NOMINATION OF LOUIS S. ROTHSCHILD, OF MISSOURI, TO BE UNDER SECRETARY OF COMMERCE FOR TRANSPORTATION

WEDNESDAY, FEBRUARY 23, 1955

UNITED STATES SENATE,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The committee met at 10 a. m., in room G-16, United States Capitol, Senator Warren G. Magnuson (chairman) presiding.

Present: Senators Pastore, Monroney, Daniel, Bible, Bricker, Schoeppel, Purtell, and Payne,

The next matter is the nomination of Louis S. Rothschild to be Under Secretary of Commerce for Transportation.

Mr. Rothschild, we will be glad to hear from you. Do you have a biographical sketch?

Mr. ROTHSCHILD. I think it has been furnished your committee, Mr. Chairman.

The CHAIRMAN. We will put that in the record. Do you have anything further to add to that?

Mr. ROTHSCHILD. I do not have a prepared statement, sir. I would be very happy to answer any questions.

The CHAIRMAN. Mr. Rothschild has been, as the committee members know, a former member of the Maritime Board in the Department of Commerce, and he succeeds Robert Murray, who recently resigned. It is Under Secretary of Commerce for Transportation. I think the committee would like to hear generally, Mr. Rothschild, What is your concept of the nature of this office in the Department of Commerce? You have heard us ask Mr. Rizley some general questions, and I think they would like to hear your views because there has been some confusion, I think, in the minds of some of the boards dealing with transportation, and within the Department itself, and Members of Congress, as to just what the function is of the Under Secretary for Commerce, created by the Reorganization Plan 21, I think 3 years ago.

Mr. ROTHSCHILD. It was in 1950.

The CHAIRMAN. Five years ago. The general purpose is known, but just what are the duties down there? Do you call the CAB on a transportation matter that you have some opinions on? Do you make some suggestions to them or do you confer with them or the Maritime Board or any of these other boards that deal with transportation?

Mr. ROTHSCHILD. Well, Mr. Chairman, there has been little opportunity for me in the short space of time since my name came up here, to get into details of the office or its functions, and I am perhaps approaching this post with no more equipment than I had when I approached the Maritime post a year and a half or 2 years ago.

It seems to me in broad general terms, however, that the Under Secretary's post is a policy post and that it should be concerned with policy matters and should not be an administrative function in any sense of the word.

The CHAIRMAN. When you were on the Maritime Board, were there occasions when the previous Under Secretary for Transportation would consult with the Maritime Board on transportation matters, or just how did you cooperate? How did you operate together?

Mr. ROTHSCHILD. As Chairman of the Federal Maritime Board, I was also the Maritime Administrator and so I was heading two agencies, the Maritime Board and the Maritime Administration. On the side of the Administration there were frequent discussions and conferences regarding the duties of the Administration. I do not now recall that there ever was any direction of any kind as far as the Board, itself, was concerned.

The CHAIRMAN. Was there any occasion when a matter was pending before the Board for decision where the Under Secretary for Transportation would do other than make suggestions, or let me say this not make suggestions, but let it be known to you what the Administration policy might be on a particular matter prior to a decision?

Mr. ROTHSCHILD. I do not recall a single instance when any decision concerning matters before the Board was ever had.

The CHAIRMAN. But if you-I just use the Maritime Board because you were there-if you had an occasion to want to know what that Administration policy might or might not be, you would not hesitate to call the Under Secretary's office and ask?

Mr. ROTHSCHILD. I presume I would not, sir, but we operated as a totally independent agency throughout my chairmanship.

The CHAIRMAN. Now then, just what are you going to do down there? I mean what will be the duties of the office? You say you don't know too much about it. I might read to you, Mr. Rothschild. On April 5, 1950, when this Board was created, I wrote and I think this should go into the record, because it may clarify in your mind and the committee's mind just what are the duties of the Under Secretary in this particular instance.

Over my signature I wrote the then Secretary of Commerce, Charles Sawyer-this was specifically in regard to the merchant marine, but it brings up the question of the duties of this office, and I said this is part of the letter [reading]:

In view of the fact that the plan provides

and this the reorganization plan—

for the post of an Under Secretary of Commerce for Transportation, a summary of respective duties to be assigned to and the spheres of authority to be exercised by yourself, the Under Secretary, and I use the Maritime as an example, the Maritime Administrator, will be appreciated.

He wrote me back subsequently under date of April 14, 1950, as follows [reading]:

As in case of other bureau heads, the Maritime Administrator will be ultimately responsible to me as Secretary. The proposed Under Secretary of Transportation would act as my deputy in respect to programs and activities embraced within the proposed Maritime Administration, Bureau of Public Roads, Civil Aeronautics Administration, and the Inland Waterways Corporation. It would be the responsibility of the Under Secretary for Transportation to exercise general policy supervision on my behalf over all transportation activities in the Depart

ment and to assure program consistency among the several transportation agencies. He would play a major role in developing a coherent overall transportation policy in assuring the effective administration of those transportation activities lodged in the Department.

Now do you think that that precludes any interference by the Under Secretary in the regulation of the judicial functions of these agencies? It would keep you well within the Department and general transportation policy; isn't that correct?

Mr. ROTHSCHILD. Well, it seems to me, Mr. Chairman, that the boards are independent agencies and, except on the broadest policy lines, they have their own powers which should be carried out without leadership or interference from anyone.

The CHAIRMAN. And you think that this office could, within that general sphere of major transportation policies, serve a good purpose, and be helpful to the regulatory agencies that have these specific problems of transportation?

Mr. ROTHSCHILD. I believe it could; yes.

The CHAIRMAN. And that is your only concept of this job?
Mr. ROTHSCHILD. That is right, sir.

The CHAIRMAN. Senator Bricker, do you have any further questions of Mr. Rothschild?

Mr. ROTHSCHILD. As I remember, many of Murray's predecessors have been witnesses before this committee on matters of legislation in which they were interested, and gave us advice and recommendations on policy matters.

The CHAIRMAN. And we have requested them from time to time. Senator BRICKER. Yes. There is no reason why this representative should not be a witness before this committee or any other committee on matters of policy in regard to transportation, even though they do involve the policy matters of the various boards and bureaus.

I think Mr. Murray was down here last year, and I think we gave him constructive suggestions on the matter of feeder lines. As I remember, he has been here several times.

The CHAIRMAN. Senator Pastore.

Senator PASTORE. No questions.

The CHAIRMAN. Senator Schoeppel.

Senator SCHOEPPEL. I have no questions of Mr. Rothschild.
The CHAIRMAN. Senator Daniel.

Senator DANIEL. No questions.
The CHAIRMAN. Senator Payne.

Senator PAYNE. No questions.

The CHAIRMAN. Everett, you are our guest here.

Senator DIRKSEN. I have no questions, Mr. Chairman.

Senator MONRONEY. I wanted to ask him about the airport program.

The CHAIRMAN. I have 2 or 3 other matters here I was requested to ask him. One is, What is your concept of your responsibilities as Under Secretary in the field of international aviation?

Mr. ROTHSCHILD. Mr. Chairman, I haven't had an opportunity to get into that. I know nothing whatever about it at this point. The CHAIRMAN. Your predecessor, Murray, held a position as Chairman of the Air Coordinating Committee. Do you know anything about that?

Mr. ROTHSCHILD. Only that I shall probably hold the same position.

The CHAIRMAN. You probably will hold the same position. Then another question: Under your predecessor's chairmanship, the Air Coordinating Committee prepared for the President, in May 1954, a comprehensive civil aviation policy statement and the question is, Do you know the status of this policy statement now?

Mr. ROTHSCHILD. I believe, sir, that the President has accepted it and has indicated that it will prove a valuable guide for the future. The CHAIRMAN. The next question was whether or not you considered it as a guide. Then the question: What do you think the recommendations therein, which urged the curtailment of-well, you have answered that question generally, the question of competition.

Senator BRICKER. I think that whole report was a matter of evidence. The CHAIRMAN. The whole report is a matter of evidence on that. Now, Senator Monroney, you go ahead on this.

Senator MONRONEY. The aviation industry, Mr. Rothschild, is very much concerned about the failure of this administration and, to some degree, the last administration, to carry out the intent of the Federal Airport Act of 1946.

However, this committee and the Congress have reaffirmed that act as late as 1951. With an ever-expanding aviation industry, with the passenger load and freight and other things coming in, plus the operation on many commercial airports of military importance, we would like to have your views on how you feel toward an expanding airport program, as the Coordinator of Air Transportation, and with other degrees of transportation, we are fearful of action that might be taken in the administration or elsewhere to discourage the carrying out of these two acts of Congress.

Mr. ROTHSCHILD. Senator, I wish I could answer that question. But my name came up a week ago today and since that time I have been trying as diligently as possible to wind up the affairs over at Maritime with which I was concerned, and I have had only a short space of time in which to consider some of these things, and as yet I have no opinions.

Senator MONRONEY. We passed in the original act a $500 million authorization at not more than $100 million a year. I have the figures where in 1947 we spent $48 million; in 1949, $40 million; in 1950, $39 million; in 1951, $24 million; in 1952, $18 million; in 1953, $14 million; in 1954, none at all was appropriated; and in 1955, $22 million; and in 1956 we receive a recommendation for only $11 million.

At the same time the administration is recommending a $101 billion program for highways. At the same time, your aviation load and importance and service is going up every year to carry out a dynamic and growing air industry, and it would seem to me to indicate that we must give further attention to airport construction.

I would like to ask. Do you intend to make a study of those needs a part of your work as Under Secretary of Commerce for Transportation?

Mr. ROTHSCHILD. It is my philosophy that as far as transportation as a whole is concerned, and in a nation as vital, as dynamic, as pulsating as this, that we shall need all kinds of transportation and that the Federal Government's share of encouraging each and every kind of transportation should be carefully assessed and, when once determined, it should proceed with vigor.

Senator MONRONEY. You believe that the Federal Government should participate in a part of the planning and construction costs of airports that are part of the national transportation system?

Mr. ROTHSCHILD. Not only airports, Senator, but other forms of transportation where required.

Senator MONRONEY. I see.

The CHAIRMAN. I want to ask you about ship transfers right now. Senator MONRONEY. That is all I have.

The CHAIRMAN. You will probably be discussing some of these transportation matters with the Maritime Board and the two new members, and I want to ask you this. I know it won't be directly part of your job, but I would like to get your views on the reestablishing of the revolving fund in the Maritime Board. Do you have any views on that?

Mr. ROTHSCHILD. I think there will be a request for that in the 1956 budget.

The CHAIRMAN. You think there will be a request in the 1956 budget? I am glad to hear that. Just to clear the record up, Do you believe that your policy on the question of foreign-flag transfers has been a sound one?

Mr. ROTHSCHILD. I do, sir.

The CHAIRMAN. I would disagree with you on that, but I wanted it on the record. Now I have one matter, if the committee will bear with me, and I want to bring it to Mr. Rothschild's attention. It is this statement. There has been brought to the attention of the committee, myself, and other members of the committee, which I think is serious, since we need be fully informed of the facts, there have been letters and telegrams received by us relating to the proposed replacement of the newly installed short-range air-navigation system known as VOR/DME by another system developed by the military known as tactical air navigation.

There is responsibility on all of us to assure that the general public interests are predominant. Certainly, it is our responsibility to insure to the best of our ability that the investment of large amounts of taxpayers' money will not be nullified by an arbitrary and ill-conceived

action.

Congress has approved the expenditure of huge sums of money for the installment of this system. Fred Lee, the Civil Aeronautics Administrator, has, I think, been doing a splendid job in carrying out that program. It involves large sums of money. Some of it is classified. But it is now recommended that the whole system, representing an investment of some three-quarters of a billion dollars, is about to be junked in favor of the other system which the military is developing, but which has never been put into operation, and I am wondering if you know about that or if you have any opinions about that, if you could give us any enlightenment as to whether or not the transportation policy-because the CAB will be directly under you and they are very greatly concerned with that-whether or not that is, in effect, true.

Now I might say this: We expect to call Mr. Lee up in executive session, because a great deal of it is classified.

Mr. ROTHSCHILD. I know about this matter only from what I have read in the newspapers, and little more. It is a highly technical problem and I have absolutely no equipment on it at this point.

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