Government has stepped in, as you put it, and issued orders that the status quo remain the same or be continued?

Mr. BENDETSEN. As far as I know, the first case would be the basic order that no changes be made without approval. Then there were about four specific cases where a request was made to change, which were not approved. I asked the regional directors through channels by telephone to be sure that they saw that no changes were made. Then there is the case of the wage order, General Order No. 2, where it was not keeping the same, but rather changing it, as also was true in the case of the MonCon. Then there have been some independent on-the-ground settlements in a few instances between an owning carrier and collective bargaining representatives who then requested that the benefits contemplated by their settlement be paid during the remainder of Government operation, and where the parties themselves have agreed, there we have authorized the change.

Senator MORSE. Where there has been a collective bargaining agreement reached?

Mr. BENDETSEN. The collective bargaining process between carriers and local people on the ground who represented the employees concerned.

Senator MORSE. Would you say, Mr. Secretary, that because of the wording of the Executive order in the first instance, in which you were charged with the responsibility of operating the procedures of seizure, you have taken the position that the status quo which existed at the time of seizure should be maintained in the operation of these railroads, save and except in those few instances to which you testified here this morning where you have authorized a change, and, as I understand it, that authorization was limited to the wage matter and to those instances in which the parties by mutual agreement, through a collective bargaining agreement settled their differences. Has that been pretty much the administrative policy that you have carried out under the Executive order?

Mr. BENDETSEN. Yes, pretty much so. There was also the wage change which I didn't describe specifically, although I covered it generally, involving the employees who were employed by roads represented in the so-called nonoperating settlement where the benefits that agreement contemplated were paid to those concerned during the period of Government operation.

Senator MORSE. Throughout the period of Government seizure, the railroads have carried on their operations in the main just as they carried on their operations prior to seizure, save and except for the upward adjustment of wages, which you yourself ordered under proper authorization, save and except the authorization that you granted approving of collective bargaining agreements which the parties themselves negotiated.

Mr. BENDETSEN. Yes, sir.

Senator MORSE. So during the period of Government operation, except as you took the position that you can't change any of these operations without special authorization, and the general policy is to maintain the operations as they existed prior to seizure, the carriers today are in very much the same position as far as operations are concerned as they were prior to seizure.

Mr. BENDETSEN. Except for the things you have described.

Senator MORSE. Except for the things you and I have discussed, to which you have testified and which I think are very clear in the record, the carriers are operating

Mr. BENDETSEN. Are you speaking of the owning companies or the rail transportation system?

Senator MORSE. Let us speak of both.

Mr. BENDETSEN. I think they are pretty much in the same operating position.

Senator MORSE. The same operating position.

Mr. BENDETSEN. Except for the things you have indicated.

Senator MORSE. Is it not true that the carriers throughout Government seizure have been in a position where it was a safe bet, in view of the interpretations of the Executive order that were made at an early date, that they could proceed to operate as they did prior to seizure and that their limitations would be pretty much involved in those instances in which they asked for specific authorization for a change in operations as they had been operating prior to seizure. Isn't that pretty much your position?

Mr. BENDETSEN. Pretty much for everybody concerned, both management and labor, in the same position, to go on doing what they were doing before.

Senator MORSE. We will get to labor in a moment. That was true of the carriers; was it not?

Mr. BENDETSEN. I would think generally that is true.

Senator MORSE. If you had been a railroad president, Mr. Secretary, at the time of seizure, would you have been very much concerned about the effect of the seizure on the operation of your railroad?

Mr. BENDETSEN. Senator Morse

Senator MORSE. I don't know a better witness in America to answer that question.

Mr. BENDETSEN. I could tell you my personal opinion, that I wouldn't want any part of my system taken over by the Government under any conditions if I could possibly avoid it. That is the way I would personally feel.

Senator MORSE. If you had a choice at the time of the Executive order, Mr. Secretary, with regard to the operation by the Government of the nature that you testified to this morning and the shut-down of your railroad by a strike, which would you prefer?

Mr. BENDETSEN. I would far rather see, personally-and I can only give you my personal opinion-I would far rather see the normal process of collective bargaining continue with all of the aspects that are available to both sides, and I am speaking my sincere conviction. I would not personally like to see this happen-

Senator MORSE. Count me in on that, too.

Mr. BENDETSEN. The trouble of course is that you can't run the country without railroad service, so you have another problem, but my own personal reaction, whether or not I were a railroad president, or John Citizen or Assistant Secretary of the Army, my solid personal conviction is that I would far rather see the collective-bargaining process proceed. I understood, and I don't know if this is true or not, I seem to recall I saw it in the paper that some of the heads of the brotherhoods had asked for seizure. I couldn't understand that if it is true that they did.

Senator MORSE. I couldn't either.

Mr. BENDETSEN. It was reported. Maybe they have been here and said they didn't.

Senator MORSE. Unless they wanted Government ownership.

Mr. BENDETSEN. But everybody concerned-this is my first experience in one of these

Senator MORSE. I hope it is your last, not because I wouldn't be perfectly willing to have you do it if it had to be done, but if we can't change

Mr. BENDETSEN. I hope it is my last, too.

Senator MORSE. But if we can't change this by legislation so you are not in the position you have been in, then Congress better submit itself for some examination.

Mr. BENDETSEN. I hope it is my last, too, Mr. Chairman and Senator Morse.

Senator MORSE. I want to come back now to what I had in mind by my question. You led me astray from it a little bit, Mr. Secretary. I want to get back to the status the day the Executive order of seizure was issued. I want your view of what position you would be in if you were a railroad president making a choice between operation under that kind of Executive order of seizure, where as you have testified the operation would continue practically without change except in specific instances to which you have referred, or be faced with a complete stoppage of the operation of your railroad through strike. Wouldn't you be much more concerned about the strike than you would be about the effect on your railroad through seizure?

Mr. BENDETSEN. For what it is worth, Senator Morse, and so be it, it is my opinion, but for the public interest aspect which I have already mentioned, I would far rather, if it had to be, see a strike, get the matter settled and get back into private operation.. If I were a railroad president, I would be very apprehensive, because the Government can do anything under this order. If the Government takes over I would be very apprehensive because the Government did take over in World War I and kept them. I am a strong believer in the collectivebargaining process. I am getting out of my field. I am not speaking as an Assistant Secretary of the Army, and I want to put that on the

record.

Senator MORSE. You are speaking as a man with a lot of sense. Mr. BENDETSEN. That is my opinion as Karl Bendetsen, a common citizen.

Senator MORSE. Am I to understand that the scope and breadth of this Executive order frightens you a bit?

Mr. BENDETSEN. Me?

Senator MORSE. Yes.

Mr. BENDETSEN. It doesn't frighten me any, sir, but you asked me hypothetically how I feel if I were on the receiving end.

Senator MORSE. I thought you said you would rather have a strike than to have seizure under an order.

Mr. BENDETSEN. You asked me, sir, as I understood it, the hypothetical question how I would feel if I were president of a railroad on the receiving end of this; wouldn't I much rather have this happen than, if we couldn't get together, have a strike occur and, as all things must, have it finally settled. Not as an Assistant Secretary of the Army, but hypothetically, for what it is worth, I would

Senator MORSE. Mr. Secretary, you will never be able to separate your views as a private citizen and as Secretary of the Army any more than I can separate my views as a private citizen and a Senator. I speak from sad experience. There is no Dr. Jekyll and Mr. Hyde in this game at all. But to get back to the point, I think you know me well enough to know that I mean to be exceedingly fair in the examination.

Mr. BENDETSEN. Yes, sir.

Senator MORSE. I want to get back to the situation at the time of seizure. I ask you, in view of what you have already testified as to the effect of this seizure upon the carriers, save and except for the specific instances that you have mentioned in your testimony, whether or not as far as continuing the operation of the railroads and the income of the railroads is concerned under this order as it has worked out, not as it might work out but as it has worked out, would you not prefer that kind of seizure to the losses that would go along with a strike?

Mr. BENDETSEN. Again answering your hypothetical question, Senator Morse, and being as honest as I can be on a situation of this kind which I have never experienced-I would not personally want to see Government seizure in any case, and I would be fearful of it. I would much rather see the process of collective bargaining continue in the normal way.

Senator MORSE. Ending in a strike, if necessary?

Mr. BENDETSEN. If necessary. If a strike has to come, knowing that all things have to be settled sometime, yes; much rather. That is my personal judgment, sir.

Senator MORSE. I am very glad to have it.

I have one other question before the noon recess, Mr. Chairman, if it is your pleasure to recess at noon.

Mr. BENDETSEN. I think I would feel the same way on either side of the matter, though I have never been in either position. If I were the head of a large labor brotherhood organization or a labor organization trying to obtain the best results I could for my people or if I were the head of a company in private business, I have a deep conviction that I would be very fearful of Government seizure in private enterprise. That is my feeling about it. I can find no basis for any other view of it. The public interest has seemed to make it very different in this case.

Senator MORSE. It is more important to get your views in the record than mine, but I just want very quickly to say, Mr. Secretary, that if I were working for a state economy, the development of any form of a socialist state, I wouldn't overlook the bet of the seizure procedure to enable the Government to creep into a state economy through the back door, so to speak. I have what I think is the same fear you have.

Now going back to this situation the day this Executive order was issued, on the basis the experience the carriers have had to date under the seizure order as you have testified here this morning, would you say that from the economic standpoint the seizure has worked no particular hardship on the carriers?

Mr. BENDETSEN. I think that would have to remain to be seen because until there is a settlement of the matter when the carriers have their systems returned, you couldn't tell how they would come out.

As matters stand right today if they went back and there was an exchange of releases, I can't see where they would be hurt at all; but you asked me the general question, and that would have to remain to be seen. They could or couldn't be.

Senator MORSE. It is not contemplated, as shown by the record in this case to date, that the Government expects to do anything else than leave the carriers whole financially and economically. Is that not true?

Mr. BENDETSEN. This isn't up to me and it is out of my field, but I don't think the Government at this point has a position in the matter. What they have done in the past and what they would contemplate doing under the operating agreements would be to exchange releases with each road, but that is by no means certain. If they did exchange releases with each road, on the theory which has been suggested that the measure of compensation for possession of a private property is the profits which would have accrued had it not been seized, they would be no worse off and they would release the Government of all liability and hold it harmless. It is by no means certain at this point. Senator MORSE. It is my recollection from the record of this hearing. Mr. Secretary, that there is an exhibit in the record

Mr. BENDETSEN. The operating agreement you have before you which I sent up to you with my report.

Senator MORSE. Let me see what I can do by way of recall-in which it is stated in effect that it is contemplated by the Army to negotiate with the carriers a financial settlement with them that will give them a financial return equal to their profits and seek to release the Government at least from the possibility of any suit in the future for the collection of any money that the carriers might think they might have been able to make if there had not been Government seizure.

Mr. BENDETSEN. Yes, sir; that is the operating agreement. It has to be worked out with each road.

I have just had handed to me this morning a suit. I don't know anything about its legal aspects, but someone is suing the Government for $750,000 in connection with operations on one of the roads. Senator MORSE. That is exhibit No. 11. May I read the paragraph that I was going to recall, Mr. Secretary?

It should be pointed out that this is not a token seizure and these operations are in fact for the account of the Government. In the past at the conclusion of operations by the Government the practice has been to negotiate with each road what is in effect an exchange of releases. This is based upon advice of the Attorney General that the fairest measure of damage under the Constitution for the taking of the railroad systems is the amount of profit which the owners would have made for the period concerned had it not been for the seizure. In consequence, it is our hope that the Government will be able successfully to conclude, at the end of the period of operations with each of the 195 roads concerned, an agreement under which each road holds the Government harmless from all liability on account of the taking, in return for a release on the part of the Government of profits which would have accrued to each road but for the taking. Under such arrangements no profits would accrue to the Government as a result of these operations, and conversely operation losses would also acerue to the owning corporation.

Mr. BENDETSEN. That is right, sir.

Senator MORSE. Is it a fair interpretation of that plan of settlement on the part of the Government that you would seek to determine what the profits of the carriers would have been if there hadn't been