Second. They want all proposed rate changes docketed and advertised. It is obviously important to know what changes are being considered in a competitor's rates. There are naturally more of such changes than in a shipper's own rates, because our competitors are always the more numerous. The ability to do business generally depends upon a fair relationship of rates between competing localities, ports, producing areas, and consuming markets, and any change which would disturb that relationship is a matter of vital concern. The carriers acknowledge the necessity of docketing and advertising and, in accordance with the agreement mentioned, follow such procedure in rate bureau action. Without rate bureaus shippers would largely be in the dark concerning contemplated changes in rates. Third. They want the right to be heard before the rate bureaus on any rate proposal. This is recognized by the agreement between the carriers and the National Industrial Traffic League and is accordingly a fixed part of rate bureau procedure. Shippers thus are able to present facts and arguments to all interested carriers at the same time, either in support of or in opposition to any proposal to change their own or a competitor's rates. Fourth. They want certain time limits observed: (a) That a reasonable time be allowed before action is taken on a docketed proposal in order to give objecting parties an opportunity to organize their case, and (b) that disposition of the docket be had within a reasonable time. Such time limits are observed by the rate bureaus. Fifth. They want a reasonable time after a rate is finally determined and published before it takes effect in order to allow a period of time to protect existing contracts and to permit study of the effects of a proposed rate change. This is assured to them by the statutory period of 30 days after posting the tariff and filing with the Interstate Commerce Commission. Sixth. Finally, they want the privilege of appealing to the Commission in protest against any published rate and to secure its suspension, upon a proper showing, pending an investigation by the Commission. This is provided now by the Interstate Commerce Act. The shippers of the country, therefore, now enjoy a system of devices which, while safeguarding the benefits of railroad competition, affords checks at every step from the conception of a rate to its effective date, which not only tend to prevent destructive railroad competition but also aid in preventing the disruption of the rate structures upon which the industry of the country is founded. I do not wish to be understood as minimizing the importance of competition in railroad rate making. We regard it as a vital and important force, which we desire to see fully protected. But experience tells us that it is a force that cannot be allowed to run rampant. Before the passage of the Hepburn Act the grain business was to a large extent conducted on special rates given to a few, and the grain trade has a lively recollection to this day of the advantages enjoyed by the few. We do not want that condition to return. While rates would still have to be published on 30 days' notice even if rate bureaus were abolished the sudden an unnanounced publication of a reduced rate determined in collusion with a particular shipper would have much the same undesirable result as the special rates of the earlier day. If each railroad were free to make such rates as it saw fit we should have situations such as the following: The main trend of the flow of grain is the East. Omaha, Nebraska, and Kansas City are competitive markets with the same rates to the East. Certain railroads serve Omaha that do not reach Kansas City. If one of those lines saw fit in its own interest, to reduce the rate from Omaha to Chicago the reduced rate could be published and filed before the Kansas City lines would become aware of it and could take steps to meet it by a corresponding reduction of the Kansas City rate; and in the meantime Omaha shippers could undersell their Kansas City competitors. Such things could not happen under the existing procedure, and we do not want them to happen. In return for this protection we forego the possibility of inducing some Kansas City-Chicago line to reduce its rate without notice to the Omaha lines. The rate bureau plan, where the right of independent action is preserved, does not impair wholesome competition. It does help to avoid destructive competition. The key to preserving proper competition is, of course, the right of independent action. The restraint upon destructive competition is the free discussion by all the railroad competitors of the probable effects of a proposed rate action. There has been some suggestion lately that competition in rate making no longer has a place in protecting the public interest because Congress has almost completely displaced it for a system of regulation. It is true, of course, that the Interstate Commerce Commission over its long history has by rigid orders removed a large body of rates beyond direct carrier control, but I believe that shippers generally will agree with me that there remains a large area within which the carriers are free to initiate rates and in which competition between the carriers is as vital a force as ever. In addition, such competition is manifested in the attitudes of carriers in formal proceedings before the Commission and in proposals to induce the Commission to revise existing orders. The numerous subjects on any rate bureau's docket furnish evidence of the substantial remaining field of competition. This competition I regard as of great value to the shipping interest I represent and to the public at large. I rely upon the fact that it is in the interest of the railroads that serve Kansas City to make it possible for grain to flow through Kansas City to the greatest possible extent. This interest must affect their judgment in initiating rates and in dealing with formal proceedings and leads them from time to time to seek changes in outstanding orders. The rate relationships that Kansas City enjoys are, in my opinion, protected to a very large extent by the interest of our railroads that causes them to keep a watchful and jealous eye upon competing carriers who would change them to our detriment. I am not unmindful that the same carriers in some situations find it more to their interest to protect some other center and that other carriers are guarding other markets, but this is a wholesome thing. The resultant of all these forces is the maintenance of all the commercial centers of the country in a rough equilibrium, adjusted by the competition bearing upon each. And I say that this competition, therefore, is real and active and very important. I submit that the task is to preserve competition in rate making but to avoid its undesirable aspects and that this is best done by the rate bureau plan which the pending bill would preserve. STATEMENT OF CARL GIESSOW, DIRECTOR, TRANSPORTATION BUREAU, St. Louis CHAMBER OF COMMERCE, AND PRESIDENT OF THE NATIONAL ASSOCIATION OF SHIPPERS ADVISORY BOARDS IN SUPPORT OF THE SO-CALLED REED-BULWINKLE BILL, S. 110, on Hearing BEFORE THE HOUSE OF REPRESENTATIVES' COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE JUNE 25-26, 1947 My name is Carl Giessow. I reside in St. Louis and am employed as director of the transportation bureau of the St. Louis Chamber of Commerce. Since last October I have also been president of the National Association of Shippers Advisory Boards, the coordinating agency of the 13 regional advisory boards having approximately 22,000 members who it is estimated control over 80 percent of all the commercial traffic moving in the United States. I appear before you in support of S. 110 which passed the Senate on June 18 and is now before your committee on hearing. The views which I express on behalf of the organizations for which I appear, reflect considered judgment based on many years of experience. The experience has been that of men engaged in all lines of business-big business and little business. Virtually all are in agreement that there is urgent need for the legislation proposed in S. 110. Without it a chaotic situation in our freight rate structure will rapidly develop which would be highly destructive to industry and commerce not to mention its effect on the carriers. I have personally had over 40 years of experience in and with transportation. I have railroaded, sat in railroad committee meetings and conferences on rate and other matters. I have represented shippers and commercial organizations on rate and service matters. During World War I and for a short period thereafter I was a member of one of the United States Railroad Administration's rate committees. During the recent World War, I was a member of an advisory group to the Office of Defense Transportation. I have practiced before the Interstate Commerce Commission since 1910, the Maritime Commission and its predecessors since 1918, and the Civil Aeronautics Board since 1945. What I have said is not in a spirit of braggadocio but that you might know the background of experience on which my views are based. It is difficult for me to comprehend the situation if carriers and carriers and shippers could not meet in conference to exchange views on rate and other proposals. Without the proposed legislation and based on recent attitude of the Department of Justice conferences would be subject to prosecution however meritorious and necessary. Such conferences are as necessary as exchange of views between buyers and sellers of goods and wares. Carriers' rates, fares, and charges when not satisfactory to purchasers are subject to review by the regulatory bodies. Regulations of conference procedure by such bodies will vest full authority in such agencies. This is as it should be. There should be no division of regulation over a carrier's action between different governmental agencies. The Maritime Commission over overseas shipping and the Civil Aeronautics Board over air transportation already possess authority over the carriers which they regulate similar to that which S. 110 would give the Interstate Commerce Commission over the carriers which it regulates. There should be uniformity in treatment. Conferences between carriers and between shippers and carriers are necessary to a proper and logical conduct of business. Individual rate procedure and publication by carriers would produce a chaotic condition destructive to business and commerce. The St. Louis Chamber of Commerce and the National Association of Shippers Advisory Board and its constituent regional boards have consistently supported the principles of S. 110, the Reed-Bulwinkle bill over a period of years. All think the proposed legislation is an absolute necessity. I earnestly ask this honorable committee to recommend its enactment. STATEMENT OF POSITION OF THE IDAHO PUBLIC UTILITIES COMMISSION WITH REFERENCE TO BULWINKLE BILL, INVOLVING APPLICATION OF ANTITRUST LAWS TO AGREEMENTS CONSISTENT WITH THE NATIONAL TRANSPORTATION POLICY BOISE, IDAHO, June 23, 1947. The Idaho commission has heretofore gone on record in favor of passage of the Bulwinkle and Reed bilis, going so far in the original consideration of the Bulwinkle bill as to send one of the members of this commission to testify in behalf of that measure, a position in harmony with that taken by shipper and grower organizations of this State. The Sherman and Clayton Antitrust Acts involve a broad policy of open or unrestrained competition. Contrarily, the Interstate Commerce Act provides for supervised, coordination of transportation utilities. Public utilities law universally provides for creation and regulation of legal monopolies or quasi monopolies in the public interest. Unrestrained competition in the transportation field has proven in times past to be disastrous to the public interest, and public demand for control and restraints resulted in the enactment of the Interstate Commerce Act and subsequent amendments and necessary extensions of that authority. The tremendous growth of the transportation industry and the competition of producers and shippers for near and remote markets has produced an intricate system of rates and practices requiring constant effort on the part of the Interstate Commerce Commission to establish and preserve proper and nonprejudicial relationships, rates, and practices for the ultimate benefit of the general public. Rate associations and tariff bureaus are an inevitable development and the purpose of the present proposed legislation is to give legal recognition to this situation and grant authority to the Interstate Commerce Commission to approve agreements within certain limitations in the interest of effective administration and control. Otherwise we have the antithetical situation of a salutary practice over State or Federal regulatory control becoming collusion under the broad scope of the Sherman and Clayton Acts. We believe also that the Interstate Commerce Commission is better qualified to pass upon these questions and that transportation should be freed from the possibility of conflicting controls to the extent proposed. We, therefore, respectfully urge enactment of this proposed legislation. IDAHO PUBLIC UTILITIES COMMISSION. Mr. HALL. The committee will recess until 2 o'clock. (Whereupon, at 12:20 p. m., the committee recessed to reconvene at 2 p. m.) AFTERNOON SESSION The committee reconvened pursuant to the taking of the recess, Hon. Leonard W. Hall presiding. Mr. HALL. The committee will come to order. There will be placed in the record at this point, there being no objection, a letter dated June 20, 1947 from George J. Burger, director, National Federation of Small Business, Inc., enclosing a statement by Willis J. Ballinger, former economic adviser to the National Federation of Small Business. (The documents are as follows:) NATIONAL FEDERATION OF SMALL BUSINESS, INC., Hon. CHARLES WOLVERTON, Chairman, House Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. DEAR CONGRESSMAN WOLVERTON: It is our understanding that your committee is now taking under consideration the Bulwinkle bill, H. R. 221 (S. 110) and I desire to place before the committee the position of this association and its members. We are speaking and acting for our members in this communication in placing it with you for the consideration of the members of your committee. A short time back this association presented the question to the membership, numbering approximately 100,000 through the Nation. We are attaching as an exhibit the question presented to the members through the Associations official publication The Mandate. A short time later the vote was made by the members on the question involved (the Bulwinkle bill), and the result of the vote was as follows: 18 percent for, 80 percent against, 2 percent not voting. We are attaching herewith copy of the testimony given by the then official of the association before a committee in Congress on this bill. In our opinion a dangerous precedent would be set in any move that would permit an exemption of the antitrust laws for any segment of industry in our Nation's economy. Once this is done and approved by the Congress, there is nothing to prevent any other industry from coming in and asking for similar relief. In our opinion, the law is the law and should apply in all segments of industry with no exceptions or omissions. Mr. Chairman, in our opinion, the main contributing cause to the elimination of thousands of small businesses in our Nation's economy, is due solely to the lack of enforcement of antitrust laws. A good example is a case in question in the rubbertire industry, and it is interesting to note the release of the House Small Business Committee of June 15th, which in some degree confirms our statement as to antitrust law enforcement. It is my hope and trust that your committee will give this communication consideration before arriving at a vote on the bill in question. If the Sherman Act is allowed to be bypassed for one segment in our industry it should then be fair and proper to repeal the law in its entirety. Sincerely yours, GEORGE J. Burger. NATIONAL FEDERATION OF SMALL BUSINESS, INC., Hon. CHARLES WOLVERTON, Chairman, House Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. DEAR CONGRESSMAN WOLVERTON: I respectfully call to your attention my letter of June 20 which states the position of this association and its members on H. R. 221 (S. 110). I was present this a. m. at the hearing on this bill before your committee. I was particularly impressed by the questions put to Mr. J. Carter Fort, vice president and general counsel. Association of American Railroads, by various members of the committee. I distinctly noted the question of Congressman Heselton directed to Mr. Fort as to the opposition of the National Federation of Small Business to the bill. I believe the witness stated he did not know the reason for the opposition by the National Federation of Small Business, but he further stated that other small business associations and small business institutions favored the bill. We find nothing in the records of the hearings of any other national small business association in support of the bill. Unfortunately, many so-called small business associations do not keep their members informed as to legislative action that would be helpful or destructive to the future business life of small business of this Nation. This is what the national federation has been doing as a help to its members during the life of the federation-a service long overdue in the interest of the Nation's small business. Our opposition to the bill is not because we have any grievance with the railroads of this Nation. We believe they did a commendable job during the war-an outstanding job. I reaffirm the position of this association as outlined to you in my letter of June 20. Our position boils down to this simple fundamental fact, that if the Sherman Act is allowed to be bypassed for one segment of our industry, it should be fair and proper to repeal the act in its entirety. I also was amazed at the question presented to the witness, Mr. Fort, by a member of your committee, where, in substance, he stated that what the railroads wanted done was what they were doing for many years back legalized by the Congress through the proposed legislation. I believe the witness answered "yes." Realizing the heavy calendar that the committee must have giving testimony on this bill, may I request that this letter and my letter of June 20 to you, with the testimony that was presented before the Senate Committee on Banking and Currency, be filed in the records of the hearings of your committee on this bill. Sincerely yours, GEORGE J. BURGER. STATEMENT OF WILLIS J. BALLINGER, ECONOMIC ADVISER TO THE NATIONAL FEDERATION OF SMALL BUSINESS, ON BEHALF OF THE FEDERATION, IN OPPOSING SENATE BILL 110 After careful examination of Senate bill 110, popularly known as the Bulwinkle bill, the National Federation of Small Business desires to register a strong protest against its enactment into law. In our opinion the bill would legalize the growth of private monopoly in railroad transportation and reinforce its existence in other fields of transportation such as motor and water carriers and pipe-line companies. Today monopolistic rates in railway transportation are seriously preventing the recovery of private business in the United States. In 1929 American business went into a profound depression. From that depression the economy has never recovered. From 1929 to the beginning of war mobilization the economic system was sustained by Government spending. As a result of the war there are some billions of war savings, the spending of which, for a time, will giv the appearance of a sound forward movement in private business. But when those savings are gone, it is our opinion that the depression of 1929 will return with greater virulence, and that the system will remain locked in depression until the forces causing the collapse of business in 1929 have been remedied. A capitalistic system dependent on Government spending is a capitalistic system in danger of liquidation. If private enterprise cannot afford employment to millions, and Government spending becomes necessary to take care of millions of unemployed, then private enterprise will eventually be replaced by Government control and direction of the economic system. The break-down of business in 1929 was the result of half a century in which capitalism in the United States was systematically misoperated by an alliance of big businessmen and bankers. Monopoly controls appeared in finance, industry, transportation, and distribution. Regional competition was also eliminated through a discriminatory freight rate system on the railroads of the Nation, which prevented the development of more efficiently located industries in the South and the West. The purpose of this discriminatory freight rate system was to protect giant monopolistic corporations from potential competition in the South and West. The rapid spread of monopoly in American capitalism from 1890 to 1929 caused a progressive loss of productive power in our economic system. This is always the effect of monopoly in a capitalist system. The depression of 1929 registered the fact that private business had become incapable of carrying the employment load of the Nation, shackled as it was by monopolistic restraints placed on trade by big-business men and bankers. At the same time the elimination of regional competition through the system of discriminatory freight rates, had caused a congestion of the population of the Nation in a few giant cities with hideous slums. But for this system of discriminatory freight rates the population of the Nation would have been dispersed. Hundreds of vigorous small towns and cities would have sprung up in the West and South. The health and prosperity of the Ameri |