welfare. By carrier welfare I do not mean simply profits but also the preservation of a sound, adequate, and safe transportation plant. The device given by Congress to the ICC in 1920 was the minimum rate power. By it the ICC could not only curb predatory and destructive rate warfare but also insure adequate revenues for the carriers. This concept was strengthened when motorcarriers and water carriers were brought under regulation in 1935 and 1940, respectively, and when the national transportation policy was adopted in 1940. To now remove the minimum rate power of the Commission would not be to move ahead constructively but to move backward, destructively, to the days of 1900.

The national transportation policy was adopted in 1940. It provides, among other things, that the ICC shall "promote safe, adequate, economic and efficient service and foster sound economic conditions in transportation and among the several carriers ;" and "encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices;". Section 15a (2), a principal section of the rule of ratemaking, directs the Commission in the exercise of its power to prescribe just and reasonable rates. among other things, to give due consideration to the need of revenues sufficient to enable the carriers to provide adequate and efficient service.

It will not be possible for the Commission to carry out the above enumerated responsibility if they lose the minimum rate power.

The Commission will not be able to insure that "reasonable charges for transportation services" will be established and maintained. The word "reasonable” must, of necessity, mean a charge or rate falling between two extremes; i.e., a rate that is too high, on the one hand, or too low, on the other. If the Commission retains control over what is too much but loses control over what is too little, it cannot make a determination as to reasonableness and it cannot make a determination with respect to the adequacy of carrier revenues.

The Commission will not be able effectively to prevent undue preferences and advantages for reasons previously given. Neither, in our opinion, will it be able effectively to prevent unjust discriminations.

The Commission will definitely not be able to deal with unfair or destructively competitive rate practices. To the extent that they are to be controlled under this bill, they eventually are to be remedied by the Department of Justice and the courts for all practical purposes-no remedy at all.

For the past 50 years we have relied as a nation upon service competition in transportation as the best means of insuring technical advances, innovations, and service improvements. The result of this service competition is reflected in the fact that we have in this country the finest transportation system the world has ever seen. Appreciating the importance of each of the different modes of transportation and their individual and unique contributions to a well-rounded national transportation system, the Interstate Commerce Commission has sought to carry out the national policy by preventing the excesses of unbridled rate competition among carriers. To this end the Commission sought to see to it that carriers compete vigorously with one another, but that none competes as aggressively that its competitors are destroyed.

In contrast, the carriers would, under the proposed legislation, be free to name any rate without regard to cost of performing the service that may be necessary to secure the traffic. Without statutory power as to minimum rates, this can only result in competition that is the most ruthless and destructive sort of economic warfare, in which only the financially strong can possibly hope to survive.

The great purpose of the Interstate Commerce Act was to establish the law of equality by eliminating favoritism and discrimination between persons, places, and commodities. Unbridled competitive rate cutting leads inevitably to discrimination. The history of regulation under the Interstate Commerce Act provides myriad examples of the necessity for governmental control of carrier selfishness in order to prevent preference of the large shipper and discrimination against the small shipper. All of the major rate proceedings have revealed the tendency of uncontrolled carrier management, whether of rail, water, or highway carriers, to respond to the pressure and demand of the big and important shippers or receivers in derogation of the interests of the small shippers and receivers and of the smaller and relatively less important communities or localities. Here again the ICC has sought to carry out the national policy by insuring a stable rate structure and proper rate relationships. It cannot do so without power to control minimum as well as maximum rates.

If transportation history teaches any one thing, it is that while competitive forces generally are effective in keeping prices at a reasonable level, these same competitive forces, if unleased, and not made subject to reasonable restraints, will result in eliminating competition, through unfair and destructive competitive rate cutting to the detriment of the transportation system as a whole and in disrupting reasonable and fair rate relationships as between competing shippers, geographical areas, and territories.

Railroad testimony

The railroad witnesses left unclear the answer to a number of questions which we believe they should be requested to clarify. It is difficult to ascertain from the testimony of their principal witnesses, several of whom spoke only for their own companies on specific points, just where they stand on antitrust coverage to replace the ICC controls which are to be removed. It is also difficult to discover just what their policy is to be on making rate reductions applicable across the board. The Southern Railroad claims that it intends to do so but the other testimony raises doubts as to the intentions of the industry at large. These questions should be answered, clearly and unequivocally.

S. 3242

This omnibus bill, which was introduced with S. 3243, covers other recommendations in the President's transportation message. Some of them are of great importance but they have received very little attention in the hearings because of the paramount importance of the minimum rate deregulation bill just discussed.

In the expectation that before action is taken by this committee further hearings will be held, I shall only summarize our position on those of the recommendations in S. 3242 in which we have an interest. Obviously the pressures attendant upon all in these closing days of this Congress make inadvisable an attempt to go into the lengthy discussion that they deserve.

The bill has 14 sections. Our interest is in sections 2, 3, 4, 5, 6, and 9. Section 2-Experimental rates

Section 2 of S. 3242 would authorize radically new and different ratemaking procedures. The section calls for rate experimentation through the devices of "simplified documentation, and plans for different or simplified bases and freight classifications."

We endorse and entirely agree with the ICC's comment in which they stated: "We seriously question the wisdom of lending legitimacy to a basically unlawful proposal merely because it is characterized as an 'experiment'."

The Interstate Commerce Act is a flexible law under which much has been accomplished in the area of experimental rates as well as in experimental services, etc., and we see no need specifically to authorize rate experiments which could apparently take place outside of the law.

We oppose section 2 of S. 3242.

Section 3-Piggyback

Section 3 is designed to implement the President's recommendation that legislation be enacted to "assure all carriers the right to ship vehicles or containers on the carriers of other branches of the transportation industry at the same rates available to noncarrier shippers." We support this objective.

Section 3 will, in our opinion, need some further safeguards and amendments, and we are at the present time working with other interested groups under the auspices of the Transportation Association of America to try to work out a satisfactory solution on this particular section of the bill.

Section 4-Through service and joint rates

Subsection (a) of section 4 declares it to be in the national interest "that the establishment of through service and joint rates, fares, and charges between carriers of all modes of transport be encouraged and promoted." We support this principle and have supported it for many years.

Subsection (b) of this section provides for the establishment of joint boards on which the Civil Aeronautics Board, Federal Maritime Commission, and the Interstate Commerce Commission will be represented and which will have jurisdiction over and control of through service and joint rate arrangements of carriers subject to the several agencies' jurisdictions.

While we have no objection to the creation of such a joint board arrangement, it seems to us a rather complex and unwieldy procedure when it is possible at

the moment for almost all of the modes to make joint rate arrangements with other modes under existing provisions of the Interstate Commerce Act. The only gap of significance has been that it was impossible for motor carriers to make through service and joint rate agreements with water carriers subject to Federal Maritime Commission jurisdiction in service to Alaska and Hawaii. This deficiency has been remedied by H.R. 11643 which has passed both Houses and has been signed by the President. It would appear that the purpose of the President's recommendation has been accomplished.

Section 5-ICC cooperation with States

Section 5 would authorize the Commission to make cooperative agreements with States in order to better enforce "the economic and safety laws and regulations of the various States and the United States concerning highway transportation." Similar language to that contained in this section also appears as section 5 of S. 2560 which has passed the Senate this year.

The purpose of this is to enhance further cooperation and exchange of information between the ICC and State regulatory authorities in order to bring about better enforcement of the Motor Carrier Act. This is a subject of great interest to the motor carrier industry and we are wholeheartedly in favor of this proposal.

Section 6-Civil forfeiture

The Interstate Commerce Act presently allows the ICC to bring civil proceedings against motor carriers for certain types of administrative violations of the Interstate Commerce Act. Motor carriers found to be violating these administrative provisions may be fined $100 for each offense and $50 for each day of a continuing violation.

Section 6 of the bill would extend the civil forfeiture provisions of the act to include violations of operating authority and the Commission's safety regulations and, in addition, would increase the penalty to $500 for each offense and $250 per day for continuing violations.

The trucking industry supports extension of the civil forfeiture procedure to cover violations of operating authority, and we support an increase in the fines from their present level up to $200 for a single violation and $100 for a continuing violation.

However, we do not feel that the civil forfeiture procedure should be extended to violations of the ICC's safety regulations. It seems unconscionable to us to require a motor carrier to pay a fine of $500 simply because he has unintentionally violated some obscure and highly technical provision of the ICC's detailed safety regulations.

S. 2560, as passed by the Senate, is in line with our recommendation except to the extent that it applies the civil forfeiture procedure to safety regulations. In your hearings on S, 2560 we stated fully the reasons for our objections to the inclusion of safety regulations.

Section 9-Government procurement, rate simplification, and transportation of mail

Subsection (a) (1) of section 9 relates to Government procurement and the transportation of mail by motor carriers.

The proposal is to amend section 321 of the Transportation Act of 1940. That section, as here applicable, now provides that except as to rates under section 22 the Government shall pay tariff rates for transportation and that the Government need not advertise for bids for transportation service when common carrier service is available.

The revision would place in the hands of any head of a Government agency the authority to create an entirely new system of transportation procurement. in addition to tariff rates and section 22 rates, an agency for the first time would have authority to "negotiate the provisions and prices of contracts, agreements, or other instruments for the purpose of procuring transportation."

We oppose placing such authority in the hands of the Government in its capacity as a shipper. This proposal violates the basic ideas of the national transportation policy. The Government, already favored by the free or reduced rate language of section 22, would under section 9 have a further advantage over all other shippers.

Subsection (a) (1) also deals with the transportation of mail by motor carriers. The Post Office Department today is severely curtailed in its use of motor carrier service, as it must today deal with motor carriers largely under the antiquated star route procedures established many, many years ago. The motor carrier industry believes that the best interests of the Post Office Department and of our industry would be best served by enactment of legislation, similar to that contained in the Railway Mail Pay Act, which motor carriers would have an obligation to transport the mail at rates which are established by the ICC.

Legislation to implement this idea was drafted jointly by the industry and the Post Office Department in the 86th Congress and was introduced as H.R. 2752.

We invite the committee's attention to that legislation which was before the Post Office and Civil Service Committee of the House. We feel that an approach of that nature is far superior to the proposal in this bill which would simply allow the Post Office Department to make contracts with motor carriers, at negotiated rates, for the transportation of mail.

Subsection (a) (2) of section 9 of the omnibus bill would authorize the General Services Administration and the Department of Defense to establish simplified rate structures suited to the needs of modern data-processing machines. The language contains a directive to the effect that the prospective simplified rate structure shall be found to be in the public and the Government interest. To our minds this presents two extremely unappealing prospects. One is the idea of tailoring our rates and services to conform to the requirements of machine processing. The other, and much more drastic, is the placing in the hands of a shipper, albeit the Government, the right to decide what is in the shipper's best interest and what is in the public interest. It is difficult to conceive of a traffic manager, even a Government traffic manager, who can make such a dual determination. How can any one man whose main responsibility is arranging for transportation services maintain the detached point of view necessary for a "public interest" finding?

This measure smacks too much of leaving the cat to mind the canary. But, assuming that the Government traffic managers could achieve a complete impartiality of approach, what argues for them as substitutes for the Interstate Commerce Commission in an area where the Commission has spent three generations developing the techniques requisite to such a key judgment? For example, while they are undoubtedly expert in securing transportation for the Government, what do they know about carrier costs?

We join with the ICC in questioning the soundness of such a proposal and we join with the ICC in again recommending to this committee that the Government be treated as all other shippers are treated today. To accomplish this equality, we reiterate our longstanding position in favor of repeal of that portion of section 22 of the Interstate Commerce Act which provides for free or reduced rates for Government.

91497-62- -43

APPENDIX A

Percentage of inbound and outbound freight moved by truck by 1,359 newly located plants-Selected States

1 Plants constructed in period July 1955 through 1959. Source: Special survey by Department of Research and Transport Economics, American Trucking Associations, Inc.

APPENDIX B

[Excerpt from Daily Traffic World, Washington, D.C., Aug. 13, 1962] PROPOSED RAIL RATE ON CORN IN MULTIPLE-CAR LOTS IS PROTESTED BY SHIPPERS Many shippers and processors of grain and grain products have petitioned the Commission to suspend a proposed multiple-car rail rate of 48 cents per 100 pounds on corn, in bulk, carload minimum 110,000 pounds per car, in not less than 500-ton lots, applying from origins in portions of Ohio, Pennsylvania, and Michigan to Augusta and Portland, Maine.

The petitions are directed to various items in supplement No. 204 to Central Territory Railroads Tariff Bureau freight tariff No. 245-H, ICC No. 4403, Traffic Executive Association-Eastern Railroads, published to become effective August 20.

In a reply to the petitions, the railroads said the protested rate was published for the purpose of meeting water competition specifically shipments via rail or truck from origins to Toledo, Ohio, thence by barge via Lake Erie, the New York State Barge Canal, the Hudson River, Long Island Sound, and along the Atlantic coast to the Kennebec River and to Farmingdale, Maine, thence by truck to Augusta, Maine. They said the rates were published so as not to apply during the closed season of navigation, and would not apply on export traffic. In connection with the proposal, relief from the long-and-short haul provision of the Interstate Commerce Act was sought in fourth section application No. 37837, the railroads said.

In its protest, the New England Millers & Shippers Association said the proposal could only result in disrupting present market relationships on grain and grain products applicable to and within eastern territory, "which for many years has been based on the single carload unit of sale as developed and incorporated in