system of rates for Government traffic, adaptable to emergency conditions, could go far to expedite transportation actions to meet such situations.

PRIMARY PURPOSE OF RATE SIMPLIFICATION

The primary purpose of rate simplification is that of enabling application of traffic management to Government transportation on broad overall bases in lieu of the present limited and shipment-by-shipment methods now required by the complexities of the tariff system which necessitate handling of problems on commodity-by-commodity and point-to-point bases.

Should the proposed legislation be enacted, GSA would proceed to develop with the common carriers, on an experimental basis, methods of applying simplified rates which would be advantageous to the Government in terms of economy, efficiency, and service.

The General Services Administration is not only in complete accord with section 9 of H.R. 11584, but also with the other sections of the bill.

In closing, I wish to make the following brief comments concerning the remaining sections of H.R. 11584:

SECTION 2 OF THE BILL

Section 2 of the bill would authorize simplified rates upon voluntary agreement of shippers and carriers. This proposal would extend to commercial shippers substantially the same relief as provided for the Federal Government in section 9.

SECTION 3 OF THE BILL

Section 3 of the bill would forbid railroads to discriminate against any shipper or carrier tendering loaded or empty vehicles for transportation. This proposal would clarify and extend the availability of piggyback services for Government transportation.

SECTION 4 OF THE BILL

Section 4 of the bill would provide regulation of joint rates of carriers now subject to separate regulation of the Civil Aeronautics Board, the Federal Maritime Commission, and the Interstate Commerce Commission. The purpose of this section is to encourage joint rates, fares, and charges between carriers of all modes of transport. This objective would be to the advantage of the Government as a shipper.

SECTION 5 OF THE BILL

Section 5 of the bill would authorize the ICC to make cooperative agreements with the States to enforce provisions of the Interstate Commerce Act relating to highway transportation. Such legislation would be desirable, particularly in safety of operation of motor vehicles.

SECTION 6 OF THE BILL

Section 6 of the bill would increase penalties applicable for violation of part II of the Interstate Commerce Act. The purpose is to improve enforcement of the act.

SECTIONS 7 AND 8 OF THE BILL

Sections 7 and 8 of the bill apply to air carriers the reparation provisions applicable to rail and water carriers under the Interstate Commerce Act, and which would be applied to motor carriers and freight forwarders should S. 676 be enacted. (See also S. 1283, H.R. 2765, H.R. 5596.) The provisions of this latter bill were proposed to Congress by GSA. The reparations provisions give relief to persons damaged because of violations of the regulatory statute on a retroactive basis. Such provisions are justified to protect users of transportation services from unreasonableness of carrier-made rates which are not adjusted by the carriers to meet consumer needs when transportation services are used.

SECTIONS 10 TO 13 OF THE BILL

Sections 10 through 13 of the bill transfer to the Secretary of Commerce the responsibilities of guarantee of loans to air carriers and railroads. As this responsibility involves promotion of carrier financing, rather than of regulation, it is a function properly assignable to the Department of Commerce.

This concludes my prepared statement on these bills, Mr. Chairman. However, I have with me today Deputy Commissioner, Mr. Malcolm D. Miller, and we shall be happy to answer questions which you or members of your committee may wish to ask.

The CHAIRMAN. Thank you, Mr. Conrad.

Mr. Mack, any questions?

Mr. MACK. Not at this time, Mr. Chairman.
The CHAIRMAN. Mr. Schenck?

Mr. SCHENCK. Thank you, Mr. Chairman.

Briefly, Mr. Conrad, do you feel that this would expedite the work of the Interstate Commerce Commission in establishing rates, and would take some of the time lag out of it?

Mr. CONRAD. We are of that opinion, sir.

Mr. SCHENCK. Do you see any inference or effort in this legislation to do away with the Interstate Commerce Commission in the job of setting rates?

Mr. CONRAD. No, sir.

Mr. SCHENCK. That is all I have, Mr. Chairman.

The CHAIRMAN. To abolish the Interstate Commerce Commission? Mr. SCHENCK. I wondered if that was a part of the purpose behind this proposed legislation.

The CHAIRMAN. I would be very much interested if it were, but I haven't had any indication that there was any such thought here.

Mr. SCHENCK. Mr. Chairman, I have heard such a suggestion mentioned. That is the only reason I asked the question.

The CHAIRMAN. Mr. O'Brien?

Mr. O'BRIEN. No questions, Mr. Chairman.

The CHAIRMAN. Mr. Younger?

Mr. YOUNGER. Yes; one.

Mr. Conrad, your entire statement seems to illustrate the advantages to the Government by eliminating the minimum rate as included in the bill.

I am wondering, because Mr. Hodges, the Secretary of Commerce, yesterday said that this bill was for the benefit of the railroads and the common carriers. I am wondering where that point is, if you drive your rates down to a point where they are below cost, where is the relief to the common carriers?

I would like to go into that subject a little bit with you.

Mr. CONRAD. If I may address myself to the first part of your question, we are presenting our testimony here only in the capacity of the Government's interest as a user of the transportation service itself. This is the only purpose of our appearance.

Secondly, with reference to the second portion of your question, and while I am not sure that I can answer it, I can assure you that we have no desire to participate in any movement which would drive transportation costs or drive transportation rates below the cost which the industry is experiencing in providing the particular transportation facility involved.

Mr. YOUNGER. I just wanted to clear that up in the record, because one might very well gather from your statement that you are primarily interested in driving these rates down, and the great saving to the Government might be detrimental to all of the common carriers.

What we are trying to do is strike some balance and make sure that whatever the Government does, that they don't go into the field and pit one mode of transportation against another, to a point where they are carrying Government goods at a loss.

Mr. CONRAD. Congressman, we would be extremely pleased to provide or participate in the development of a rate structure which is geared to the cost of the transportation industry, including a reasonable amount for the profit which they are entitled to earn.

But I want to reemphasize, if I may, respectfully, that we do not intend, nor would we ever wilfully participate in, any movement to drive transportation rates below the costs which the industry itself is experiencing in providing the transportation facility.

Mr. YOUNGER. That is very fine, because I would like to see come out of this transportation legislation a bill which will permit every mode of transportation to take advantage of all of its inherent advantages for the benefit of the public and the Government.

That is all, Mr. Chairman.

The CHAIRMAN. Mr. Conrad, should any transportation company propose rates which had for its purposes driving its competition out of business, the antitrust laws would probably be applicable, at least they could be if that situation came about, is that not right?

Mr. CONRAD. That is correct.

The CHAIRMAN. In the second place, any responsible transportation company, in carrying on its own business, would not propose and offer a rate that would obviously put it out of business because of the economic situation a rate that could not meet and have good business. If they did that they ought to have their heads examined, is that right? Mr. CONRAD. We find very little indication of different members of the transportation industry attempting to operate at or receive revenues that are less than their out-of-pocket costs.

The CHAIRMAN. Mr. Hemphill?

Mr. HEMPHILL. I am sorry I missed part of your statement, Mr. Conrad, but I have read it and it is a very interesting statement. I am glad you are interested in saving the Government money.

One of the questions I have about the legislation is whether or not you are going to save people money who are trying to buy these farm commodities, such as people who have cattle and people in the turkey and chicken businesses, and people of similar trades who, last year, were trying to get some feed grains out of the Midwest, when the freight rates were so prohibitive that they couldn't get the feed grains, and they were in the warehouses out there at a commodity support price.

So we had plenty of grain and plenty of need, and we couldn't get them together because of transportation costs.

In your opinion, will this help those people?

Mr. CONRAD. You are referring to H.R. 11583?
Mr. HEMPHILL. Yes.

Mr. CONRAD. And as I indicated on page 2 of my statement, we definitely feel that through the introduction of increased competition in this particular area of movement of agricultural and bulk commodities, that there would be a reduction in transportation costs which would be beneficial to the shipper and the consumer of the product involved.

Mr. HEMPHILL. I had given to me an illustration of certain commodities which presently had a rate of $10.65. If this H.R. 11583 went through, the railroads could ship the commodities and benefit the farmers involved for something like $3.90, and still make a profit. Is that the intent of this bill, to make sure that the railroads can do this and still make a profit and still serve the public, in your opinion?

Mr. CONRAD. The intent of the bill is, as we interpret it, to extend to the rail industry the same economic environment which exists with reference to other modes of transportation industries in the movement of these commodities.

Mr. HEMPHILL. Such as barges and some of these trucks?
Mr. CONRAD. That is correct; yes, sir.

Mr. HEMPHILL. We call it down home "bird-dogging," I believe. Once a trucker goes down-well, he follows the produce market production. Then he gets a load and he brings it into a particular area, then of course the railroad can't compete because they can't change their rates, but he can change his rates.

So do you think it is fair to the regular trucking lines, freight forwarders and all others, that this competition be allowed?

Mr. CONRAD. Yes, sir.

Mr. HEMPHILL. Thank you very much.

Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Conrad, in your statement I observe that you state that 76 percent of the Government's rail carload shipments, I believe you said-is that true or is it the total?

Mr. CONRAD. This is just the railroad shipments, Mr. Chairman. The CHAIRMAN. Freight charges I believe you mentioned a figure of $130 million plus. I had it awhile ago. Do you mean by that that all of the 76 percent is now moving under published tariff?

Mr. CONRAD. Mr. Chairman, most of this is moving under published tariffs, but not all of it.

The CHAIRMAN. That would leave 24 percent of the Government movement that would be applicable under section 22 rates, then?

Mr. CONRAD. They would be both section 22 and published tariff rates, Mr. Chairman. These statistics do not represent a division between section 22 rates and other rates. This is a composite of the total rail carload shipments.

The CHAIRMAN. I don't know that I get the distinction. You used the term "76 percent." Now you say that most of the I just wish to clarify it a little bit, so I can get some idea of what the facts are. Mr. CONRAD. Mr. Miller would like to address himself to that, with your permission, Mr. Chairman.

The CHAIRMAN. All right, sir.

Mr. MILLER. This 76 percent consists of the bulk commodities and the agricultural commodities shipped by the Government, most of which would be under tariff rates. There are section 22 shipments in that 76 percent.

The other 24 percent would be what you might call manufactured and miscellaneous commodities which would not come within this proposed exemption. There would be traffic under that 24 percent of both section 22 traffic and commercial tariff traffic.

Mr. MACK. Then, Mr. Chairman, could I ask a clarifying question here?

The CHAIRMAN. Yes.

Mr. MACK. Then the Government is shipping 76 percent of the agricultural products.

Mr. MILLER. And bulk commodities. A large part of it is grain, a large part of it is coal, things of that sort.

Mr. MACK. Could you give us a further breakdown on that?

Mr. MILLER. It could be prepared; yes. We do not have it here. Mr. MACK. Mr. Chairman, I would like to have that broken down, if they have it available.

Mr. CONRAD. We would be pleased to supply that for the record. The CHAIRMAN. You may submit it for the record.

Are there any further questions?

Mr. MACK. I would like also, if possible, to have the percentage of the shipments under section 22.

Mr. MILLER. That can be obtained.

Mr. MACK. That was not included in your statement this morning. Mr. CONRAD. We will be glad to supply that.

The CHAIRMAN. You may supply that information.

Mr. CONRAD. Yes, sir.

Mr. NELSEN. Mr. Chairman.

The CHAIRMAN. Mr. Nelsen.

Mr. NELSEN. I would like also to have some information relative to section 22, the difference in costs of transportation as provided under section 22 as compared to regular rates, what the difference would be. You can supply it for the record if you wish. You don't have to answer the question now if you don't have the information. I would like to have it included in the answer to the question asked by Mr. Mack.