the trucking industry and its ability to survive as a transportation entity in our system here?

Mr. TRIGGS. Well, our board of directors, in their discussion of this subject, did not think so.

In fact, they are inclined to believe that in many circumstances the regulated truckers themselves need a greater flexibility of ratemaking procedure to prevent the erosion of their traffic by private carriage, and that the enactment of this measure would permit them to move more rapidly to meet that competition.

Mr. HEMPHILL. Well, I am happy to hear you say that because I have received a number of letters from trucking people who are opposed to the legislation. They say it is going to wreck their industry. They are not particularly specific about it. They just say, "It is going to wreck our industry." It is just like a fellow seeing an object moving through the dark and not knowing what it is and saying, "It is going to run over me."

I think we have a responsibility to the railroads, and to the trucking industry, to all other modes of transportation, and overall to the public.

It concerned me that we get these letters, because apparently they believe this, and apparently that belief has been disseminated among the people who depend on that industry for a livelihood.

Finally, do you believe if we pass this legislation, the people in the trucking business will lose their jobs? I have gotten petitions saying, "We are going to lose our jobs."

Mr. TRIGGS. I do not, sir.

Now, obviously there are certain traffic movements where technological change is enabling the railroads to meet the competition of the trucks far more effectively. The movement of grain as pioneered by the Southern Railway is a good example.

Now, yes, there is going to be some-in the long run, irrespective of the enactment of this bill there are going to be some truckdrivers engaged in hauling grain who are going to lose their jobs. The bill will permit the railroad industry to move more rapidly to reflect new efficiencies and new technological development in their rate structure, and therefore this process will be hastened. But it certainly won't be changed in its basic nature.

Mr. HEMPHILL. Thank you for your courtesy in answering my questions.

Thank you, Mr. Chairman.

Mr. WILLIAMS. Mr. Kornegay.

Mr. KORNEGAY. Mr. Triggs, do you feel that if H.R. 11583 is enacted into law it will result in rate wars?

Mr. TRIGGS. Well, the proposed bill does open the door to possible rate wars. I think it would be easy to exaggerate the importance and significance of the extent to which this would occur.

I do not know of any reason to suppose that the enactment of this measure would lead to any more rate wars than the bulk exemption has led to below-cost rates in the case of inland water carriers.

Theoretically, producers of steel and automobiles and sewing machines and gasoline can have price wars and occasionally do. But this does not appear to be a reason to extend regulation to them.

Now, the railroads are in business to make money, and they are not going to make money by establishing rates at unprofitable levels. I think the time is past when railroads could recover the loss on below-cost traffic by increasing rates in other traffic, because private carriage and the competition of other modes that is all prevailing now, prevents them from doing this.

While there may be some situations in which this is possible, I do not think they are very general.

Furthermore, certainly the extension of antitrust law to ratemaking imposes some rather effective deterrents on reckless rate reductions, and selective rate reductions which were not fully warranted by costs or to meet competition would involve an area of antitrust jeopardy. Now, I do not doubt that there is going to be some substantial rate reductions if 11583 is enacted. But every rate reduction is not a rate war, even though the competitors might be so inclined to regard it. And there are technological changes coming along that the people who are responsible for them should have the opportunity to reflect them rapidly in their rate structure. This is not a rate war. This is just rate competition.

Mr. KORNEGAY. You feel, sir, that setting a rate that is compensatory, that is, reflecting a profit to the carrier, even though it would be a reduction from a former rate, would not be classified as rate war participation?

Mr. TRIGGS. Yes, sir, I would agree with this. I would also comment, as you will appreciate, that it is awfully difficult to determine what a compensatory rate is.

Mr. KORNEGAY. Now, do you have any figures on the movement of grain as between trucks and rail?

Mr. TRIGGS. I do not, sir; no.

Mr. KORNEGAY. I think that is all. I want to take this opportunity to thank you for a very fine statement.

Mr. TRIGGS. Thank you, sir.

Mr. JARMAN (presiding). Does that conclude your questions?
Mr. KORNEGAY. Yes, Mr. Chairman, that is all I have.

Mr. JARMAN. Thank you very much, Mr. Triggs.

Mr. TRIGGS. Thank you, Mr. Chairman.

Mr. JARMAN. Our next witness this morning is Mr. Joseph E. Moody, president of the National Coal Policy Conference, Inc.

STATEMENT OF JOSEPH E. MOODY, PRESIDENT OF THE NATIONAL COAL POLICY CONFERENCE, INC.

Mr. MOODY. My name is Joseph E. Moody. I am president of the National Coal Policy Conference, Inc.

This conference membership includes the Nation's coal-carrying railroads, the coal-producing companies, the coal-using electric utilities, the United Mine Workers of America, and the coal-machinery manufacturers.

I am appearing before this committee on the instructions of my board of directors.

I thank you very much for your courtesy in accepting this statement, sir.

Mr. JARMAN. Thank you, Mr. Moody. Your statement will be printed in the record. Thank you very much.

(The prepared statement of Joseph E. Moody follows:)

STATEMENT OF JOSEPH E. MOODY, PRESIDENT OF THE NATIONAL COAL POLICY CONFERENCE, INC.

Mr. Chairman, my name is Joseph E. Moody. I am president of the National Coal Policy Conference, Inc.

This conference membership includes the Nation's coal-carrying railroads, the coal-producing companies, the coal-using electric utilities, the United Mine Workers of America, and the coal-machinery manufacturers.

In appearing before your committee, I am under instructions of the chairman of the board of the conference, Mr. John L. Lewis, and of the board to express the full support of the conference for the bulk commodity provisions of H.R. 11583, as introduced by the distinguished chairman of this committee, implementing certain of the recommendations contained in the President's transportation message of April 5, 1962.

I don't believe it is necessary to point out to this distinguished committee that our Nation's railroads have long been in a very precarious position, and this has resulted, in considerable measure, from discrimination and unequal treatment accorded the rail carriers in relation to other forms of transportation. The same precarious economic situation exists within the American coal industry, and its causes are likewise partially due to failure to obtain equal opportunity in the marketplace with other fuels sold at predatory prices which are impossible for coal to meet under present conditions.

These fuels are imported residual oil, which is a waste product of the refining process, and natural gas which is sold for industrial boiler use under so-called interruptible contracts--which means that the pipelines and distributors sell excess gas to utilities and industries when it is available, for example, during off-peak seasons at prices only a fraction of what the homeowner and other small users must pay for it. Both these marketing practices not only take away great amounts of coal sales from the producers and their employees, but also sharply curtail railroad revenue from the hauling of coal. We are convinced that removing the railroads from ICC control in respect to setting minimum bulk commodity rates would provide a most important degree of flexibility to assist the coal producers in meeting the unfair competition of predatory pricing by foreign oil and dumped gas.

This, in turn, could mean a substantial revenue boost for the coal-carrying railroads, which transport about 75 percent of all U.S. coal.

According to the Association of American Railroads, 304.5 million tons of bituminous coal were originated by class I railroads in the year 1960, providing à gross freight revenue of more than a billion dollars. Total U.S. coal produced that year was just a little over 400 million tons.

These figures indicate the mutual stake that the coal industry and the railroads, as well as coal consumers, have in the legislation under consideration. No other bulk commodity in 45 categories originated by class I railroads amounted to a third of the bituminous coal tonnage. Second to bituminous coal, for example, according to Association of American Railroads, was iron ore totaling 96.8 million tons, with a gross freight revenue of close to $227 million.

Mr. Chairman, I should like to emphasize that neither the coal industry nor the railroad industry are seeking special privileges, or are waiting for the Government to solve their problems with no commensurate effort on their own part. In recent years the coal industry has spent millions of dollars for modern mechanized equipment, and, with the full cooperation of the United Mine Workers of America, has been able to more than double productivity per man shift. Today, the skilled American miners produce an average of 14 tons of coal per shift at least 7 times the highest per man production of mines in Europe or Japan. As a result, the price of coal at the mine has been steadily reduced since the late 1940's.

The railroads, likewise, have made strenuous efforts to modernize equipment and service, and have reduced rates time after time in order to maintain coal transportation revenue and to help the coal producers compete with other fuels. As a result of the strenuous efforts of these two industries, the average price of coal at the mines fell from $5.08 per ton in 1957 to $4.65 per ton in 1961. At the same time, the average rate for coal originated by class I railroads declined from $3.57 per ton to $3.40 in the same period. Thus, the two industries working together have brought the average delivered price of coal down from $8.65 to

$8.05, even during a period of continuing inflation when most other commodities were increasing in cost.

Credit for these accomplishments should be rightfully given to the coal producers, the United Mine Workers of America, and the coal-carrying railroads, working together.

I wish the record to show the reduction of bituminous coal prices and freight rates per net ton for the past 5 years, as follows:

But even with this fine record, accomplished at the cost of millions of dollars, coal is still unable to compete in many of its most important markets with foreign waste residual oil and dumped natural gas.

Despite the lowering of coal prices at the mine head and railroad transportation prices for coal, bituminous coal production has declined nearly 100 million tons during the past 5 years, from 492,703,916 tons in 1957 to 400 million tons in 1961.

The decline in bituminous coal production in the past 5 years is shown in the table below:

Mr. Chairman, we are convinced that this is an unhealthy trend, not only for the coal-producing areas and their citizens, but also for the national welfare and security.

As I have pointed out, we are not sitting idly by hoping for someone in Government or the Congress to rescue us. But we submit that the plight of the coal and rail industries is a matter of concern to our whole country, and your favorable action on H.R. 11583 would be a major contribution to the fight we are making.

One of the most exciting developments in the history of railroad transportation is on the verge of happening now, and removal of the railroads from ICC control of minimum bulk carrier rates will make it much more certain of success. I refer to the so-called integrated, or unit, train which several of the major coal-carrying railroads are now planning to put into operation or already have running on an experimental basis.

Such trains operate on fast schedules, carrying whole loads of coal from one mine or production area to a single customer or a group of customers closely allied by location, with no lost time for loading and unloading, switching cars, layovers, etc. This new transportation concept is certain to make more economical the large-scale movement of coal, as well as eventually other bulk commodities.

Someday, such trains may revolutionize not only railroads but also the locations and design of powerplants.

The integral train's great possibilities are shown by a pioneering example of the Pennsylvania Railroad's new unit train to move coal 395 miles in 5,950 ton trainload lots (70 cars at 85 tons capacity each) from a new mine at Tunnelton, Pa., to the Martin's Creek powerplant of Pennsylvania Power & Light Co.

The Pennsylvania Railroad has filed for a tariff on this haul of $3.30 per net ton, a reduction of $1.04, or 24 percent, under the present temporary rate of $4.34 and a reduction of $1.26 under the normal rate of $4.56.

It is obvious what such efficiency and its consequent transportation rate reductions can mean to the coal industry. However, passage of H.R. 11583 is essential if the railroads are to be assured of being able to make the most of this concept. The integrated trains envisioned for the future will require expenditures of many millions of dollars for equipment of completely new designs. They

involve trains of as much as 35,000 tons capacity, trains with rolling stock built together as a complete single unit, with power units spaced at intervals throughout the length of the train, and many other innovations.

But unless a railroad can be assured that it has the right to put into effect the rates that will truly reflect the operating cost reductions achieved, and thus to assure their ability to acquire new business on long term, volume contracts, they cannot afford the tremendous capital expenditures involved. Removing them from ICC control on minimum bulk commodity rates is essential to this end.

The integrated train concept will mean much to the entire economy of the Nation, as well as to the coal and railroad industries. For example, it will assure continued supplies of low cost coal to utilities and major industries.

It will also provide a stimulant to the steel industry, manufacturers of equipment and supplies, and similar producers. Not only will it provide a market for evolutionary new-type cars and motive power units, new automated controls and new maintenance facilities, but also the equipment will have a life expectancy of only 10 years, because of constant usage, instead of the present 40. This will mean a continuing market for new equipment, and it will also mean that equipment will be kept up to date, with carriers enabled to take advantage of latest technological developments and freeing them from longlived, low-utilization equipment.

By extending to the railroads freedom from minimum bulk rate regulation now enjoyed by bargelines in handling bulk commodities and by motor carriers in handling agricultural and fishery products, Congress would not only unshackle the railroads from present inequities confronting them, but also give impetus to the grand design of the integral train.

Railroads, coal companies, and electric utilities would be encouraged, and justified, in making substantial investments in developing the integral train complex to its highest potential.

At this point, I should state, however, that we feel that the value of H.R. 11583 is limited by one major omission, and that this should be corrected by an amendment if the intent of this bill is to be realized.

I refer to the requirement, which is contained in the bill as now written, which provides that all railroad rates must be published for 30 days before becoming effective, and are subject to suspension by the Interstate Commission if someone there decides that the rates violate some other portion of the Interstate Commerce Act.

I am told by the railroad members of the conference that the railroads would be the only carrier subject to this requirement.

This would be a serious restrictive limitation on the right of the railroads to compete freely and on an equal base with other carriers, and would greatly nullify the benefits that are anticipated from passage of this legislation.

If railroads are required to publish bulk commodity rates and then wait 30 days before putting them into effect, it is quite likely that very few of them would ever go into effect, or at least not for a long time. There would be delays, opposition by competing carriers, perhaps injunctions, and no one can foresee the snarl-ups that could result.

We believe the railroads should be given the full benefit of freedom from minimum rate restrictions on commodity rates and seriously urge that your committee amend H.R. 11583 to clearly establish greater equality of opportunity under its provisions.

We cannot afford to overlook another very important responsibility on the part of Congress, and perhaps one that has the most vital bearing on this question. That is the tremendous dependence which our Nation has on a strong rail and coal industry in case of national emergency.

During World War II the railroads moved over 90 percent of all military freight, and over 97 percent of all military passengers moving in groups of 40 or more. Likewise, as water shipments of oil were critically disrupted by enemy submarine action, while the total demand for energy soared, the coal industry was called on to produce and the railroads to transport-about 200 million tons more fuel per year between the war's beginning and 1944.

This measure will contribute materially to keeping both these industries strong and economically healthy, to assuring that they will be able to meet the extraordinary demands of any other national emergency.

But even more current considerations call for the approval by Congress of H.R. 11583 and, particularly, its provision for freeing the railroads from minimum bulk commodity rate controls. That is the fact of present-day economic