Mr. SCHENCK. Is there anything in this type of legislation which encourages private enterprise to do it?

Secretary HODGES. I think so. I think through all of these things we are suggesting, sir, in these bills, it is mostly for private initiative. In the urban transportation bill there is recognition of a problem that is very difficult to work out, and the Federal Government is saying that in this particular case we ought to try to help the cities get out of it particularly through helping them in their planning. But I think there are plenty of other things in here which point out that reliance on private enterprise will help a great deal.

Mr. SCHENCK. I would wholly agree with you, Mr. Secretary, that you are making some suggestions here that would greatly assist private enterprise transportation systems, and therefore the development of this mass transportation through a $500 million project seems to be a little inconsistent with the rest of the idea.

Mr. SPRINGER. Would the gentleman yield at that point.

Mr. SCHENCK. Yes.

Mr. SPRINGER. Mr. Secretary, I realize you are not familiar with this, but in March 1959, when Mayor Celebrese sat in the chair you are sitting in and testified before our subcommittee, I asked him why he was here. Well, he was frank enough to be honest about it, because I knew the facts. That is, that in February of the same year, less than 30 days before, the city of Cleveland had turned down a $41 million bond issue to build a subway in the city of Cleveland. So he was very frank-that he had come to the Federal Government to get that $41 million, if he could get it.

Now, I think the fundamental thing is, it is your philosophy that when Cleveland is not willing to vote a bond issue, the Federal Government at that point ought to come in and give a grant.

Secretary HODGES. Not unless it is a matching grant.

Mr. SPRINGER. All right. That is a pretty good answer.

The CHAIRMAN. If the gentleman would permit, I would like to ask a question at this point, prompted, I may say, by a note from a member of the staff.

It has to do with exemption from minimum rate regulation. And I agree that it is a very interesting proposal, as has been expressed by Mr. Springer, Mr. Williams, and Mr. Schenck and others—that is, to rely on competition rather than regulation, and to rely on the antitrust laws to protect the carriers and public against ruinous and unfair competition.

I have got several other questions on that that I am going to ask later on. But for the present-I wonder why, if this philosophy is sound under today's conditions, the exemption from minimum rate regulation should not apply to all commodities? What is the reason for confining the proposal to bulk transportation or to agricultural and fishery products only?

Secretary HODGES. It seems to me, Mr. Chairman, they are the ones which enjoy the special privileges. All we are saying, in probably oversimplified terms, is to cut out such privileges altogether, and let everybody enjoy the same. That is all we are saying. Whether it is a bulk commodity or an agricultural commodity. In one case, the bulk commodity, the one mode that has it is water, and in the other, motor carriers have the exemption-to the detriment of the other

carriers.

The CHAIRMAN. Well, that appears to me to be basing a principle, which evidently is considered to be sound, on the basis of what somebody else might be able to do. I do think you understood what I asked, Mr. Secretary. That is, if the philosophy is sound that so far as extending exemptions-that is, the minimum rate provision, that they should

Secretary HODGES. Why you shouldn't carry it the whole way, you mean?

The CHAIRMAN. Yes. If it is going to be applicable to certain movements, that is bulk commodities in this case, and agricultural products, why shouldn't it just go all the way and include everything? Secretary HODGES. I see, Mr. Chairman. I understand what your question is. I think as someone said a while ago, this program may be a millennium. I think that would be carrying it a little too fast. I think you have got to start with this. You may move from that point later on. Just like we don't want to apply minimum rate regulation for passengers to air travel. We think it would be disastrous to do that overnight. We think it would help the other forms of transportation now. We don't think that is inconsistent. We think it is more practicable.

The CHAIRMAN. Well, maybe it would be something like it was, the argument when I was a boy-two gentlemen of the community engaged in an argument. One contended that the bigger the wagon wheels, the easier it would be to pull. The old doctor there asked the other man "but if that is true, how high would those wagon wheels have to be before it would roll by itself."

Mr. SCHENCK. Mr. Chairman, if the gentleman would yield-if you put small wheels on the front, then you are always going downhill. [Laughter.]

The CHAIRMAN. Well, when I was a very small boy, somebody switched around and put the small wheels on the rear of the buggy. I rode 8 miles in it, and I never did feel as though I were going uphill. [Laughter.]

But I think it does raise an interesting question.

And then it does provoke this question.

The minimum rate provision contained in this bill, H.R. 11583, speaks, then, only of rates, fares, and charges, and makes no reference to classification, regulations, and practices, relating to such rates, fares, or charges.

Is it intended by this bill to cover in these minimum rates provisions reductions in freight charges that might be accomplished through changes in classification of rates?

Secretary HODGES. I would have no objection to having those put in, Mr. Harris.

The CHAIRMAN. Well, I just wondered what is the intention-had that point been thought of in connection with your consideration of this matter. And what is the intention?

Secretary HODGES. Those items are a little more technical. We probably should have included them in the draft. But we are trying to cover the major phases. But if your committee

The CHAIRMAN. Well, would they be reached by the language that you have in the bill?

Secretary HODGES. Probably not. They probably ought to be included.

The CHAIRMAN. I recognize that it is a technical problem. And I imagine it is a legal problem as well. I wonder if counsel would comment on that.

Mr. GILES. Mr. Chairman, I think what we ought to do is just take a careful look at that. It may be my quick reaction is that that was just the way we drafted it--and probably we could have drafted it to clearly include that. But let us look at that carefully, and file with the committee a statement on it.

The CHAIRMAN. I think if you are not sure about the intent as well as whether it is included or not, you had better take a careful look at it, because I think it is a pretty important problem.

Mr. GILES. I would rather do that than to give a quick reaction on it. (The following letter was subsequently submitted for the record:)

GENERAL COUNSEL OF THE DEPARTMENT OF COMMERCE,
Washington, D.C., July 6, 1962.

Hon. OREN HARRIS,
Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: During the course of the hearings, you questioned whether the minimum rate provisions in H.R. 11583 are intended to apply to freight charges that might be set through changes in classification of rates.

The language of the bill proposed by the Department of Commerce does not make express reference to any changes accomplished by classification, but there is a definite intent for the minimum rate provisions of this bill to apply to any reduction in freight charges, whether accomplished through changes in classification or otherwise.

Since a reduction in a classification rating would, of course, have the same effect as a reduction in the rate itself, I believe that the present language of H.R. 11583 is legally sufficient to apply to any method of rate reduction. My present thought is that no change in the language of the bill is necessary to make this clear. However, I think it would be desirable to have some appropriate language in the committee report on H.R. 11583 which would clarify the question you have raised.

If you believe that it would be desirable to have some change in the language of the bill itself, we shall certainly be glad to cooperate fully with your committee staff on this point.

With cordial regards, I am,

Sincerely yours,

The CHAIRMAN. Mr. Jarman.

ROBERT E. GILES.

Mr. JARMAN. Mr. Chairman, I would like to join in welcoming Secretary Hodges and his colleagues to the committee. I have no questions at this time. I would like to compliment the Secretary and his Department for what I think has been an all-out effort to reach out to interested groups and to other branches of the Government, including the Congress, for suggestions and ideas on what is needed in the general field of transportation.

I well remember last year when we sat informally, some of us here on the House side, and on the Senate side also, with the Secretary and his associates. And the one thing the Secretary was asking of us, as he was asking of other departments of Government and interested modes of transportation all over the country, was for recommendations as to what is needed in our Nation. It has been a tremendous effort at a unified overall program and I certainly want to compliment the Secretary.

Secretary HODGES. Thank you, Mr. Jarman.

The CHAIRMAN. Will my colleagues permit me to ask this question at this point. I see our friend and former colleague, a member of this committee, Mr. O'Hara is present. Of course he can't speak here.

But, Mr. Secretary, does this provision that you offer here not repeal the Reed-Bullwinkle provision of the law?

Secretary HODGES. I don't know.

Mr. BARTON. Mr. Chairman, it repeals it as far as making minimum rates is concerned. It preserves it for making joint rates and through routes. The feeling is that if they are given freedom from ICC regulation of minimum rates, that they should be subject to the antitrust laws in order to insure that the public is adequately protected.

The CHAIRMAN. Well, I noticed the Under Secretary's statement on the question, which led right up to it. And I thought that that is what it did. But then he gave that last punch, which looks to me like he backs completely away from what he says in the rest of the paragraph, and said it was a policy matter for Congress. But I believe the bill, as I interpret it, has a provision or incorporates a provision that actually and so far as the purpose of the bill, repeals what the Congress has done in that respect heretofore.

Mr. BARTON. Mr. Chairman, I think you will find there are differences of opinion as to how much antitrust immunity should be given. There will be other points of view expressed. As far as the practical workings of the rate bureaus are concerned, I think the committee will probably want to consider the measure of antitrust immunity that should be extended.

The CHAIRMAN. Mr. Younger.

Mr. YOUNGER. Thank you, Mr. Chairman. I too want to congratulate the Secretary and the Under Secretary for some very fine proposals. However, there are a couple of questions I have.

I do not find anything in your statements about the permission of one mode of transportation to own or operate other modes of transportation.

Secretary HODGES. Well, we took on about all we could handle. We didn't take that one on.

Mr. YOUNGER. Did you sidestep it because it was a controversial subject, or don't you believe in it?

Secretary HODGES. Well, we would rather have you present that to the committee, sir.

Mr. YOUNGER. You want us to handle that.

Secretary HODGES. Yes, sir. We think we have said almost enough. Mr. YOUNGER. Also I think you have skirted a little bit on the question of mergers.

Secretary HODGES. Well, no. We say here that we have an interagency committee working on mergers. We already met two or three times. We stated publicly our feeling on mergers. We favor the principle of mergers, of course subject to each one being looked at on its merits. We think that is an essential modern way of handling things, depending on the conditions and what is applied for.

Mr. YOUNGER. Do you think an approval of a merger by this interagency group, would prevent a court action afterward?

Secretary HODGES. No. This interagency group, sir, does not have the power or authority to approve mergers. We simply discuss the basic principles and policies in connection with it, and do try to aid the Justice Department, from a practical point of view, with the industry and commerce, in its arguments before a regulatory body that is considering and does have authority over mergers.

Mr. YOUNGER. In regard to eliminating the subsidy for the trunkline air carriers, I have been interested in that for some time. I have had a bill in which would provide that once the carrier was off of subsidy, they could never return. As I understand, your idea now is to repeal the portion of the act which gives subsidies, so that they would never be eligible because it wasn't provided in the law. Is that true? Secretary HODGES. That is right, sir-unless you pass another law. Certainly that would be the idea of getting away from it—except in the international phase of it.

Mr. WILLIAMS. That is with respect to the trunk carriers, and not with respect to the local service carriers, is that right?

Secretary HODGES. That is right.

Mr. YOUNGER. On page 6, elements of public policy No. 2, the question of user charges what is anticipated there, toll charges, or what type of user charges did you have in mind?

Secretary HODGES. No; we are speaking of a basic principle there, Mr. Younger, that a person who uses a road ought to pay a tax of some kind that would take care basically of his use of that road. The same way on a railroad or on a bus, or airplane, or so forth, water line. They all ought to be, so far as possible, free from Government subsidy, and they ought to stand on their own feet. The user himself ought to pay the full costs of whatever he uses.

Mr. YOUNGER. Specifically how would you apply that to an air carrier to use an airfield, which was provided by the Government? Mr. MARTIN. Mr. Younger, the Government spends many, many millions of dollars a year. The Federal aviation program is up in the neighborhood of half a billion dollars in airport construction, and the maintenance and improvement of the Federal airways system.

The executive branch believes that the airlines should pay a share toward the maintenance of the airways, and assistance in the airport program. I think that the principle is sound-that they should be paying something for the use of the airways.

Mr. YOUNGER. And you consider that the trucks now through the special taxes for the highway, are not contributing their share?

Mr. MARTIN. No, sir; we feel that they are. We came up here last year and proposed user charges for the trucks. We by no means got all we asked for, but we got a substantial amount. And we think that the trucks are paying a goodly share toward the use that they make of the Federal highway system.

Mr. YOUNGER. Just one other question.

Mr. Martin, in reading your statement, on page 4, you omitted one word "Movement of highway trailers by rail 293ICC93 (1954) and other decisions, substituted service by piggyback." You left out the word "piggyback." Was that done purposely?

Mr. MARTIN. No, sir.

Secretary HODGES. He had it mixed up with piggybank. That is the reason he left it out.

Mr. MARTIN. No, sir.

Mr. YOUNGER. You want that still in the statement, in the printed form.

Mr. MARTIN. Yes, sir.

Mr. YOUNGER. That is all, Mr. Chairman.

The CHAIRMAN. Mr. O'Brien.

Mr. WILLIAMS. Mr. Chairman-would the gentleman yield?