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1 accounts, books, records, memoranda, correspondence, and other documents, now or hereafter existing, of a carrier or 3 subsidiary, and such accounts, books, records, memoranda, 4 correspondence, and other documents, now or hereafter existing, of a controlling person or affiliate, as the Commis6 sion deems relevant to such controlling person's or affiliate's 7 relation to or transactions with one or more carriers or subsidiaries.

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"(d) The Commission, or any authorized agent thereof, 10 shall at all times have authority to inspect and copy such 11 accounts, books, records, memoranda, correspondence, and 12 other documents, now or hereafter existing, of any bank, 13 trust company, trustee under any indenture, brokerage firm, 14 investment banking firm, accounting firm, railway associa15 tion, or person which sells or has sold equipment or supplies 16 to carriers, as the Commission deems relevant to transactions 17 or relations between such bank, firm, association, or person, and one or more carriers or subsidiaries.

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"(e) It shall be unlawful for carriers subject to this part, or subsidiaries of such carriers, to keep any other accounts, 21 books, records, memoranda, and other documents, than those 22 prescribed or approved by the Commission. This provision shall apply to receivers and trustees of carriers or subsidiaries.” SEC. 7. Paragraph (6) of section 20 of the Interstate

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Commerce Act, as amended, is hereby amended to read as follows:

"(6) In case of failure or refusal on the part of any 4 such carrier, subsidiary, receiver, or trustee to keep such 5 accounts, records, and memoranda on the books and in the manner prescribed by the Commission, or in case of failure 7 or refusal on the part of any carrier, receiver, trustee, sub8 sidiary, controlling person, affiliate, or other person to submit 9 any accounts, books, records, memoranda, correspondence, 10 or other documents to the Commission or any of its author11 ized agents or examiners for inspection or copying, as re12 quired by this section, such carrier, receiver, trustee, sub13 sidiary, controlling person, affiliate, or other person shall 14 forfeit to the United States the sum of $500 for each such 15 offense and for each and every day of the continuance of such offense, such forfeitures to be recoverable in the same 17 manner as other forfeitures provided for in this part." 18 SEC. 8. Paragraph (7) of section 20 of the Interstate 19 Commerce Act, as amended, is hereby amended to read as 20 follows: 21

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"(7) Any person who shall willfully make, cause to be 22 made, or participate in the making of, any false entry in any 23 annual or other report required to be filed, or in the accounts 24 of any book of accounts or in any record or memoranda 25 kept by a carrier or a subsidiary thereof, or who shall will

(Page 13)

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fully destroy, mutilate, alter, or by any other means or device falsify the record of any such account, record, or memoranda, or any books, correspondence, or other documents, or who shall willfully neglect or fail to make full, true, and correct entries in such accounts, records, or memoranda of all facts and transactions appertaining to the business of the carrier or subsidiary, or shall keep any other accounts, records, or memoranda than those prescribed or approved 9 by the Commission, or shall knowingly or willfully file with 10 the Commission any false report or other document required to be filed by it, shall be deemed guilty of a misde12 meanor, and shall be subject, upon conviction in any court 13 of the United States of competent jurisdiction, to a fine of 14 not less than $1,000 nor more than $5,000 or imprison15 ment for a term not less than one year nor more 16 than three years, or both such fine and imprisonment: 17 Provided, That the Commission may, in its discretion, 18 issue orders specifying such operating, accounting, or 19 financial papers, records, books, blanks, tickets, stubs, 20 correspondence, or documents of carriers and subsidiaries as may, after a reasonable time, be destroyed, and prescribing 22 the length of time such books, papers, correspondence, or 23 documents shall be preserved. As used in this part, the 24 word 'keep' shall be construed to mean make, prepare, or 25 compile, as well as retain."

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(Page 14)

SEC. 9. Section 20a of the Interstate Commerce Act, as amended, is hereby amended by adding at the end a 3 new paragraph, which shall take effect sixty days after the 4 approval of this Act, reading as follows:

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(13) The provisions of this section shall apply to subsidiaries."

SEC. 10. The Interstate Commerce Act, as amended, 8 is hereby amended by adding, after section 20a, a new 9 section, which shall take effect sixty days after the approval of this Act, reading as follows:

10 11 "SEC. 20b. (1) It shall be unlawful, except with the 12 prior approval of the Commission under paragraph (2) 13 of this section, for any carrier or subsidiary (or for any 14 carrier and one or more subsidiaries which are controlled, 15 directly or indirectly, by such carrier), directly or indi16 rectly, by any method or device whatsoever

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"(i) to expend or effect the expenditure of any funds, transfer or effect the transfer of anything of value, or make, cause to be made, or guarantee any loan, (whether or not in connection with any obligation, contract, or agreement), to an aggregate amount in excess of $50,000 of money or value in any one year; or

"(ii) to incur any obligation or enter into any contract or agreement (other than an obligation which is, or a contract or agreement which is, and all terms and

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conditions of which are, conditional as to performance and validity upon the approval of such obligation, contract, or agreement by the Commission under paragraph (2) of this section), providing for the expenditure of funds. the transfer of anything of value, or the making or guaranteeing of any loan, by or effected by such carrier or subsidiary, to an amount in excess of $50,000 of money or value,

9 for or in connection with the acquisition, direct or indirect, or 10 by any means whatsoever, by or in behalf of such carrier or 11 subsidiary, of any interest whatsoever in securities (including 12 specifically, but not exclusively, any right, claim, or evidence 13 of indebtedness), or in property (including specifically, but 14 not exclusively, real or personal, legal or equitable, or tan15 gible or intangible property, but not including securities) 16 unless such property is to be used for the operation, mainte17 nance, or improvement of its existing transportation facilities 18 and existing noncarrier property needed and used in con19 nection therewith. 20

"(2) (a) Any carrier or subsidiary which proposes 21 to enter into or effect a transaction which is prohibited by 22 paragraph (1) of this section unless the Commission ap23 prove such transaction, shall file an application for approval 24 of such transaction with the Commission. Within a reasonable time after the filing of such application, and after inves

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1 tigation of the purposes and uses of the proposed transaction, the Commission shall issue an order approving, or, after 3 notice and opportunity for hearing, denying or otherwise dis4 posing of, such application. The Commission shall approve such transaction if, but only if, it finds that such transaction constitutes a proper use of the funds, assets, or credit 7 of the carrier or subsidiary, and will be compatible with 8 the public interest, and that the terms and conditions of the 9 proposed transaction are fair and reasonable.

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10 "(b) In the case of a subsidiary which is not a carrier, 11 the Commission may, upon application, by order prescribe

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classes or categories of transactions (other than acquisitions of carrier properties or securities of carriers), which such 14 subsidiary may thereafter enter into without further applica15 tion to or approval by the Commission, to the extent specified 16 in such order and subject to any terms and conditions 17 therein made applicable. The Commission shall issue such 18 an order if, but only if, it finds that transactions within the 19 classes or categories and subject to the terms and conditions 20 therein specified will constitute a proper use of the funds, 21 assets, or credit of such subsidiary and will be compatible 22 with the public interest. Transactions entered into by such 23 subsidiary pursuant to such an order whall be subject to the 24 provisions of paragraph (4) of this section.

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"(c) The provisions of paragraphs (3), (4), and (6) of section 20a shall apply to applications under this para3 graph (2).

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(3) The provisions of paragraphs (1) and (2) of 5 this section shall not apply to any acquisition which has been 6 authorized by the Commission under any other provisions 7 of this Act, and shall not prohibit a carrier or subsidiary from investing its reserve or surplus funds in obligations of, or 9 guaranteed by, the United States of America, or such other 10 obligations as are permissible for investment by savings 11 banks and trustees under the laws of the State in which 12 the principal office of the carrier or subsidiary is located, or from using its funds or assets in the payment, retirement, or purchase of its lawful obligations existing on the effective 15 date of this section, or thereafter lawfully incurred.

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"(4) Within ten days after the incurring or entering 17 into of any obligation, contract, or agreement which is con18 ditional upon approval by the Commission under paragraph 19 (2) of this section, and within ten days after the expenditure of any funds, the transfer of anything of value, the making or guaranteeing of any loan, the acquisition of any securities 22 or property, or the incurring or entering into of any obliga23 tion, agreement, or contract to acquire any securities or 24 property, by any carrier or subsidiary, as authorized by an

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1 order of the Commission under paragraph (2) of this section, such carrier or subsidiary shall file with the Commission a 3 certificate of notification to that effect setting forth therein

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4 all such facts as may be required by the Commission.

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"(5) Any director, officer, attorney, employee, or agent of a carrier or subsidiary who knowingly assents to or 7 participates in any expenditure of funds, transfer of anything 8 of value, making or guaranteeing of any loan, acquisition of securities or property, or the incurring or entering into 10 of any obligation, contract, or agreement to acquire securities 11 or property, contrary to the provisions of this section, shall be subject to the penalties provided in paragraph (11) of section 20a."

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[COMMITTEE PRINT]

JUNE 21, 1939

S. 2610

(Comparative Print of Amendments of Interstate Commerce Act by S. 2610; i. e., Paragraph (3) of Section_1; Paragraph (17) of Section 5; Paragraph (1) of Section 12; Paragraphs (1) to (7) of Section 20; Paragraph (13) of Section 20a; and Section 20b of the Interstate Commerce Act)

Matter in italics is new; [matter] in brackets is old matter omitted; all other matter is old matter retained.

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PARAGRAPH (3), SECTION 1, INTERSTATE COMMERCE ACT

(3) (a) The term "common carrier" as used in this 3 part shall include all pipe-line companies; express companies; 4 sleeping-car companies; and all persons, natural or artifi5 cial, engaged in such transportation as aforesaid as common carriers for hire. Wherever the word "carrier" is used in this part it shall be held to mean "common carrier". term "railroad" as used in this part shall include all bridges, car floats, lighters, and ferries used by or operated in connection with any railroad, and also all the road in use by any common carrier operating a railroad, whether owned

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1 Paragraph (18) of section 5 having been repealed in 1934, S. 2610 renumbers paragraphs (19), (20), and (21) as paragraphs (18), (19), and (20) with no other change.

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1 or operated under a contract, agreement, or lease, and also all switches, spurs, tracks, terminals, and terminal facilities of every kind used or necessary in the transportation of the 4 persons or property designated herein, including all freight 5 depots, yards, and grounds, used or necessary in the trans6 portation or delivery of any such property.

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The term "transportation" as used in this part shall 8 include locomotives, cars, and other vehicles, vessels, and 9 all instrumentalities and facilities of shipment or carriage, 10 irrespective of ownership or of any contract, express or im11 plied, for the use thereof, and all services in connection with 12 the receipt, delivery, elevation, and transfer in transit, ven13 tilation, refrigeration or icing, storage, and handling of prop14 erty transported.

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(b) The term "person" as used in this part means an 16 individual or a company.

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(c) The term "company" as used in this part means a corporation, partnership, association, joint-stock company, 19 business trust, organized group of persons, whether incor20 porated or not; or any receiver, trustee, or liquidating agent 21 of any of the foregoing in his capacity as such.

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(d) The term "subsidiary" as used in this part means—

(A) a company 10 per centum or more of the outstanding voting securities of which are directly or indirectly held with power to vote, owned, or controlled, by one or