mission, including Commissioners Jett and Webster, who returned last week for a series of special meetings for the purpose of considering this statement.

The necessity, of course, of having a series of meetings did somewhat delay my ability to get the statement prepared. The committee had an advance copy of it yesterday, but the mimeographed copies were not ready until 8 o'clock this morning.

For the most part, the members of the Commission are in agreement on all points. Naturally, on some particular points there are differences in opinion. Where that is the case, the statement which I am about to present will specifically so indicate.

The mimeographed statement which you have before you, considers the bill section by section, beginning with section 1, and ending with section 25. I believe that this arrangement will make it easy for the members of the committee to follow my comments.

The statement is 55 pages long, and if it is agreeable with the committee, I shall not read all of it. What I would like to do is to read the sections that deal with the most important points, and omit the reading of all those parts which deal with the more technical and procedural points.

However, Mr. Chairman, if it is agreeable, I should like to ask that my whole statement appear in the record as though it had been read by me in its entirety.

The CHAIRMAN. Without objection, that will be done.

Mr. DENNY. For your convenience in following my reading of this statement, the mimeographed copies of it which have been placed before you have been so marked as to indicate the portions that I will read, and those that I will not read.

There is a vertical pencil line in the margin of the committee's copies beside those paragraphs and pages which will be read. The parts not marked will be omitted in reading, but, as the chairman has indicated, they will be copied into the record.

The CHAIRMAN. May I interrupt you right there? I want to say, in view of your statement that you are to take this up section by section, that you probably will say some things at least with which I am not in agreement.

I feel, however, that it is the part of wisdom that I should not attempt to be a witness and to testify in behalf of the bill which I have introduced. So I shall not interrupt you unduly for examination, but will read with interest what you have said when you have concluded, when I have a chance to do so.

Mr. DENNY. Mr. Chairman, I want to say on my part that I do not mind interruptions, and any comments that might occur to you as I go along will, I think, perhaps be helpful.

Finally, I should like to state that in the course of my testimony, I shall make reference to five exhibits. These have been distributed to you, along with the mimeographed statement, and I should like to ask that the committee print as many of these as it deems feasible.

There are two of them which I believe are so long that it probably would not be feasible to print them, but I do think it would be helpful for you to have copies.

I begin reading now with the second paragraph on page 1 of my mimeographed statement.

As your letter of invitation pointed out, many of the provisions of S. 1333 are derived from other bills on which extensive hearings were held both by the Senate and House Committees, principally in connection with S. 814, Seventy-eighth Congress, and H. R. 5497, Seventyseventh Congress. I have had an exhibit prepared which shows for each section of the bill the corresponding section in S. 814 and H. R. 5497 and the pages of the hearings on those bills where commission testimony appears.

I should like to offer this, Mr. Chairman, as my first exhibit. I think it might be helpful to the committee, and I believe this is in line with your request that we do not present material that has been previously presented to the Congress.

The CHAIRMAN. So far as possible that will be followed. The exhibit will be received and made a part of the record.

(The document referred to was marked "Exhibit No. 1," and filed for the information of the committee.)

Mr. DENNY. The method, as I have stated, that I should like to follow in my statement is that of a section-by-section analysis of the bill.

For convenience, I have listed under the heading of each section the page references to the hearings on S. 814 and H. R. 5497 where Commission testimony appears with respect to corresponding provisions in those bills.

Sections 1, 2, and 3 (S. 814, p. 939; H. R. 5497, pp. 796–800; 849–853) These sections contain the title of the new act, and propose to change certain definitions now contained in the Communications Act of 1934 and to add some new definitions.

In general, the definitions proposed are satisfactory. I should, however, point out that there appears to be a slight inconsistency between the definition of "network broadcasting" as used in section 2 and "network organization" as it appears in section 3. The former includes delayed broadcasts in the definition, whereas the latter does not. In the interest of uniformity, both provisions should be the same. It is suggested that delayed broadcasts be referred to in both places. Section 4

Under the present provisions of the Communications Act the Chairman of the Commission is designated by the President. Under the proposed amendment, the Chairman would be elected annually by the Commission itself. This procedure is followed in the case of many other administrative agencies and is entirely acceptable to the Commission.

Section 5 (S. 814, pp. 30-31, 620-622, 545-547, 939-941; H. R. 5497, pp. 765-780, 813-814)

Section 5 would require the Commission to organize its members into two independent divisions to be known as the Broadcast Division and the Common Carrier Division. Each division would have three members. The Chairman would be the executive officer of the Commission, but could not sit on either division except in case of a vacancy.

The purpose of this section is stated to be twofold. The first is that there are fundamental differences between rate-making and publicutility concepts, on the one hand, and broadcasting on the other, and

having the Commission operate as a unit on all matters creates a tendency on the part of the Commission to confuse the two and apply the same concepts and philosophies in both fields. The second stated purpose is that the Commission has centered its attention, as well as the attention of its staff, on broadcasting at the expense of the other matters entrusted to the Commission's jurisdiction.

As to the first point, I have heretofore seen such statements in print both in a trade magazine and in briefs filed by networks during the course of litigation. But I have never seen any facts presented to support the charge. In order to provide a means for proving or disproving the statement I have prepared exhibit No. 2 which catalogs the more important powers which the Commission exercises in the common-carrier field. You will note that when we deal with the telephone or telegraph companies we have authority to order their rates to be raised or lowered, prevent discriminations in rates, prescribe the form of accounts they must keep, determine the depreciation rates which should be applied, ascertain the rate of return they are entitled to earn, et cetera. None of the concepts of common-carrier regulation is used in the broadcast field.

I turn now to the second stated purpose of section 5, namely, that broadcasting work demands a disproportionate share of the Commission's efforts.

It is true that broadcasting work does require a great amount of time, but examination of the Commission's agenda discloses that it is in the common-carrier and safety and special-service work that we are relatively current. In the broadcast field we have a huge backlog. This has been due to the abnormal broadcast work load that has been thrust upon the Commission since the war.

At the present time, this backlog consists principally of hearing cases. A division of the Commission would not expedite this work. What is badly needed in connection with the hearing cases are more hearing officers.

Moreover, in the common-carrier field the Commission has for the past several years had both a telephone and a telegraph committee each composed of three Commissioners to which is delegated a large portion of the Commission's functions with respect to common-carrier matters. Originally these committees were responsible only for coordinating the staff work on common-carrier matters. In the past few years more and more important functions have been delegated to these committees.

So far as the safety and special services are concerned, the new bill would not effect any change in the present set-up. Such matters are now handled by the full Commission and they would continue to be handled by the full Commission under the new system. Indeed, if anything, less attention would be paid to the safety and special services problems under the new system because each Commissioner would be primarily concerned with the work either of the Broadcast Division or of the Common Carrier Division.

This is the situation so far as the Commissioners are concerned. As for the staff, it is presently organized into divisions. Thus, in each of the professional departments-Engineering, Law, and Accounting— we have a Broadcast Division, and Common Carrier Division, and in addition the Engineering and Law Departments have Safety and Special Services Division.

We have no such division in the Accounting Department, because the Accounting Department does not deal with the safety and special services.

Thus far, I have been discussing the reasons which have been advanced for requiring a mandatory division of the Commission, and I have endeavored to show our reasons for feeling that the arguments advanced are not valid arguments.

I should now like to discuss the affirmative objections we have to section 5 of the bill. In the first place, the divisions proposed by section 5 would be composed of three members each. In our opinion, many of the problems which the Commission must pass upon are too important to be finally resolved by a majority vote of two out of three men. This has been recognized ever since the days of the original Federal Radio Commission. That body had five members and did not have the present Commission's common-carrier jurisdiction.

The second difficulty with section 5 is that it provides for only two divisions-Common Carrier and Broadcasting. In our opinion three divisions are desirable since the work that we are performing in the safety and special services field is as important as in the other two branches referred to.

The CHAIRMAN. May I interrupt you right there? Would you not consider that the authority that is reserved to the full Commission, conferred on the full Commission, is pretty near tantamount to constituting a third division? You would have your Broadcasting Division, your Common Carrier Division; and then you have your over-all Commission Division, if you want to call it a Commission Division.

It would seem to me, in thinking about it, that with the specific authorities which we have vested in the Commission, with the right of the Commission to make all the allocations of frequencies available to the Broadcasting Division, with its authority to make all the rules and regulations for the conduct of the business, that we were creating, in fact, although not in name, really three statutory divisions, a Broadcast Division, a Common Carrier Division, and the Commission.

Mr. DENNY. You could, Senator, treat the full Commission as a third division. I quite agree that if we go to the division system, we need coordination that would be supplied in such general matters as allocation and rule making. Those things must be in the hands of the seven members of the Commission.

I have thus far only covered the portion of my statement which is critical of the division system. I am going to say something good about the division system in a little while, and one of the things that I am going to say about the division system that we like is that I think it provides the opportunity in each of these three important fields for supplying more leadership than we now have. That is the keynote, as I see it.

The CHAIRMAN. It almost seems to me that the difference between you and me in respect to this matter is that you really want what I should refer to as discretionary rather than mandatory divisions. I was trying to get into the law a mandatory provision establishing three divisions and conferring statutory authorities upon the Commission. But I do not want you to take time now to discuss that.

Mr. DENNY. I don't think we are quite as far apart as my statement up to this point might seem to indicate. We are apart, I think, Ï

on two fundamental points. One is that if we are to have divisions, it is just as important that we treat Safety and Special Services the same way as we treat Common Carrier and Broadcasting, and not leave that to the seven men who are going to be divided up among two other activities, but give them the same specialized leadership that we supply in the other two fields. Because in those fields we are not dealing with the telephone company and the telegraph company and with the broadcasting companies, who have their counsel, and who can pretty well, in these matters, take very good care of themselves.

In that field, we are dealing with the shipowners, with the itinerant aircraft pilot, with the small boat owner, with the police chiefs throughout the Nation, with the fire departments throughout the Nation, with people who are not so well organized, who cannot quite so competently take care of themselves, and who, therefore, need a little more nursing from the Federal authority than the broadcasters, or the telephone or telegraph companies. And that is one reason why I strongly feel that we need three instead of two divisions if we go to the division system.

The second rather basic point on which I believe we are apart, or at least perhaps a little bit apart, is that I do not feel that three men are enough for a division. Because if, for example, you commit the final authority in this country to making decisions in the broadcasting field, or in the telephone or telegraph field, or in the maritime or aviation field, to the judgment of three men, those decisions are going to be made in many instances by a majority of two men. And to have those important policy matters, which so deeply and importantly affect communications and, in the case of broadcasting, the very processes of democracy itself-decided by three-man divisions, would be, I feel, to move too far toward a single autonomous authority.

I don't think anyone would think of committing broadcasting regulation to a single administrator, and I think that a three-man division, which would turn on a majority vote of two men, is only one man better than a single administrator. Therefore, I strongly urge that if we are to have divisions they should be divisions of more than three men.

Now, those are the points on which I think we are a little bit apart. The CHAIRMAN. You may go ahead now. I will not interrupt. Mr. DENNÝ. It is very helpful to me to discuss it this way, Senator. The CHAIRMAN. Well, you are persuasive, but you have not convinced me as yet.

Mr. DENNY. I think this is one of the most important subjects in the bill, and I think I would like to stay with it until I convince you, or at least until I have exhausted my efforts to convince you.

The CHAIRMAN. I said I was not going to interrupt the witnesses, and then I got a little stirred up by what you said, and was not able to restrain myself; but I am going to struggle to keep still and listen. Senator MCMAHON. May I ask a question, Mr. Chairman? The CHAIRMAN. Senator McMahon.

Senator MCMAHON. In a circuit court of appeals, there are three members and decisions come down two to one. I realize that is a judicial body and this is an administrative one, but what is your ob-servation on that?