all of their traffic while two-thirds of intercity highway ton-miles and nine-tenths of inland waterway tonnage move wholly free of any Interstate Commerce Commission rate regulation-largely in consequence of the agricultural and bulk commodity exemptions.

A measure of the railroads' handicap in this regard finds expression, as I have pointed out, in the fact that some 70 percent of railroad tonnage consists of these self-same agricultural and bulk commodities, and some 45 percent of the railroads' gross freight revenues is derived from them.

Volume traffic is essential to low-cost transportation. As cost is a key factor in obtaining volume, the railroads seek to translate improved efficiency through technological progress into lower costs and rates. Unless the regulatory drags under which the railroads are required to operate are removed, new-found efficiencies cannot produce their potential benefits for the national economy.

It is proposed, in H.R. 11583, to take a step in the direction of equality of competitive opportunity to participate in the transportation of this traffic, and to do so by way of diminished regulation. Regulatory control of the levels of minimum rates for the rail transportation of agricultural and bulk commodities would be eliminated. This step would constitute only partial equality, for it is not proposed to grant to the railroads the complete regulatory exemptions available to highway and waterway operators. Except for the elimination of minimum rate controls the Interstate Commerce Commission's authority and power over rates for the rail movement of agricultural and bulk traffic would be preserved and remain undiminished.

The Commission's control over maximum rail rate levels, for example, would be left intact, as would its control over discriminatory rail rate practices.

But decontrol of minimum rates would remove the most formidable obstacle faced by the railroads in their competition for agricultural and bulk traffic. Further, it would do so without rendering the railroads' competitors helpless, as is sometimes contended. Reduced rail rates on this traffic would still have to be published and observed, without change except upon statutory notice; and applicable provisions of the antitrust laws would be interposed as protection against the threat of predatory practices.

In summary, enactment of the minimum rate legislation would afford greater equality of opportunity among carriers through the removal of artificial and inequitable regulatory restraints, encourage vigorous, but fair, competition for traffic, and thus benefit users and the public through lower rates for transportation services more nearly reflecting the true economic capabilities of the carriers.

The transportation system which a strong America must have can be provided if Congress will act favorably on the recommendations contained in the President's transportation message. We urge such action at this session of Congress in order to help bring about the sound and healthy transportation system so essential to our economy and defense.

APPENDIX A

Tons originated and gross freight revenue, class I railroads, year 1960

1 See following tables for lists of agricultural and bulk commodities.

Source: Interstate Commerce Commission, Freight Commodity Statistics. Class I Railroads in the

United States.

Tons originated and gross freight revenue-Class I railroads, year 1960

1. Page 1, line 7. Insert the word "interstate" before the word "transportation."

The purpose of this amendment is to make certain that the Interstate Commerce Commission will retain authority under section 13 (4) to remove unjust discrimination against, or undue burden on, interstate commerce by prescription of the minimum level of intrastate rates.

This would be consistent, it appears, with the intended purpose of the bill. During the course of testimony presented before this committee on June 26, 1962, by the Under Secretary of Commerce for Transportation the following colloquy took place:

"The CHAIRMAN. Now, then, finally I would like to inquire that with reference to H.R. 11583, where your reference is made to carriers of rates, fares, and charges for transportation of agricultural and bulk commodities—if it is not intended by the bill that the ICC be deprived of its authority to remove unjust discrimination against interstate commerce by prescription of a minimum level of intrastate rates. Now, that question was raised by another member a little while ago.

"Mr. MARTIN. No, sir; I don't think so.

"The CHAIRMAN. You do not think that that is intended by this provision. "Mr. MARTIN. No, sir." (Tr., p. 96.)

2. Page 2, line 25, and page 3, lines 1 and 2, substitute for the words "The Commission shall have no authority or power to determine that such a rate, fare, or charge is lower than a reasonable minimum" the following "Neither the Commission nor the courts shall have authority or power to determine that such a rate, fare, or charge is unlawful under this Act on the ground that it is lower than a just and reasonable minimum."

The purposes are these: (a) Section 1(5) of the Interstate Commerce Act provides that every unjust and unreasonable charge is prohibited and declared to be unlawful. Section 9 of the act provides that any person claiming to be damaged by violation of substantive provisions of the act shall have the right to make complaint to the Commission or to bring suit in designated courts. It might conceivably be argued that the bill deprives the Commission of jurisdiction to determine that a reduced rate violates section 1(5), but that damages could still be sought in court for a violation of section 1(5); (b) insertion of the words "just and" before the word "reasonable" constitutes a technical change to conform the wording in the bill with that in section 1 (4) and (5) of the act, where the reference is to "just and reasonable" rates, fares, and charges.

3. Page 3, line 3, insert the following sentence after the word "charge": "When used in this paragraph, the terms 'rates, fares, or charges' shall include all classifications, regulations, and practices relating thereto."

The purpose of this proposed amendment is to make certain that reductions effected by changes in classifications, regulations, and practices will be covered by the limitation on ICC authority effected by the bill. For example, a reduction on freight charges on a particular commodity might be accomplished by a change in classification rating or by creating an exception therefrom. The proposed amendment is consistent with section 15a (1) of the Interstate Commerce Act, which provides :

"When used in this section the term 'rates' means rates, fares, and charges, and all classifications, regulations, and practices relating thereto."

An alternative form of amendment would add the following language after the word "change" on line 3: "and this limitation shall include any reduced rate, fare, or charge effected by changes in classifications, regulations, and practices relating thereto."

When the Secretary of Commerce appeared before this committee on June 26, 1962, he was asked by the chairman:

"The minimum rate provision contained in this bill, H.R. 11583, speaks, then, only of rates, fares, and charges, and makes no reference to classification, regulations, and practices, relating to such rates, fares, or charges. Is it intended by this bill to cover in these minimum rate provisions reductions in freight charges that might be accomplished through changes in classification of rates?

"Secretary HODGES. I would have no objection to having those put in, Mr. Harris.

"The CHAIRMAN. Well, just wondered what is the intention-had that point been thought of in connection with your consideration of this matter. And what is the intention?

"Secretary HODGES. Those items are a little more technical. We probably should have included them in the draft. But we are trying to cover the major phases. But if your committee

"The CHAIRMAN. Well, would they be reached by the language that you have in the bill?

"Secretary HODGES. Probably not. They probably ought to be included" (Tr. p. 68).

The CHAIRMAN. Any questions, Mr. Williams?

Mr. WILLIAMS. I think congratulations should be in order to Mr. Loomis for the comprehensive and clear presentation of the railroads' position with respect to this legislation now under consideration. Mr. LOOMIS. Thank you, sir.

Mr. WILLIAMS. His statement answered most of the questions that I had in mind. However, I do have one. That is with respect to the suggestion that you made on page 28 to the effect that the mixing rule. and the three-commodity rule be retained for water carriers.

Now, if these are retained, that would not make for exact equality in the shipment of bulk and agricultural commodities, would it?

Mr. LOOMIS. The carriers hauling the three bulk commodities, and subject to the mixing rule, would still have greater privilege than would a competing railroad, because they would be free of all regulation, whereas the railroads are only free of minimum rate regulation. Mr. WILLIAMS. That is correct. However, there is no suggestion that the mixing rule or the three-commodity rule be extended to the railroads?

Mr. LOOMIS. No, sir.

Mr. WILLIAMS. Now, let me ask you this. I understand that you are at some disadvantage because of the fact that you still have to file minimum rates where the other forms do not have to file minimum rates, and you are subject to regulation as to discrimination of rates, long haul, and so forth. If language were written into this act that would place the water carriers under exactly the same type of regulation in this respect that the railroads now have, would the railroads be satisfied with it?

Mr. LOOMIS. That would achieve the objective of equality.

Mr. WILLIAMS. You would be satisfied, if that were done, to eliminate the mixing rule and the three-commodity rule?

Mr. LOOMIS. If they were relieved only from minimum rate regulation, you would have equality, and that would be in accordance with our objective.

Mr. WILLIAMS. In other words, you would have no objection to providing actual, real equality?

Mr. LOOMIS. That is right. If a water carrier now exceeded the three-commodity rule, or was subject to the mixing rule because he mixed with nonexempt commodities, he would be freed from minimum rate regulation under this bill, but not from the other provisions of the Interstate Commerce Act applicable to it. So as to that, you would have equality as far as minimum rate regulation is concerned between that type of water carrier and the railroads. The carrier who only carries three or less commodities, or is not subject to the mixing rule, or doesn't violate it, is free from all regulation. So he would still have an advantage under the bill as drafted.

Mr. WILLIAMS. Throughout your statement and the statements of other industry witnesses I have noticed that reference is continually made to the economic health of that particular industry, and the way that this legislation would affect the economic health of that industry. Very few, if any of the industry witnesses have appeared to testify in regard to the public interest. Would you like to comment on how you feel that the enactment of this legislation would serve the public interest?

Mr. LOOMIS. I think it would definitely serve the public interest in providing lower rates; in providing a greater choice of services, it could not help but benefit the public and the shippers.

Mr. WILLIAMS. That is all.

The CHAIRMAN. Mr. Younger.

Mr. YOUNGER. Yes, Mr. Chairman.

I believe, Mr. Loomis, you were here when Mr. Murphy testified yesterday.

Mr. LOOMIS. Yes, sir.

Mr. YOUNGER. In your recommendations you follow the bill recommendation eliminating the minimum rate rule, while Mr. Murphy