and he has an opportunity to protest if he does not like the rate that is being proposed by any competitor.

We have not heard any single argument in opposition to the Bulwinkle-Reed bill that we regard as valid and we hope the legislation will promptly be enacted into law.

I would like to say, Mr. Chairman, that in making that statement, we looked at one paragraph of the Russell amendment, that is, paragraph "c" of the Russell amendment; and if there is an ambiguity there, we anticipate that that would be eliminated by the House committee or the Senate committee or in conference, because we would not conceive that it was the intention to have this statute perpetuate the law as it existed when these suits were filed, and to make anything in this bill which would change the basis then existing unlawful, because that would just simply be to nullify the purpose of the legislation, which we understand to be one of clarifying the jurisdiction over these cases, to make clear under which cimcumstances the Interstate Commerce Commission has jurisdiction and under which circumstances the antitrust laws are applicable.

Thank you Mr. Chairman.

Mr. O'HARA. Colonel, how much notice do you think the average small shipper has of a hearing, of these unofficial hearings that are had? I do not speak of the Interstate Commerce Commission published tariffs, but I am speaking of these changes of rates or classifications that are made in informal discussions with the carriers which are then promulgated through some notice. Now, what is that notice?

Mr. BARBER. They are published regularly in the Traffic Bulletin, and we get copies occasionally of the notices that are sent out to interested shippers. I am not personally familiar with the exact number of days that are required. I think perhaps some of the other witnesses could answer that better than I.

I know that there is no criticism, or no criticism has come to us of the time allowed or of the arrangements for disseminating this information about the proposals that are up. That is about the way we look at these things.

Mr. O'HARA. Your traffic leagues would get notice of it, but I am speaking of small shippers of the Podunks out in the average State where you have these small shippers. Do they get these notices?

I

Mr. BARBER. They get them if they are interested. They are published in the official guides, and they have to be posted, too. have not heard of any single complaint that the shippers have failed to be advised. The whole procedure, I think, is one of the best working and least complained of of all of mechanisms that we have in this transportation field.

Mr. O'HARA. Of course, if he has a complaint, he has to appear at the hearing before the rate bureau, is that what follows then?

Mr. BARBER. That is right.

Mr. O'HARA. If that was several hundred miles away, even if he did have a complaint, if he was a small individual shipper, he would not go down there, is that about it, even if he had the notice?

Mr. BARBER. What he would actually do would be to go to his carrier and say, "I do not like the looks of this rate." His carrier is just as much interested in protecting the interest of that particular shipper as the shipper is in having it protected himself. He does not want to see it unprotected.

Mr. O'HARA. You do not mean to say that a carrier is going to object if that rate is favorable to him over the shipper's interest, do you?

Mr. BARBER. What I am suggesting is that if a shipper sees the rate, he does not like it because it is too favorable to his competitor. Let us say that two shippers are located in two different towns. One of them proposes a rate, or that is, he gets his carrier to propose a rate; and the second shipper looks at this proposed rate and says, "This looks unfair to me. It is going to give my competitor an advantage over me in transportation costs."

The one natural ally that shipper number two has got is the carrier which serves him, because he does not want to have the shipper number one and carrier number one have an advantage over his shipper and his carrier. That is one of the things in here.

Mr. O'HARA. I have had little practical experience in that, if you might permit me to say that. Here is A on X railroad. His competitor on Y railroad gets a better rate than he does or a lower rate, or if it is a mill, he may get milling and transit priveleges from an adjoining large railroad center. Now, you cannot tell me if he goes to his railroad and says, "Now, this is wrong; I want my rate reduced on your railroad the same as it is for my competitor over here on the other railroad," that they are going to go to bat very much for him. I just do not believe that they do, because I know that they do not.

Mr. BARBER. They will very often, that is, the second carrier concerned will very often protest against the reduction of the other rate. Now, the shipper No. 2 is mainly concerned that his competitor is not given any advantage over him. The percentage of costs, in total costs, that represent transportation costs is so relatively small that it does not make so much difference what the actual levels of rates are, as the question of the competitive relationships. That is what all of this is about.

Now, let us assume the case that the second shipper did not get satisfaction. He has always got recourse to the Interstate Commerce Commission.

Mr. O'HARA. That is a long road, and costly one.

Mr. BARBER. Not on informal complaint. It is a very easy route. It is done often by just a letter. I think in our contacts, our members who are interested in miscellaneous rate cases, to them our consistent advice is take this up first with the carrier and see if you can get it straightened out, and then if you cannot get it straightened out that way, take it up with the informal procedure. I have no figures on this, but I believe that 99 percent of the difficulties are straightened out in that manner.

Mr. O'HARA. Colonel, I just wanted to say for the benefit of the record that my personal experience in one of these situations is just exactly to the contrary of what you have stated as what happens, because it just worked out the other way. That is about the shortest way I can put it.

Mr. HALL. Are there any other questions, gentlemen?

Mr. HARRIS. Might I ask the colonel one question? There were 75 votes against this proposal from your organization?

Mr. BARBER. Yes, sir.

Mr. HARRIS. Where did those 75 votes in opposition come from generally?

Mr. BARBER. They were scattered all over the country. I was interested in that question, Mr. Chairman and Mr. Harris, because I thought that it might reflect some pattern as to what these folks were objecting to; but they were just scattered all over the country, and there was no pattern to it at all. I imagine some of them did not like what was said about user charges on airports.

This declaration, incidentally, was the one we submitted to this committee in response to the Lea inquiry along with the explanatory report about it; and there were a lot of things in it.

Mr. HARRIS. They were not noticeably opposition from any one section more so than any other?

Mr. BARBER. No, sir.

Mr. HALL. Thank you very much, Colonel Barber.

Our next witness is Mr. LaRoe.

Will you please state your name and your representation?

STATEMENT OF WILBUR LAROE, JR., REPRESENTING THE AMERICAN PAPER & PULP ASSOCIATION, WASHINGTON, D. C.

Mr. L'AROE. My name is Wilbur LaRoe, Jr.; and my address is Investment Building, Washington, D. C. I am a lawyer, and I was formerly chief examiner for the Interstate Commerce Commission and formerly president of the Association of Interstate Commerce Practitioners.

I do not have a prepared statement, and I shall avoid cumulative testimony. I appear here for the American Paper & Pulp Association which embraces most of the manufacturers of paper and paper products in the United States with mills scattered all over the United States, in every region and every area. The size of the shipments and the importance of the traffic is indicated by the fact that they pay $135,000,000 a year in freight charges, which is a great deal of money to pay to the transportation agencies in one year.

The freight rates and the method of making them are extremely important to our members, some of whom are small and some of whom are large. The conference method of making these rates and publishing these tariffs has been through the years exceedingly satisfactory to our members, as it has been to most shippers. I would like to stress to the committee the extreme difficulty that would exist if a shipper had to be familiar with the tariffs of a very large number of railroads or a very large number of motor carriers. He just could not keep up with the tariffs published by all of those agencies. However, when in a given area like trunkline territory, we will say, the carriers get together and publish an agency tariff, the shipper has it on his desk, and it simplifies the thing. The point I would like to make to you is this: The railroads cannot make that kind of a tariff, and the motortrucks cannot make that kind of a tariff without joint action. They have got to get together to do it.

Now, if somebody is going to say that they are violating the law in doing that, then we just are in a bad fix, because we go back then to individual railroad action and individual motortruck action which would be chaos.

I do think, answering Mr. O'Hara, that I see some validity in his point, because it is difficult to get notice to every shipper. Yet, I think that the notices of rate changes that go out are broadcast just about as far as it is humanly possible. What I mean by that is that the traffic bulletin, the daily traffic bulletin and so on contain these changes, so that every shipper who keeps up with the periodicals is notified. I grant you, however, that there might be some who cannot, because of their small size, and how to reach them is, of course, a perennial problem.

I would like to just briefly indicate the points of protection to the shipping public. First, these changes are publicly docketed and publicly discussed, and notice is given in papers of wide circulation. The shipper is never taken by surprise. He has the right to go to that hearing, if he can afford to get there; and I grant you that it may be difficult for him to get there, but the public hearing is held.

I want to tell you it is a healthy thing to have the light of publicity thrown on these rate changes by public hearings. It tends to prevent things being put over on the small shipper and the big shipper, and I would like to agree with the previous witness that the danger to the small shipper, or the protection to the small shipper by this bill is very important, because it is to his advantage that some big railroad shall not put over something in favor of a big shipper.

Then, the power of the ICC to suspend is always there. I would like to underscore the confidence of my people, my whole group, in the Interstate Commerce Commission. I do not know of any agency in the United States that enjoys more complete confidence by those whom it serves than does the Interstate Commerce Commission. It stands at least as high as any of the courts in that matter.

I would like to quote, if I may, what the Interstate Commerce Commission said in 1898, which I think has a pretty close bearing on this matter. It said in its annual report of that year:

It is extremely difficult to see how carriers can intelligently adjust their rates so as to fulfill the general requirements of the act without the right to organize in some form for the purpose of obtaining necessary information and applying that information as occasion requires. To one familiar with actual conditions it seems practically out of the question to establish rates that are relatively just— and get this sentence

without conferences and agreements.

Professor Ripley made a statement once that always impressed me. He said:

The rate structure of this country is not a lot of individual threads, it is a fabric. Now, you cannot make a fabric of freight rates without conferences between the railroads, and if the Department of Justice is going to tell you that you are violating the law whenever you sit in a conference on a freight rate, then your rate fabric is reduced to a lot of individual threads, and the railroads are fighting with each other. You do not have then the unified and consistent method of making rates which you have today.

As I understand the purpose of this legislation, it is, as has been stated by some of the members of this committee, to authorize by a declaratory statute a practice that has been going on for a great many years, and to prevent the concerted action of carriers in these matters from being attacked by the Government or by anybody else

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as unlawful, where the carriers can conform to the methods laid down. by this statute for the protection of the public.

That concludes my statement, unless the members have questions. Mr. HALL. Thank you very much, Mr. LaRoe.

Mr. O'HARA. Mr. LaRoe, I would like to ask you a question. I agree with you, as I did in the last hearing, that there has to be a conference or conferences between shippers and also carriers as a practical and sensible proposition. Now, the difficulty of that, or the difficulty that I have is that those conferences can be perfectly legitimate, a dealing-at-arm's length proposition, or they may verge on what amounts to a conspiracy, or coercion.

Now, I have no objection to the fair, pound-the-table dealing between shippers and carriers and joint carriers and that sort of thing; I think it is a perfectly sound and practical situation. When we write this act and say, in effect and practically, that they are not subject to any violations of the law, then I think we are going a long way. That is my point.

Now, if the Justice Department is wrong in some of its prosecutions, that is something else. I am not defending them.

Mr. LAROE. You are afraid that this statute opens the door for several railroads to get together in some kind of a conspiracy and throw the cloak of protection, legal protection, over that bad conspiracy? That is what is worrying you?

Mr. O'HARA. That is exactly what is worrying me. I think that that may be done, and it may start out to be a perfectly fair proposition and end up a perfectly bad one. I am not worrying about the big shipper. He is protecting himself. It is the little, unrepresented shipper who is sort of going in, and the agent says that here it is going to cost you so much, and that is all that he knows about it.

Mr. LAROE. You are right about that, and I think it is important to protect him; but my point is that if the Interstate Commerce Commission does its job, which I think it will here, in policing this matter, you know even after carrier action is taken of the conspiracy type that you mention, a complaint can be made to the Commission and the Interstate Commerce Commission can change the whole basis of the authority given.

Mr. O'HARA. The Federal Trade Commission even has authority to bring action under the Federal Trade Commission Act.

Mr. LAROE. That is right.

Mr. O'HARA. But the trouble is, I feel, to put it bluntly, that wither the antitrust laws are a good thing for everybody or they are a bad thing for everybody. I think that that should apply to railroads just as well as it applies to John Doe's making mousetraps.

Mr. LAROE. I think that you have a point there, except that I would make one qualification to it, if you will permit me, that where you have an agency like the Interstate Commerce Commission charged with responsibility in that field and you have confidence in that agency, as I know Congress has, that makes some difference.

Mr. O'HARA. Now, if you will permit me to say this, I wish that I shared that same confidence-perhaps the ICC has an impossible administrative job.

Mr. LAROE. Well, most of us do.

Mr. O'HARA. I do not say that with any personal feeling.