courts simultaneously could be both approved and enjoined. Where disparate interests are involved and the equally compelling convenience of a number of widely separated parties must be considered, multiple proceedings in several courts involving the same rate are quite possible.

And finally, courts are reluctant to make determinations which are prospective in terms. While a court might conceivably find that a given rate was unlawful and should be enjoined, it would not indicate to the parties what level of rate would conform to the antitrust laws.

For example, suppose that a motor carrier could satisfy a court that a railroad, in reducing its rate from $1 to 50 cents, had violated the antitrust laws. No doubt, the court would enjoin the rate. But that is as far as the court would go. It would not, as the Commission often does, determine the level below which the rate could not be set. And it is thus quite possible that a motor carrier, having gone to all the trouble and expense of making his proof and securing an injunction against the 50-cent rate, would find himself faced with, say, a 52-cent rate, placed in effect by his rail competitor as soon as the 50-cent rate was enjoined.

For the reasons I have stated, the private injunctive remedy of section 16 of the Clayton Act-and we do not believe it would be available-is a completely unsatisfactory substitute for the minimum rate powers of the Interstate Commerce Commission. And as for the other provisions of the antitrust laws which the bill would apply to carrier practices, it seems likely that only after a carrier. in a given traffic and a specific route or territory, had achieved a virtual monopoly, could they be successfully invoked. Here again, the ICC's minimum-rate powers can now be used to stop such situations from developing. It is conceivable, for example, that in some situations court relief under the Sherman Act might make an aggrieved carrier whole, but even so, such relief would not protect the public interest in an adequate transportation system.

SUPPORTERS OF THE BILL IGNORE HISTORY

Finally, there is a bit of history which is very pertinent to your consideration of the proposed legislation. The Commission did not acquire its power to regulate the minimum rates of carriers until 1920. The Sherman Act was passed in 1890 and the Clayton Act in 1914. In Lake Line Applications Under Panama Canal Act (33 I.C.C. 699, 716 (1915)), the Commission found that the railroads, acting in concert, "were able to and did drive all independent boats from the through lake and rail transportation, [and] thereby destroyed the possibility of competition now held as a shield against possible competition of new independents." These railroad activities took place when the Sherman Act was in full force, and continued for some years after the Clayton Act was passed. In fact, it was not until the ICC was given its power over minimum rates that independent water carriage again came alive. Now we are told that the Commission can be deprived of this same minimum rate power, and that these same two antitrust statutes, which the bill would substitute for that power, and which were of no avail when the railroads drove the independent water carriers out of business, will somehow prevent them doing the same thing again to the motor and water carriers. We prefer to believe the lesson of history.

SECTION-BY-SECTION ANALYSIS OF ANTITRUST LAWS DESIGNATED IN SECTION 1 OF THE ACT OF OCTOBER 15, 1914 (CLAYTON ACT)

THE SHERMAN ACT (15 U.S.C.A., SECS. 1-7)

Section 1: Declares every contract, combination, or conspiracy to restrain trade or commerce among the States or with foreign nations to be illegal. Provides fine or imprisonment, or both, for violations.

Comment.-Applicable to all businesses. Would apply to collective ratemaking by carriers, except for provisions of Reed-Bulwinkle Act (49 U.S.C.A., sec. 5b). Section 2: Declares that every person who monopolizes, attempts to monopolize, or combines or conspires with others to monopolize trade or commerce, is guilty of a misdemeanor and subject to fine or imprisonment, or both.

Comment.-See section 1.

Section 3: Same provisions as section 1 applied to territories or District of Columbia, or between them and the States.

Section 4: Provides for jurisdiction of courts and duty of U.S. district attorneys to prevent and restrain violations of the Sherman Act.

Section 5: Empowers district courts to bring in additional parties to section 4 proceedings by subpena, whether such parties reside in the district or not.

Section 6: Provides for forfeiture of property moving in commerce owned under any contract or combination or pursuant to any conspiracy subject to section 1.

Comment.-In U.S. v. Addyston Pipe & Steel Co. (85 F. 271 (1898)), modified, 175 U.S. 211, 20 S. Ct. 96), an injunction proceeding, it was held there could be no forfeiture of goods, except upon jury trial.

Section 7: Defines "person" as used in Sherman Act.

THE WILSON TARIFF ACT OF 1894 (SECS. 73-77, INCLUSIVE) (15 U.S.C.A., SECS. 8-11) Section 8: Prohibits combinations, conspiracies, or contracts in restraint of import trade.

Section 9: Provides for jurisdiction of courts and duty of U.S. district attorneys. Section 10: Empowers district courts to bring in additional parties to section 9 proceedings by subpena, whether such parties reside in the district or not. Section 11: Provides for forfeiture of property moving in commerce owned under any contract or combination or pursuant to any conspiracy subject to section 8.

THE CLAYTON ACT (15 U.S.C.A., SECS. 12-27)

Section 12: Defines "antitrust laws" for purposes of Clayton Act.

Comment. These include sections 1-27 of title 15, United States Code Annotated. Same definition as used in S. 3243.

Section 13: Prohibits discrimination in price between different purchasers of commodities of like grade and quality, where the effect may be substantially to lessen competition or tend to create a monopoly in any line of commerce.

Comment. Not applicable to carriers, since transportation is not a commodity. Section 14: Prohibits exclusive-use contracts in connection with the lease or sale of "goods, wares, merchandise, machinery, supplies, or other commodities." Comment.-In Fruit Growers Exp., Inc. v. F.T.C. (274 F. 205 (1921)), the Federal Trade Commission was held to be without jurisdiction in a case involving contract requiring railroad party thereto to use Fruit Growers' equipment exclusively in the movement of fruits and vegetables. ICC held to have sole jurisdiction. Dismissed (261 U.S. 629, 43 S.Ct. 518).

Section 15: Authorizes treble damage suits for violation of "antitrust laws" as defined in section 12.

Section 15a: Authorizes suits by United States to recover actual damages and costs when it is injured in its business or property.

Section 15b: Provides 4-year limitation period upon suits brought under section 15 or 15a.

Section 16: Makes final judgment or decree in civil or criminal suit brought by United States (other than consent decrees) prima facie evidence in civil suits brought by private parties (or by Government under sec. 15a). Tolls running of limitations as to private actions during pendency of Government suit and 1 year thereafter.

Section 17: Provides that nothing in the antitrust laws shall be construed to forbid existence and operation of labor (and other) organizations.

Section 18: Prohibits acquisition of stock of one corporation by another where effect thereof may be substantially to lessen competition or tend to create monopoly.

Comment. Specifically exempts transactions consummated pursuant to authority given by various administrative agencies, including Interstate Commerce Commission.

Section 19: Prohibits interlocking directorates among banks, and any two or more million-dollar competitive corporations.

Comment.-Exempts common carriers by rail, pipeline, and motor subject to ICC jurisdiction.

Section 20: Prohibits purchases of more than $50,000 of securities, supplies, etc., by common carriers from companies having same officers or directors as carriers, except upon a competitive bid basis under rules prescribed by ICC. Section 21: Vests authority to enforce provisions of sections 13, 14, 18, and 19 in the ICC "where applicable to common carriers subject to the Interstate Commerce Act."

Section 22: Authorizes suits against corporations under antitrust laws in any district where they are found or transact business.

Section 23: Provides that subpenas for witnesses in actions by United States issued in any district many run into any other district.

Section 24: Makes officers and directors liable for acts of corporations, and subjects them, upon conviction, to fine or imprisonment, or both.

Section 25: Provides for jurisdiction of courts and duty of U.S. district attorneys to restrain violations of Clayton Act.

Section 26: Provides for injunctive relief by private parties against threatened loss or damage by violation of the antitrust laws.

Comment.-Bars such relief, except to United States, against common carriers "in respect of any matter subject to the regulation, supervision, or other jurisdiction of the Interstate Commerce Commission."

Section 27: Provides that invalidation of "any clause, sentence, paragraph, or part" of Clayton Act shall not invalidate the remainder thereof.

STATEMENT OF JAMES F. PINKNEY ON BEHALF OF THE AMERICAN TRUCKING ASSOCIATIONS, INC.

My name is James F. Pinkney. I am counsel for the American Trucking Associations, Inc., with offices at 1616 P Street, NW., Washington, D.C. The association, as most of you know, is a national federation representing all forms of motor carriers, both private and for hire, and having affiliated associations in 49 States and the District of Columbia.

S. 3243

Three points stand out in these hearings so far-equality in regulation, low freight rates, and the economic welfare of common carriers. The principal question posed is whether the Congress should at this time sharply change the course of regulation by doing away with the minimum rate control power of the Interstate Commerce Commission. Ostensibly withdrawal is to be limited, but the railroad witnesses made it celar in their testimony before the House committee that they seek eventual total removal and the thrust of the Commerce Department testimony was in that direction.

In the first part of this statement I propose to discuss this problem.

By way of background, it seems well to examine some basic facts about the deregulation proposal.

First, what was immediately back of the proposal? Apparently the welfare of one bankrupt railroad. Myer Feldman, deputy special counsel to the President. in a speech before the Transportation Association of America Board of Directors on May 23, 1962, said:

"When we took office in January we were immediately faced with a transportation crisis in a particular area of especial concern to the President-the New Haven Railroad difficulies. The difficulties of this railroad highlighted the need for a transportation policy. The President asked me to look into the matter and to organize and coordinate the Government's facilities in the development of a meaningful transportation policy that would assist the industry to develop the way it should.

"We had two objectives in mind: One was to assist the New England economy through assistance to the New Haven Railroad. The other was to develop a transportation policy that would be of assistance to the entire Nation and permit each mode of transportation to develop in its own way in the most efficient manner possible."

May I comment briefly on the situation of the New Haven Railroad. It was not the agricultural or bulk commodity exemption, nor minimum rate controls. nor competition from motor or water carriers, nor ill-advised regulation by the Interstate Commerce Commission, which put the New Haven in bankruptcy. The facts appear clear. It was caused by the New Haven's passenger deficit. bad management, and the decline and change in the nature of New England's industry. In its interim report of March 31, 1961, in docket No. 33332 (313 I.C.C. 411. 415, 421) dealing with the New Haven's plight the Commission said:

"The hearing officers concluded that the immediate and major cause of the railroad's current financial crisis is the huge passenger deficit coupled with the inability in recent years of freight revenues to absorb any substantial part of those losses. While we do not disagree with that conclusion, we do not wish to leave any possible basis for any inference that the primary cause of the current

financial crisis is the precipitous decline in freight revenue or any other cause other than the respondent's chronic and staggering passenger deficit.

"The record shows that in every year from 1950 through 1959 the New Haven derived a profit from freight operations. From 1950 through 1960, total freight net railway operating income was $166,307,494. By contrast, in every year from 1950 through 1960 the passenger deficit, computed by the formula prescribed by the Commission, ranged from a low of $9,367,816 in 1950 to a high of $15,224,559 in 1957. The total passenger deficit for the period involved amounts to $138,325,992. Had the New Haven suffered no losses from passenger service during the period involved, its aggregate net railway operating income would have been $165,850,492."

*

"The recommended report contains a detailed recitation of blunder, extravagance, inefficiency, and errors of omission on the part of various persons who, from 1952 to date, have occupied positions of trust and authority in the New Haven. As pointed out by the hearing officers, however, all of the questionable actions motivated by selfish gain and many of the serious errors in judgment occurred before the present managers of the railroad took office."

Other eastern railroads with passenger deficit problems are the principal railroads having difficulties. Western and southern railroads certainly appear to be in good shape, but they have now joined with their eastern brethren in again shouting the cry of "less regulations or nationalization." They propose, as solutions, steps which will not aid the eastern railroads in the solution of their real problems but steps which will better enable all of them to get at their competition by providing weapons designed to return the railroads to the paramount position in transportation which they once enjoyed but which in America's new economy they can never again achieve except by legislative fiat. Too much of America's economy is today almost entirely reliant upon motor carriers, pipelines, airplanes, and water carriers. Let me cite just one example.

A survey of 1,359 new industrial plants located in America during the years 1955 through 1959 discloses that 73 percent of incoming traffic moved into these plants by truck, and 80.1 percent of their outgoing traffic moved by truck. Attached as appendix A is a chart showing by selected States the percentage of the products both incoming and outgoing from these new plants which move by motor carrier.

Inequities in regulation

Next, let's look at the facts of life about unequal regulation in the exemption area, of which there is a good deal, and some of which may well be termed “inequitable."

Regulated motor carriers as entitles are not exempt from any regulation. Individual trucks, when used exclusively in transporting unmanufactured agricultural commodities (which may be operated by anyone including railroads) are exempt. As will be pointed out in greater detail by another witness, this exemption creates far more of a problem for America's common carriers by motor vehicle than a benefit to them. The inequality here is not as between regulated rail and motor common carriers. If there be inequality, it is between the agricultural community, on the one hand, and the industrial community, on the other. The traffic of the latter, which is dependent upon a sound and adequate public transportation system, is practically all regulated, and necessarily

So.

On the dry and liquid bulk commodity side, motor carriers "enjoy" no exemptions. They are in exactly the same position as railroads.

To what does the present bulk commodity exemption apply, and how could. it be equalized? It applies only on waterways (which comprise only a small part of America's arteries of commerce) and it actually applies only to barge and shipload quantities (usually 500 to 3,000 tons) of not more than three such commodities in a single vessel or tow. No more. It does not now apply to movements by truck, rail, pipeline, or air carrier.

To make the bulk exemption applicable to trucks and rails will be to extend exemption for the first time to all bulk commodity movements which are handled by truck and rail-all of which are now subject to regulation (except for the single truck movements of bulk agricultural commodities I have just discussed). Bearing the above facts in mind, it can be seen that if exact equality of regulation in the exemption area is to be secured, all that need be done is

(a) exempt from all regulation except safety and hours of service the movement in truckload or carload lots (in single trucks, cars, or other vehicles) all unmanufactured agricultural commodities;

(b) exempt from all regulation the transportation of dry and liquid bulk commodities in shipments of bargeload quantity, when moving in competition with ships or barges.

However, let me hasten to add that we do not advocate even this extension route to qualify. The far better one would be the elimination or sharp curtailment of the exemptions.

Lower freight rates

The next matter I wish to discuss is cheaper freight rates. Mr. Brosnan of the Southern Railroad testified in the Senate hearings that if this proposal goes through, the shippers of this country will save a billion dollars annually. This is very enticing and very interesting. It has great popular appeal. We would like everything to be cheaper. Unfortunately, lower prices, though easy to sell, are hard to bring about in the present state of our economy.

We concede that if you take the floor from under freight rates, they will in fact be lowered. Under big shipper pressure and because of the desperate struggle of the carriers of all modes to hold on to their present traffic, rates will immediately drop between principal cities and principal manufacturing areas and, to some extent-but a far lesser extent-between smaller points and less important areas.

What will this do to public transportation, all of which is now caught in a so-called profit squeeze?

The railroads say it will make them profitable and save them from nationalization. If so, it seems to me it will have to be done with mirrors.

The last study on the subject of the distribution of rail revenue contribution by commodity groups' shows that 64.5 percent of rail tonnage was moved at rates not returning full cost. Obviously, the remaining 35.5 percent should have been priced well above full cost if the railroads were to operate at a break-even point. We believe that today's below-full-cost percentage would show little change from the 1960 figure. Despite rail statements, the ICC trend since 1955 has been in the direction of permitting more and more reduced rates to go into effect, most of them on manufactured articles. The sharp reduction in net revenues of the regulated carriers pointed out in Mr. Loomis' testimony is, in our opinion, definitely related to this trend.

The railroads argue that they will make their money because of increased volume. To get this increased volume away from their competitors and from private carriage they obviously will have to reduce freight rates to far lower levels than they are now. By so doing they will immediately reduce their revenues in the hope that in the long run their net revenues will be increased. When does the longrun increase occur? That will depend upon the reaction and the staying power of their competitors and upon the soundness of their theory that increased volume will increase their net-a theory the soundness of which has been properly challenged down through the years, as Mr. Clarence Kelley has pointed out.

The reaction of the rail competitors can be predicted. It will be in kind. They will not sit idly by and let the railroads take traffic away from them. The competing forms of transportation will have the same unrestricted right to cut rates and they will do so. There will be no referee in the game because of the inability of one carrier to even so much as object to rate reductions by another. The Interstate Commerce Act specifically provides that the sections prohibiting discrimination, preference and prejudice "shall not be construed to apply *** to the traffic of any other carrier of whatever description" (sec. 3(1) and 216(d)).

The reaction of private carriers is not so easy to foresee. They are growing, and huge fleets of proprietary trucks are now found on our highways. In many cases they are there in intercity service because they can, under the agricultural exemption, obtain some revenue for their back hauls by for-hire return trips. Otherwise, such private carriage would be economically infeasible and the shippers conducting such operations would be using common carriage. Possibly some of the traffic involved would be moved by common carriers if the decreased rate levels were sufficiently attractive, and if the common carriers

1 ICC statement No. 2-62, "Distribution of the Rail Revenue Contribution by Commodity Groups-1960," table 7.