress of the United States.

The end result of this plan, we think, will be to bury the regulatory functions of the Maritime Commission in a small and weak agency occupying a subordinate position in a large and sprawling executive department. The important quasilegislative, quasi-judicial functions of the Commission will be carried out by three men whose primary duties and responsibilities will be to implement policies formulated by an executive officer of the Government. We cannot secure independence for this type of an agency by telling the three men to pay no attention to the Secretary of Commerce when they put on their judicial robes. The whole atmosphere in which they operate will be against it.

We must heed the mandate of the Supreme Court of the United States, laid down in the celebrated case of Humphreys v. United States (295 U. S. 601), wherein the Court said that the regulatory Commission should be kept free from the "probable or possible suspicion of such (Executive) influence." The public will believe that the proposed Maritime Board is an agency of the Department

of Commerce in form as well as in name, and whether it is or not public confidence in the independence of the agency will be destroyed.

There is one other significant point to which attention should be directed. The fundamental change made by plan No. 21 is a change not recommended by the Hoover Commission. In fact the recommendations of the Hoover Commission constitute one of the strongest arguments against the plan. The one specific recommendation of the Hoover Commission concerning the Maritime Commission reads as follows:

"The Commission recommends that the functions of ship construction and the operation, charter, and sale of ships should be transferred to the Department of Commerce."

It is very clear that by spelling out the functions that should be transferred, and by pointedly omitting any reference to regulatory functions, the Hoover Commission did not consider it a wise policy to transfer such regulatory functions. In fact the task force of the Hoover Commission did specifically recommend against abolishing the Maritime Commission as a regulatory agency. On page

67 of appendix N of the task-force report on regulatory agencies we find this positive recommendation:

"Acccordingly our recommendation is that the Maritime Commission should be retained to perform the regulatory and subsidy functions remaining after transfer of the operating activities as set forth above."

From these recommendations there cannot be a shred of doubt that the Hoover Commission opposed transfer of regulatory functions to an executive agency.

Finally, we oppose plan No. 21 not only because of the basic change in policy which it makes, but because of the pattern which it sets. Plan No. 21 must be appraised in the light of other plans affecting regulatory agencies, and in the light of probable future developments. If all of the plans now before Congress affecting regulatory commissions go into effect we will have a Presidentially appointed chairman at the head of each of those agencies. The chairman will have the power of the purse and the control over personnel. He will be in a position to and undoubtedly will dictate the policy of his agency. And we regard it as morally certain that the policy of the Under Secretary of Commerce for Transportation will be the policy of the chairman of the commissions.

Whether or not the other agencies are ultimately physically transferred to the Department of Commerce, we think the centralization of policy control will be effective. Moreover we think that if plan No. 21 is adopted there will come a time when other agencies will be physically transferred and that it will only be a question of time until the independent regulatory agency as we have known it in this country for more than half a century will cease to exist.

In our opinion this is a dangerous and an unwise move. It represents a precedent setting change in our basic policy and form of government, and Senate Resolution 265 should be promptly approved.

Mr. Ramspeck, you were the first witness scheduled. We will be glad to hear from you now.

Mr. RAMSPECK. I am sorry. I did not know it or I certainly would have been here.

The CHAIRMAN. We are very glad to have you before our committee. Mr. RAMSPECK. Thank you.

The CHAIRMAN. You may proceed, sir.

STATEMENT OF ROBERT RAMSPECK, EXECUTIVE VICE PRESIDENT, AIR TRANSPORT ASSOCIATION OF AMERICA

Mr. RAMSPECK. Mr. Chairman, my name is Robert Ramspeck. I am executive vice president of the Air Transport Association of America, which has as its members most of the certificated airlines operating under the American flag. We appreciate the opportunity of testifying before your committee with respect to Senate Resolution 265, which would reject Reorganization Plan No. 21. In the interest of economy and sound governmental organization, we urge the committee to report favorably on Senate Resolution 265, and we hope