New Orleans Steamship Association

The City of New Orleans

New Orleans Clearing House Association

Board of Commissioners of the port of New Orleans, and

the individual members of the said organizations.

Most of the members of the trade organizations recited, whom we represent, are what you might term small manufacturers, shippers, and receivers of freight.

I appeared before the Senate Committee on Interstate Commerce at a public hearing held in Washington, March 22, 1946, in support of H. R. 2536, introduced by Congressman Bulwinkle and known as the Bulwinkle bill. The so-called Reed-Bulwinkle bill, S. 110, was passed by the Senate on June 18, 1947, and there is now before your committee for consideration H. R. 221, which substantially reproduces the previous Bulwinkle bill, reintroduced by Congressman Bulwinkle on January 3, 1947. The bill as originally introduced has been amended in several particulars.

As a prelude to my testimony, I wish to state that I have had approximately 26 years' experience in rate and transportation work, the first 5 years of which were with the railroads in various capacities. My combined service in connection with, first, the New Orleans Joint Traffic Bureau, predecessor to the New Orleans Traffic and Transportation Bureau, and then with the New Orleans Traffic and Transportation Bureau, comprises approximately 17 years.

It might be said that the preponderance of the transportation problems that are handled by the bureau are usually those of the smaller manufacturers, shippers, and distributors, due to the fact that the larger manufacturers, shippers, and distributors have their own highly trained traffic organizations who supervise their individual traffic and transportation matters. As a general rule, the large manufacturers and shippers located at New Orleans handle their own rate and traffic matters with the transportation carriers and before the regulatory bodies, including the Interstate Commerce Commission.

During the time that I have been connected with the Bureau in various capacities and now as general manager, I attended numerous meetings of the rate-making bureaus of the rail carriers. I have also had occasion to handle any number of rate adjustments sought to be established by the port, also manufacturers, shippers and distributors located in New Orleans, some of which we initiated and supported and others we opposed, before the rate-making bureaus, as well as before the regulatory bodies. I have many times personally appeared before the carrier rate-making bureaus, representing the city and port, or the manufacturers and shippers located at the city and port, either in support of or in opposition to rate adjustments sought by other shippers, ports and/or communities.

In my present organization I have several experienced traffic men whose time is largely devoted to examining and handling rate proposals that are filed with the several carrier rate-making bureaus for consideration.

In view of the foregoing, I feel and believe that I am qualified to express an opinion with respect to this proposed legislation, which proposes to amend the Interstate Commerce Act so as to exempt certain agreements of the carriers from the antitrust laws, including activities of their rate bureaus and standing rate committees, subject

to such terms and conditions as may be prescribed by the Interstate Commerce Commission.

There are approximately 136 rail lines in the United States, and through the activities of the rate bureaus and various rate associations, all of these railroads are actually operated as one system insofar as the shipping public is concerned. The purpose of these rate bureaus and associations is to act as a clearing house for the consideration and adjustment of traffic matters between the rail carriers and the shipping public. Through them, any railroad or shipper may originate a proposal to publish, change, or revise rates on any commodity that it or he may be interested in. Any shipper may step in and show how he will be affected adversely by any such publication, revision, or change or he may demand a corresponding adjustment. Any adjustment that may be agreed upon or approved by the rate bureaus may, after the tariff or supplement containing such adjustment is filed with the Interstate Commerce Commission, be protested against by a shipper by filing a petition, for suspension with the Interstate Commerce Commission. This privilege is afforded to him by the present provisions of the Interstate Commerce Act. If the shipper, in his petition, establishes a prima facie case of unlawfulness or unreasonableness, the Iuterstate Commerce Commission will suspend the protested items and assign the matter for public hearing. If no protest is filed with the Commission, the approved rates or charges become effective on the effective date published in the tariff. However, even should a rate become effective without protest, the Commission has the right, under the Interstate Commerce Act, to institute an investigation on its own motion, should it feel that the published rate is unlawful in any respect, and a shipper has the right to file a complaint.

As to intrastate traffic (that is, traffic moving wholly within the confines of a particular State), even if a rate or charge is approved by the rate bureaus, the carriers cannot proceed with publication without first securing the consent of the State regulatory body, which in the State of Louisiana is the Louisiana Public Service Commission.

In the course of a year, thousands of such rate adjustments are handled by the various rate bureaus, and through this system of rate making millions of rates covering thousands of items and points of origin and destination have been worked out through the cooperation of the shipping public and the carriers. Furthermore, this method of procedure has been designated to meet the needs of the shippers as well as to work out a harmonious method of publishing and revising rates between the shippers on the one hand and the carriers on the other. To deny the rail carriers, or, in fact, any of the other carriers subject to the Interstate Commerce Act, the right to organize and maintain rate-making bureaus would result in a chaotic condition, not only as between the carriers themselves but also between the shipping public on the one hand and the carriers on the other. To require the shipping public to handle the question of publishing, revising, or canceling a rate with individual carriers would not be practical. As a matter of fact, such a procedure would result in the very discriminations and prejudices that the Interstate Commerce Act was enacted to prevent.

Without such cooperative agencies as are presently maintained, it would be virtually impossible for the carriers not only to cooperate with the shippers in bringing about harmonious rate adjustments,

but it would also be virtually impossible for the carriers, themselves, to comply with the numerous orders of the Interstate Commerce Commission. The rate bureaus and associations represent the core of the regulation of the railroads, and if the present bureaus and associations are severely restricted by reason of being held to be subject to the operations of the antitrust laws of our land, a situation would immediately arise that would be disadvantageous to the railroads and shipping public alike.

The Bulwinkle bill, as amended, will make more effective and workable the system of regulated competition in the field of transportation, will eliminate any doubt as to the carriers not being amenable to antitrust suits, and enable not only the railroads but also the water carriers, the motor truck operators and the freight forwarders, to continue the conference method of making rates through their rate bureaus and associations, and also make other kinds of agreements affecting operations subject to the supervisory control of the Interstate Commerce Commission.

It is to the interest of not only the transportation agencies, but also the shipping public, if the present cooperative system of rate making is to be continued and improved and the carriers relieved of the harassment of antitrust suits such as has been filed by the Justice Department, that the Bulwinkle bill be enacted.

The legislative committee of the Interstate Commerce Commission in its report dated May 17, 1945, approved, with certain amendments, the enactment of the Bulwinkle bill. These amendments have been incorporated in the bill now before this committee for consideration. The legislative committee of the Commission in its latest annual reports expressed the belief that there was definite need of legislation to clarify the rights of the carriers in connection with present antitrust laws.

The New Orleans Traffic and Transportation Bureau has gone on record as favoring the passage of this legislation and has urged its enactment.

I now respectfully request that your committee concur in the action taken by the Senate as there is, in our opinion, definite need for this legislation.

Mr. HALL. Thank you very much, Mr. Schwartz.

Mr. SCHWARTZ. Thank you.

Mr. HALL. The next witness is Mr. Schwietert. We will hear from Mr. Schwietert at this time.

STATEMENT OF A. H. SCHWIETERT, TRAFFIC MANAGER OF THE CHICAGO ASSOCIATION OF COMMERCE AND INDUSTRY,

CHICAGO, ILL.

Mr. SCHWIETERT. My name is A. H. Schwietert. I am traffic Director of the Chicago Association of Commerce and Industry located at 1 North La Salle Street, Chicago, Ill.

I am also appearing on behalf of the Illinois Territory Industrial Traffic League, which consists of traffic representatives of industries and commercial associations located within the State of Illinois, cities in surrounding States bordering on the State of Illinois and within the southern portion of the State of Wisconsin. This area is known as the Illinois Rate Committee territory. Directly and

indirectly the Illinois Territory Industrial Traffic League represents approximately 10,000 shippers and receivers of freight.

In a recent survey of 2,866 manufacturers, members of The Chicago Association of Commerce and Industry, it was found that 85 percent employ less than 250 people, clearly indicating the large preponderance of small industries and small manufacturers represented in our organization.

These organizations support the principle of S. 110, and desire passage of the legislation for the protection of shippers and communities as well as the carriers. If legislation such as proposed by this bill is not passed, and thereafter the present rate making procedures of the carriers should be condemned under the antitrust laws, it would have a destructive effect upon the interests of the shippers of the country, result in a break-down of the rate structure and create discrimination between individual shippers and between communities.

Present methods of making rates through rate bureaus, conferences or associations are necessary to an orderly and consistent presentation of proposed changes, to the maintenance of a lawful and nondiscriminatory rate structure, and are a distinct advantage of the shipping public.

Under present practices, proposed changes in rates, whether suggested by shippers or carriers, are placed on a public docket, widely circulated among shippers and published in national transportation magazines of wide circulation such as The Traffic Bulletin and Transport Topics. Every shipper, therefore, has advance notice of the changes being proposed. It would be extremely difficult if not impossible for carriers acting individually to follow such a practice. First, because it would be too expensive and second, the volume of material received by the shipper would destroy much of its practical value. Such advance notice of contemplated changes is extremely valuable to shippers. Sales and purchasing departments are advised and can proceed with caution in making future sales and purchases. After subjects have been docketed by the carriers' committees they are assigned for hearings on a specified date at which time shippers are given an opportunity to meet with the committee and discuss the proposed changes and to hear the views expressed by competing shippers. The element of surprise and secrecy in the establishment of rates and services is thus eliminated.

And last but not least the advance notice acquired and the opportunity given for discussion provides a real and practical means through which the shipping public may obtain the fullest use of the suspension provisions of the Interstate Commerce Act. If rate committee conferences and the docketing procedures were discontinued there would be a lack of advance knowledge of proposed changes, which would work a hardship on shippers and shipper organizations. Large industries, and some organizations could probably maintain staffs in Washington to try and check tariffs as filed, but the small shipper and the small trade or commercial organization could not afford to do so. True, it may be said that the shipper has the right to file a protest with the Interstate Commerce Commission to tariffs filed with the Commission asking that such tariffs be suspended, and that an investigation be instituted as to its lawfulness. However, such petitions must be filed not less than 10 days prior to the effective date of the tariff and frequently the time between the filing date and

the date the petition is due does not permit proper study, conferences with interested shippers, and the preparation of a petition.

Under the present practice the shipper is forewarned of proposed changes. If he believes that they are detrimental to his interests he not only presents his arguments to the carriers during the course of rate bureau conferences, but he also is advised by the carrier of the final action they intend to take. If the action taken by the carrier is still believed to be against the shipper's interest, he may watch for the publication of the tariff providing such change and then file his petition with the Commission.

The difficult task of attempting to check proposed changes in tariffs, even when they are mailed to the shipper by the carrier, is readily apparent when an analysis of the total number of tariffs, filed by the carriers is made. In 1 month our office received approximately 1,697 tariffs and supplements in which changes in rates were made. These tariffs and supplements contained a total of 12,809 pages and it would have required a great deal of time on the part of our office to check each and every page and item of such tariffs to determine whether or not changes in rates, either increases or reductions, were being made that would be injurious to the Chicago market or to individual shippers. When this burden is placed upon the smaller shipper and the smaller community it becomes so expensive that they simply cannot afford to pay for service necessary to protect their own interests.

In the larger communities, particularly in transportation centers like Chicago, much of the traffic can be transported by the use of a single carrier; however, smaller communities, served by a limited. number and frequently only one carrier, must use joint line services in receiving and shipping their products. The establishment of joint line routes and rates requires the carriers to get together to determine the rates to be charged and the service to be performed. Without rate bureau procedure the shipper would be required to carry on negotiations not only with the carrier serving the community in which he is located, but also with the connecting lines whose offices may be and frequently are far removed from the shipper's place of business. The longer the haul, the greater the number of carriers involved in the through rate and the greater the burden of securing proper rate adjustments. If carriers are not permitted to confer with one another and with shippers jointly before exercising their duty to initiate rates and services a widespread discrimination between shippers and communities will develop. Individual carriers may all decide that some change should be made, but each carrier may publish a different rate. As illustrative, suppose that one of the large shippers in the Chicago area approached one of the Chicago-Kansas City lines suggesting a revision in the rate from Chicago to Kansas City. After some discussion the carrier may find that such change in rate ought to be made and publishes a tariff. Other shippers in the Chicago area although not having had an opportunity to participate in the consideration of the change may nevertheless make use of the revised rate when it becomes effective, but other shippers in surrounding communities not served by this particular carrier would not be in a position to take advantage thereof. They would be required to approach the carriers. serving their plants probably after the reduced rate had become effective. In the meantime the Chicago shippers would have a dis