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Question 7. What measures, if any, has the association taken to limit and mitigate the suppression of expedited freight schedules by the Western Commissioner?

Answer. This question can be answered by saying that which is true, that the association has taken no measures with reference to any action of the Western Commissioner dealing with freight schedules. That is an operating matter, which is entirely beyond the scope of the province of the Association of American Railroads. However, we are not willing to let the matter rest just there. The question contains implications which are not true. So far as we know, the western commissioner has never attempted to suppress expedited freight schedules. The record shows quite the contrary. During the period when the Western agreement was in effect, perishable schedules east-bound were reduced from the ninth morning to the eighth morning and later on to the seventh morning. The western transcontinental basic freight schedules were reduced from the ninth morning to the sixth morning. In passenger-train service, at the beginning of the period, the average running time from Chicago to San Francisco varied from 70 to 84 hours. Before there was some modification of these schedules due to war conditions, the running time was reduced to from 50 to 62 hours for most trains, and in the case of certain streamlined trains, the running time was actually reduced to 39 hours 45 minutes. It would appear, therefore, that there is no basis whatever for saying that the Western agreement resulted in suppressing or limiting expedited schedules. It is true that the Commissioner was from time to time called upon to deal with certain controversies as to schedules, but the net effect of his action was certainly not to slow them up. It should be understood that, in order to prevent discriminations as among producers of freight, of which citrus fruit may be taken as an example, orderly arrangement must be made whereby a preference is not given to a particular producing area, merely because it happens to be located on a railroad somewhat more direct than another. Schedules like rates, call for orderly discussion to prevent obvious wastes and discriminations.

Question 8. Did the association receive regular reports of his activities and decisions from the Western Commissioner, and were the files of his correspondence, general and with respect to particular cases, accessible to the association's officers? If so, to what extent did the association avail itself of this accessibility?

Answer. No regular reports were made by the Western Commissioner to the association. The files and correspondence of the Western Commissioner were probably accessible to any reputable railroad officer who desired to examine them, but there was no occasion, so far as we know, for the association to make any search of the files of the Western Commissioner.

Question 9. Answer questions in number 8 with regard to the minutes of the committee of directors under the western agreement, and the files of the secretary of that committee.

Answer. Question No. 8 has been answered after having given full consideration to the suggestions in question 9, so that no further reply to the ninth question is called for.

EXHIBIT NO. 392

ASSOCIATION OF AMERICAN RAILROADS

PLAN OF ORGANIZATION

In order to promote trade and commerce in the public interest, further improve railroad service, and maintain the integrity and credit of the industry, the Railroad Companies of the United States do hereby establish an authoritative national organization which shall be adequately qualified and empowered in every lawful way to accomplish said ends where concert of policy and action are required. For the purpose of facilitating the realization of this constructive object, the Members do hereby declare that these announced policies shall be authoritative and will be supported.

ARTICLE 1. (a) The organization shall be styled The Association of American Railroads, hereinafter called the Association. It is created to deal expeditiously and effectively with all matters of general interest to the industry, within the scope of the foregoing preamble.

(b) The existing regional organizations known, respectively, as Eastern Presidents' Conference, Western Association of Railway Executives, Southwestern Presidents' Conference, and their related or subordinate associations and organi

zations will preserve their identities and activities, cooperating with the Association.

ARTICLE 2. In addition to carrying out the purposes stated in the preamble hereof, the object is to coordinate the activities of the several associations dealing, directly or indirectly, with subjects connnected with the American railroads.

ARTICLE 3. (a) All American steam railroads, except those operating less than one hundred miles of road, including trackage rights, and except those operated primarily as plant facilities, shall be eligible to membership. The Board of Directors may admit to membership railroad, switching, or terminal companies with annual operating revenues in excess of one million dollars.

(b) The Board of Directors may admit to the Association as Associate Members without voting rights, carriers which, in the judgment of the Board, are not eligible for full membership as provided in Article 3 (a). The Board shall fix a flat rate for the annual dues of Associate Members, not subject to the further assessment provided in Article 20.

ARTICLE 4. (a) The general supervision and control of the affairs of the Association shall be committed to a Board of Directors, to be selected annually by the railroads members of the Association, who shall hold office for one year or until their successors are elected.

(b) The Board of Directors shall consist of eighteen members: seventeen railroad Chief Executives (President, Chairman, Chairman of the Board,' Trustee, Receiver, Chief Executive Officer)-six from Eastern Territory, including New England; seven from Western Territory; and four from Southern Territory— and the President, who shall be ex officio Chairman of the Board of Directors. (Adopted at Annual Meeting of Member-Roads, November 19, 1937.)

(c) The Board of Directors shall elect the officers of the Association, and. fix their compensation and the terms of their employment.

(d) The Board of Directors shall meet regularly each month at a time and place to be designated by the Board. Special meetings of the Board may be called by the President, or, upon request of not less than three members of the Board, shall be called, at a time other than the stated period. A majority of the Board of Directors shall constitute a quorum for the transaction of business, but a vote for the majority of the Board is required for decision. On a controversial question a three-fourths vote of the Board shall be necessary to a decision. Any member of the Board may declare a question controversial. No decision shall be reached nor any order made against any railroad company with respect to any controversial question without notice and opportunity to be heard.

(e) The Board of Directors shall determine the policies and control the activities of the Association.

(f) If any road or group of roads, members of the Association, shall object to any decision of the Board of Directors, the radio group of raids so objecting shall have the right to submit the question or questions at issue to arbitration as hereinafter provided in Article 19.

ARTICLE 5. The Board of Directors shall appoint annually an Audit Committee of accounting officers, one of whom shall be Chairman, whose duty shall be to make a complete audit of the accounts of the Association at such time or times as it may be deemed proper, and shall make report annually to the Board of Directors.

ARTICLE 6. (a) There shall be an annual meeting of the members, and the Board of Directors shall designate the time and place thereof. At this meeting there shall be submitted a report of the activities of the Board of Directors during the preceding year, and there shall be elected a Board of Directors for the ensuing year. Special meetings of the members may be called by the Board of Directors at any time.

(b) Not less than 30 days prior to the Annual Meeting of the Members of the Association, the Eastern Presidents' Conference shall nominate six persons, the Western Association of Railway Executives seven persons, and the Southeastern Presidents' Conference four persons, all of whom shall be Chief Executive Officers (as defined in Article 4,p aragraph (b) hereof) of Member Roads, to be voted for at the Annual Meeting as Directors of the Association. Any member road may make other nominations. Vacancies occurring during the year shall be filled by the Board for the unexpired term.

1 Amended November 8, 1940.

(Adopted at Annual Meeting of Member Roads, November 19, 1937.)

ARTICLE 7. (a) There shall be an executive committee consisting of members of the Board of Directors to be selected by the Board. The Board shall have power from time to time to fix the number of members of the Executive Committee, but there shall never be fewer than five nor more than seven members, except that in addition to the members selected by the Board the President of the Association shall be ex-officio a member and Chairman of the Executive Committee.

(Adopted at Member Road meeting November 7, 1935.)

NOTE. See underneath for Article 7 (b).

(c) During the interval between meetings of the Board of Directors, the Executive Committee shall possess and may exercise all the powers of the Board, reporting its action to the next meeting of the Board for approval.

(d) The Executive Committee shall interest itself in matters affecting the railroad industry and shall recommend to the Board of Directors and to the Members such constructive policies as will promote efficiency and economical operation. Whenever requisite, it will accompany its recommendations with suggested rules and regulations to insure the execution of the determined policies. ARTICLE 8. The officers of the Association shall be

President;

Five Vice Presidents, one of whom shall be the General Counsel;
Associate General Counsel; General Solicitor; Secretary-Treasurer.

ARTICLE 9. (a) To the end that the business of the Association may be economically and efficiently conducted, and its service to the American Railroads effectively performed, the Association establishes departments to be administered under executive supervision, as herewith set forth, to wit:

I. Law

II. Operations and Maintenance

III. Traffic

IV. Finance, Accounting, Taxation, and Valuation.
V. Planning and Research

(b) Each of the Departments provided for in this article shall be under the direct supervision of a Vice President of the Association. The Vice President of the Law Department shall serve also as General Counsel. The work of the Several Departments may be subdivided into such divisions as the Vice President in charge may direct, with the approval of the President and the Board of Directors.

(c) Anything in this Plan to the contrary notwithstanding, the Board of Directors shall have power to transfer to any other Department any activity herein assigned to a particular Department.

ARTICLE 10. (a) The President shall exercise general supervision over the affairs of the Association and shall preside over meetings of the Board of Directors, the Executive Committee and the Members. He shall perform such other duties as shall be assigned to him by the Board of Directors. In the absence or disability of the President, a Vice President of the Association, to be designated by the Executive Committee, shall discharge the duties of the President.

(b) The President shall have power to appoint such subordinates, assistants and clerical employes as may be necessary for proper conduct of the work of the Association; all subject to the approval of the Board of Directors. No bills shall be incurred without the approval of the President or a Vice President.

ARTICLE 11. The Law Department shall deal with questions of legislation, governmental action and policies, and matters of a legal nature which, in the opinion of the Board of Directors or of the Executive Committee, will affect the members of the Association, and with such other matters of a related nature as may be referred to it by the President.

ARTICLE 12. The Operations and Maintenance Department shall deal with all matters pertaining to Operating, Car Service, Transportation, Equipment, Telephone and Telegraph, Signaling, Maintenance and Construction Engineering. Mechanical, Purchases and Stores, Inspection, Freight Claims and such other matters of a related nature as may require attention or may be referred to it by the President.

ARTICLE 13. The Traffic Department shall deal with all matters of a traffic nature, both freight and passenger, and such other matters of a related nature as may require attention or may be referred to it by the President.

ARTICLE 14. The Finance, Accounting, Taxation and Valuation Department shall deal with all phases of Accounting, Financial and Taxation activities and such other matters of a related nature as may require attention or may be referred to it by the President.

ARTICLE 15. The Planning and Research Department shall absorb the work of the Bureau of Railway Economics and have charge of research problems affecting carriers, and shall provide properly digested information for other Departments. It shall be the source of fundamental technical information and shall deal with all matters pertaining to the analysis and study of all phases of transportation operations, with special attention to improvements in present methods and practices, and research leading to the correlation of all forms of competitive transportation, pure and applied science, materials and construction, special statistics and reports, and with such other matters of a related nature as may require attention or may be referred to it by the President. ARTICLE 16. In each of the Departments under the direction of the Department Vice President there shall be appointed such Committees as may be deemed necessary for the subjects to be covered and the activity required upon these subjects. The members shall be selected from the various geographical sections of the country to insure adequate representation of the experience and practice of the Member Roads. They shall give such cooperative action to other committees as may be required.

ARTICLE 17. The Secretary-Treasurer shall be responsible for the funds of the Association, shall receive, disburse, and account for all monies received and expended, shall make monthly reports of the finances to the Board, and shall give such bond as the Board of Directors may direct. He shall also keep a full and complete record of proceedings of all meetings of the Members, of the Board of Directors, and of the Executive Committee, and perform such other duties as may be assigned to him by the President or the Board of Directors. He shall deposit the funds of the Association in such bank or banks as may be designated by the Board of Directors.

ARTICLE 18. (a) Standards, rules, regulations, and decisions of the Association shall be promulgated under the direction of the President, subject to the approval of the Executive Committee.

(b) Standards, rules, and regulations may be established by the Member Roads by majority vote at any regular or called meeting or by letter ballot as the exigencies of the occasion may demand. The voting power of the Members of the Association shall be, in questions affecting physical property, proportionate to the ownership of equipment or miles of track, whichever may be applicable.

ARTICLE 19. (a) It is hereby declared to be the policy of the Association that all controversies between Members of the Association should be settled by arbitration, and the Members of the Association agree that, in any controversy over which the Board of Directors has assumed jurisdiction and which it has decided by the affirmative vote of three-fourths or more of its members, they will accept and carry out such decision or, within twenty days, institute arbitration proceedings as hereinafter provided.

(b) Whenever it is necessary to arbitrate a controversy between the Board of Directors of the Association and a Member or group of Members, arbitrators shall be selected in the manner following: The Member or group of Members demanding arbitration shall select one or three arbitrators and shall notify the President of the Association of such action. Within twenty days after the receipt of such notice, the President of the Association shall select one or three arbitrators and shall notify the opposite party of such action. Within twenty days thereafter, the arbitrators shall meet and select one or three additional arbitrators. If, within the said period of twenty days, there shall be a failure by the previously selected arbitrators to select such additional arbitrator or arbitrators, the presiding Judge of the Federal Circuit Court of Appeals of the circuit which includes the home office of the Member demanding arbitration (or the home office of the Member with the largest road-mileage demanding arbitration, if there be more than one Member party to the arbitration) shall be requested to appoint, within twenty days, the additional arbitrator or arbitrators.

(c) The Association shall adopt rules to be followed with respect to the admissibility of evidence, the filing of briefs, the hearing of argument, and all other matters affecting practice and procedure.

84949-44-pt. 15-12

(d) Within sixty days after a case has been submitted, the arbitrators shall render their decision and make their award, and such award, including an award involving the payment of money, shall be conclusive and binding upon the parties to the controversy. The decision and award of a majority shall constitute the decision and award of the arbitrators.

(e) The cost and expense of arbitration, as determined by the arbitrators, in each specific submission for arbitration, shall be borne in such proportions as shall be fixed by the arbitrators.

(f) Where there exist means for the settlement of disputes in organizations to be brought under the Association such rules and regulations may be continued, unless otherwise ordered by the Board of Directors or the Executive Committee. ARTICLE 20. The expenses of the Association shall be met by assessments made by the Board of Directors and approved by the Member Roads based upon the operating revenues of the railroads members of the Association, the period selected to be determined by the Board of Directors.

ARTICLE 21. On all questions which come before the Members for decision the voting shall be in proportion to operating revenues, except as herein otherwise specifically provided.

ARTICLE 22. Attached, as Exhibit "A," is a form of Contract under which all Members will agree to the above provisions and which they will be required to enter into at the time of signifying their intent to become members of the Association; provided that Members in receivership or trusteeship may, if they so elect, execute a Contract in the form of Exhibit "B," hereto attached, in lieu of Exhibit "A."

ARTICLE 23. The principal office of the Association shall be in the City of Washington, D. C., but, subject to the approval of the Board of Directors, branch offices may be established in the cities of New York and Chicago, and elsewhere as required.

ARTICLE 24. This Plan shall become effective upon a date to be fixed by the Board of Directors after three-fourths of the mileage of the railroads now belonging to the American Railway Association and the Association of Railway Executives shall signify their assent thereto.

ARTICLE 25. The provisions of this Plan may be amended or modified at any time by a three-fourths vote of the membership, each Member casting its vote in proportion to operating revenues.

September 21, 1934.

EXHIBIT "A"

The undersigned hereby signifies assent to the Plan of Organization of The Association of American Railroads as set out in the attached Plan dated September 21, 1934, and by executing this paper becomes a member thereof, covenanting with all the others who shall sign a counterpart hereof to be bound by the provisions of the said Plan, so long as the undersigned shall remain a member of the Association, reserving the right, however, to cease to be a member upon the expiration of ninety days after giving written notice of intention to withdraw from membership; provided that the undersigned, if it withdraws from membership, shall nevertheless be responsible for its proper proportion of obligations incurred while it was a member.

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Trustees (Receivers) of the
Railroad Company hereby signify assent to the Plan of Organization of The
Association of American Railroads as set out in the attached Plan, dated
September 21, 1934, and by executing this paper become members thereof,
Covenanting with all the others who are and shall become members to be bound
by the provisions of the said Plan so long as the undersigned shall remain

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