for the prosecution of violations of the antitrust laws. When the Department takes action against the railroads for violation of the antitrust laws it no more seeks to regulate the transportation industry than it sought to regulate the aluminum industry when it took action against the illegal monopoly of the Aluminum Corporation of America, nor than it sought to regulate the petroleum industry when it took action against price-fixing agreements between the oil companies, nor than it seeks to regulate any industry when it enforces the antitrust laws to put an end to illegal practices which restrict competition and restrain trade and commerce in any industry. The antitrust laws do not apply particularly to any industry. They do apply to all industries, including the transportation industry.

The regulatory scheme which has been provided by the Congress for the regulation of the railroads has always contemplated that the principal_reliance for the protection of the public would lie in competition between the carriers. The antitrust laws have repeatedly been applied to the transportation industry without in any way impairing the proper exercise by the Interstate Commerce Commission of the regulatory power entrusted to it by the Congress.

The limited degree to which the railroads are subject to regulation by the Interstate Commerce Commission was emphasized by the Commission itself in its annual report for 1939. I quote from that report:

There is gross exaggeration in the idea that every act of the railroads is subject to regulation. The railroad's have a large degree of initiative in the making of their rates and have freely made a multitude of reductions to meet competition. We have no power to control their passenger service and exercise very little control over their freight service.

This bill would reverse the policy of the Congress with respect to competition in the transportation industry by permitting railroad and other carriers to set up procedures under which their rates and services would be noncompetitively agreed upon without check or hindrance either under the antitrust laws or from the Interstate Commerce Commission. The agreements between the carriers establishing rate bureaus and associations would, it is true, under this bill require approval by the Interstate Commerce Commission in order to secure immunity from antitrust prosecutions, but the things done by the carriers pursuant to such agreements would be shielded from the scrutiny not only of the Department of Justice but of the Interstate Commerce Commission as well. Rate changes agreed upon through rate bureaus or associations would, of course, be filed, just as they are now filed, with the Interstate Commerce Commission. But the considerations which led the carriers to agree upon the rates so filed would remain a secret of the rate bureau. And where the agreement reached in the rate bureau is negative, that is, a decision not to make any change in an established rate or service, the public would be deprived both of any knowledge that such a decision had been made and of any protection against the power of the carriers collusively and secretly to destroy all competition in rates and services and to prevent improvements in facilities and equipment.

This is a bill which strikes down the power of the Department of Justice to protect the public against collusive restraints upon independent initiative and competitive enterprise in the transportation industry, without any compensating increase in the power of the

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Interstate Commerce Commission to regulate the carriers. The effect of the bill is to require the Interstate Commerce Commission to grant broad powers to private groups to govern the transportation industry. The Interstate Commerce Commission already has the power, after hearing, to approve or disapprove rates filed by the carriers and to prescribe rate changes to be made by the carriers. Under this bill the Commission would be required, upon the basis of a few general standards, to approve agreements between carriers establishing rate bureaus and associations and setting up procedures for the functioning of such groups. This bill adds nothing to the power already possessed by the Commission to approve or disapprove the rates initiated through such procedures. It is clear that the only purpose of the provision for Commission approval of agreements between carriers is to provide machinery for the exemption of rate bureaus and associations from antitrust prosecution.

New legislation is not necessary to permit proper, lawful collaboration between the carriers in meeting the needs of commerce. Neither the antitrust action brought by the United States against all the railroads nor the action brought by the State of Georgia against the eastern and southern railroads challenges the lawfulness of collaboration between the carriers in making joint rates and establishing through routes. Such collaboration and agreement is specifically required of the carriers under the Interstate Commerce Act, and has been expressly approved by the Supreme Court in the Georgia case as being within the legitimate area of collaboration.

In antitrust cases now being heard by the courts the Government and the State of Georgia charge that the defendant railroads and their banking and industrial allies through various combinations and a hierarchy of rate bureaus and associations, have established in the railroad industry a "private government" exercising a "process of administration," a "private system of judicature" and a "system of police" without the sanction of law; that individual carriers have been prevented from initiating or modifying rates, in accordance with the Interstate Commerce Act without first obtaining the consent of the private rate-fixing agencies; that such restraints have been effectuated "even though the rates involved may be local rates applying only between stations located upon the same transportation line"; that individual carriers have been prevented from protesting to the Interstate Commerce Commission, in accordance with the provisions of the Interstate Commerce Act, against rates filed by other carriers and considered to be unlawful, without first obtaining approval of the various private rate-fixing agencies; and that individual carriers may be prevented from putting into effect orders of the Interstate Commerce Commission by the circumscription and avoidance of such orders.

The bill of complaint filed by the Government further charges a railroad combination with a concert of action and continuing agreement to impose higher rates and fares for the western district than for comparable service in the eastern district and to prevent railroads in the western district from granting reductions in rates; to fix rates for the transportation of petroleum and petroleum products both by rail and pipe line at noncompetitive levels; to withhold expedited freight and passenger service which some railroads would and could have furnished were it not for the concert of action of the combina

tion; to prevent the construction of spur tracks for shippers and receivers of freight in the western district; to prevent the construction of loading sheds for shippers in the western district; to withhold from shippers available types of improved transportation equipment and facilities; to delay and prevent the installation and use of air-cooling equipment and to place out of operation air-cooling equipment on cars of connecting railroads which had installed such equipment; to prohibit the installation of recreational equipment; to eliminate competition by restricting the individual railroad's right to advertise and to solicit business; and to hinder and prevent the development of motor vehicle and other modes of transportation competitive with the railroads.

The collusive action between the railroads which the Government and the State of Georgia attack in the pending antitrust cases is collusive action which is not subject to regulation by the Interstate Commerce Commission. The fact is that these antitrust cases are complementary to and in aid of the exercise by the Interstate Commerce Commission of its regulatory function. This fact has been specifically adjudicated by the Supreme Court in language so clear and specific as to set at rest any fears that these antitrust cases, interfere with the exercise by the Interstate Commerce Commission of its regulatory functions. I quote from the opinion of the Supreme Court in the Georgia case (Georgia v. Pennsylvania Railroad Co., et al., 324 U. S. 439, at pp. 458-460):

The type of regulation which Congress chose did not eliminate the emphasis on competition and individual freedom of action in rate-making. (1 Sharfman, the Interstate Commerce Commission (1931), p. 81.) The act was designed to preserve private initiative in rate-making as indicated by the duty of each common carrier to initiate its own rates. (Arizona Grocery Co. v. Atchison, T. & S. F. R. Co., supra.) If a combination of the character described in this bill of complaint is immune from suit, that freedom of action disappears. The coercive and collusive influences of group action takes its place. A monopoly power is created under the aegis of private parties without Congressional sanction and without governmental supervision or control.

* * * The present bill does not seek to have the court act in the place of the Commission. It seeks to remove from the field of rate making the influences of a combination which exceed the limits of the collaboration authorized for the fixing of joint through rates. It seeks to put an end to discriminatory and coercive practices. The aim is to make it possible for individual carriers to perform their duty under the act, so that whatever tariffs may be continued in effect or superseded by new ones may be tariffs which are free from the restrictive, discriminatory, and coercive influences of the combination. That is not to undercut or impair the primary jurisdiction of the Commission over rates. It is to free the rate-making function of the influences of a conspiracy over which the Commission has no authority but which if proven to exist can only hinder the Commission in the tasks with which it is confronted.

Evidence recently offered by the Government to the district court at Lincoln, Nebr., in support of these charges was presented by the Department of Justice in hearings before the Senate Committee on Interstate Commerce, Seventy-ninth Congress, second session, on H. R. 2536, the Bulwinkle bill, and may be found in printed report of those hearings.

The objections urged by the Department against the passage of H. R. 221 are substantially the same as the objections presented by the Department to the passage of its companion bill, S. 110, in hearings before the Committee on Interstate and Foreign Commerce of the Senate. It is requested that this committee receive and incorporate

in the report of this hearing the statements submitted to that committee by Attorney General Tom C. Clark, by Assistant Attorney General Wendell Berge, and by James E. Kilday, special assistant to the Attorney General, in opposition to S. 110. These statements are equally applicable to H. R. 221, and are offered by the Department as a more complete statement of its opposition to this bill than I have attempted to make in my remarks here today. I have those statements here, Mr. Chairman.

Mr. HALL. If you will turn them over to the stenographer, without objection they will be printed in the record immediately following your statement.

Mr. BOGGESS. Both the House bill (H. R. 221) and the Senate bill (S. 110), as amended in committee and on the floor of the Senate, would sanction the elimination of competition among the several competitive modes of transportation as well as among the carriers within one class. The difference between the two bills on this score is merely a matter of degree.

Paragraph (3) of H. R. 221 provides that agreements between or among carriers of different classes shall be "limited to matters relating to transportation under joint rates or over through routes." The words "matters relating to transportation under joint rates or over through routes" as stated by the Attorney General, in his report on H. R. 2536 to the Senate committee, are sufficiently broad to permit agreements under which services to be performed, facilities to be installed and the class or kind of equipment ot be used by the competitive classes of carriers could be curtailed and technological improvements suppressed. Clearly, services, equipment and facilities are matters relating to transportation under joint rates. Clearly, these things are matters relating to transportation over through routes. Indeed, these matters not only relate to, but are included in "transportation" as that term is defined in the Interstate Commerce Act. As there defined, the term "transportation" includes "locomotives, cars, and other vehicles, vessels, and all instrumentalities and facilities of shipment or carriage, irrespective of ownership or any contract, expressed or implied, for the use thereof, and all services in connection with the receipt, delivery, elevation, and transfer in transit, ventilation, refrigeration or icing, storage and handling of property transported." (Sec. 1 (3) (a) of part I of the Interstate Commerce Act; for a comparable definition for "transportation" under part II of the act, see sec. 230 (2) (19), and for a comparable definition under part III, see sec. 320 (g) and (h).) The amendment to this provision, as made in the Senate bill (par. (4) of S. 110), limited to some degree the field outside of rates wherein the various forms of transportation could take effective action. But the provision in that bill that the collaboration between the various forms of transportation be limited to "freight classifications or to joint rates or through routes" left open for collaboration between the various classes of carriers the entire field of rates, so that the railroads, for example, could take concerted action with the trucks or the waterways or the pipe lines or the freight forwarders to fix the level of rates in all such industries to raise the rates in each industry to highest levels.

The power to change freight classifications is equivalent to a power to change rates. The power to make agreements on "freight classi

fications," as now provided in paragraph (4) of S. 110, definitely extends the scope of action permitted between different classes of carriers beyond collaboration on through routes and joint rates on traffic exchanged between the different classes of carriers. This is true because freight charges may be manipulated just as effectively by changing the classification rating of an item of traffic as by changing the scale of freight rates. Freight classification places the many articles of commerce into various classes, with first class being the standard class, or the 100 percent class. Second class, for example, is 85 percent of first class, and third class is 70 percent of first class. The different classes of carriers, by being allowed to collaborate on freight classification, could, by changing the classification rating of an article from third class to second class, for instance, raise the freight charges 15 percent on the article just as effectively as though the freight rates had been increased.

The provisions of paragraph (4) allowing carriers of a single class to collaborate on traffic moving on joint rates or over through routes is so broad as to include any joint rate or any through route. That provision would permit any carrier of that class to take part in thẹ fixing of joint rates regardless of whether that carrier is an actual participant in handling the through traffic on which the rates are to apply. This language allows carriers of a single class to take collective action on joint rates or through routes on which that carrier is not a connecting carrier actually participating in physical handling of the traffic. The Pennsylvania Railroad, for instance, under this provision would be allowed to participate in determining joint rates and through routes even though the movement of the traffic is confined entirely to the South or West and could not possibly move over the lines of the Pennsylvania Railroad. Likewise, that railroad could influence the determination of a joint rate in the West between western railroads and connecting trucks or water carriers in the West.

The standards to be applied by the Interstate Commerce Commission in delegating to private groups the comprehensive powers envisioned by both bills are general, vague and ambiguous. H. R. 221 provides for approval by the Commission of any agreement between or among two or more carriers. S. 110 specifies the agreements in paragraph (2), but includes every possible activity which could be comprehended in the transportation industry.

H. R. 221 would, under paragraph (8), immunize from the antitrust laws parties to "any" agreement approved by the Commission and unspecified and unnamed "other persons. Paragraph (9) of S. 110, although more subtle, is just as broad in scope.

It provides:

No agreement approved by the Commission under this section, and no conference of joint or concerted action pursuant to and in conformity with such agreement as the same may be conditioned by the Commission, shall be deemed a contract, combination, conspiracy, or monopoly in restraint of trade or commerce within the meaning of the antitrust laws.

under its terms immunity from the antitrust laws would go not only to the agreements approved by the Commission but to all conferences or joint or concerted action pursuant to and in conformity with the agreements. The effect would be to immunize not only the combinations of carriers participating in agreements for joint or concerted action, but their bankers and financiers, powerful shippers,