Government and local communities are to meet the Nation's needs for adequate airports and air navigation facilities without excessive and unjustifiable costs. (3) The Federal Government is a major user of transportation services. To assure the greatest practical use of the transportation industry by Government, I am directing all agencies of the Government, in meeting their own transport needs, to use authorized commercial facilities in all modes of transportation within the limits of economical and efficient operations and the requirements of military readiness.

(4) I also recommend that the Post Office Department be given greater flexibility in arranging for the transportation of mail by motor vehicle common carrier.

(5) Last year the Congress extended until June 30, 1963, the authority by which the Interstate Commerce Commission has been guaranteeing interest and principal payments on emergency loans to the railroads for operations, maintenance, and capital improvements for which the carriers cannot otherwise obtain funds on reasonable terms. A similar law by which the Government guarantees loans for aircraft and parts being purchased by certain certificated air carriers will expire this year. Since the Department of Commerce is already a focal point for Government transportation activities and since, in the interest of program coordination and consistency of policy these activities should be further consolidated, I recommend that the railroad loan guarantee authority, and the aviation loan guarantee authority if it is extended, be transferred to the Department of Commerce. These problems are not regulatory in nature and are clearly separable from the chief functions of the Interstate Commerce Commission and the Civil Aeronautics Board, and can be acted upon more expeditiously by an executive agency.

(D) Protection of the public interest

(1) Mergers: A great resurgence of merger talk has occurred in the railroad and airline industries in the last several years, and major mergers have been proposed in recent months in both industries. The soundness of such mergers should be determined, not in the abstract, but by applying appropriate criteria to the circumstances and conditions of each particular case. This administration has a responsibility to recommend more specific guidelines than are now available and more specific procedures for applying them.

Accordingly, I have directed the formation of an interagency group to undertake two tasks: First, after proper consultation with interested parties, to formulate general administration policies on mergers in each segment of the transportation industry; and second, to assist the Department of Justice in developing a Government position on each merger application for presentation before the regulatory agencies. This group will consist of agency representatives designated by the Attorney General, the Secretary of Commerce, the Secretary of Labor, the Chairman of the Council of Economic Advisers, and the heads of other agencies involved in a particular case. Under the chairmanship of Commerce, this group will examine each pending merger in transportation on the basis of the following criteria and others which they may develop:

(1) Effective competition should be maintained among alternative forms of transportation, and, where traffic volume permits, between competing firms in the same mode of transportation.

(2) The goals of economical, efficient, and adequate service to the public and reduction in any public subsidies—should be secured by the realization of genuine economies.

(3) Affected workers should be given the assistance to make any necessary adjustments caused by the merger.

(2) Through routes and joint rates: For many years some regulatory agencies have been authorized to appoint joint boards to act on proposals for intercarrier services; but they have taken virtually no initiative to foster these arrangements which could greatly increase service and convenience to the general public and open up new opportunities for all carriers. I recommend, therefore, that Congress declare as a matter of public policy that through routes and joint rates should be vigorously encouraged, and authorized all transportation agencies to participate in joint boards.

(3) I have requested the Secretary of Defense and the Administrator of General Services to make the fullest possible use of their statutory powers, and I urge the enactment of such additional legislation as may be necessary, to encourage experimental rates and services to explore every promising

simplification of rate structures-and to encourage the development of systems that will make rate ascertainment and publication less costly and more convenient. These experiments will be pilot studies for a more general simplification of rates and for the application of new kinds of service to transportation in general.

(4) I am requesting the National Conference of Commissioners on Uniform State Laws, in cooperation with the Interstate Commerce Commission, to develop and urge adoption of uniform State registration laws for motor carriers operating within States but handling interstate commerce. The Congress should, consistent with this effort, give the Interstate Commerce Commission authority to enter into cooperative enforcement agreements with the various States, covering both the economic and the safety aspects of highway transportation. (5) I recommend that all common carriers, including freight forwarders and motor carriers, be required to pay reparations to shippers charged unlawfully high rates.

(6) Finally, I recommend that the civil penalty now imposed on motor carriers for failure to file required reports be substantially increased; that the same civil penalty be imposed for violations of safety regulations and for operating without authority; and that the safety regulations of the Interstate Commerce Commission should be made fully applicable to private, as well as to common and contract carriers, so as to clarify the ambiguous situation prevailing at present.

PART II. URBAN TRANSPORTATION

I have previously emphasized to the Congress the need for action on the transportation problems resulting from burgeoning urban growth and the changing urban scene.

Higher incomes coupled with the increasing availability of the automobile have enabled more and more American families, particularly younger ones with children, to seek their own homes in suburban areas. Simultaneously, changes and improvements in freight transportation, made possible by the development of modern highways and the trucking industry, have reduced the dependence of manufacturers on central locations near port facilities or railroad terminals. The development of improved production techniques that require spacious, one-story plant layouts have impelled many industries to move to the periphery of urban areas. At the same time the importance of the central city is increasing for trade, financial, governmental, and cultural activities.

One result of these changes in location patterns has been a change in the patterns of urban travel. Formerly people traveled mainly along high density corridors radiating to and from downtown. Today traffic patterns are increasingly diverse. Added to traditional suburb-to-city movements are large crosstown flows which existing mass transportation systems are often not geared to handle. Also, the increasing use of automobiles to meet urban transportation needs has resulted in increasing highway congestion, and this has greatly impeded mass transportation service using those highways.

This drastic revision of travel patterns in many urban areas has seriously impaired the effectiveness and economic viability of public mass transportation, which is geared to the older patterns. A steady decline in patronage and a concomitant rise of unprofitability and financial problems have occurred. This has been particularly true of rail commuter and streetcar services limited to particular routes by fixed roadbeds.

To conserve and enhance values in existing urban areas is essential. But at least as important are steps to promote economic efficiency and livability in areas of future development. In less than 20 years we can expect well over half of our expanded population to be living in 40 great urban complexes. Many smaller places will also experience phenomenal growth. The ways that people and goods can be moved in these areas will have a major influence on their structure, on the efficiency of their economy, and on the availability for social and cultural opportunities they can offer their citizens. Our national welfare therefore requires the provision of good urban transportation, with the properly balanced use of private vehicles and modern mass transport to help shape as well as serve urban growth.

At my request, the problems of urban transportation have been studied in detail by the Housing and Home Finance Administrator and the Secretary of Commerce. Their field investigations have included some 40 metropolitan and other communities, large and small. Their findings support the need for substantial expansion and important changes in the urban mass transportation

program authorized in the Housing Act of 1961 as well as revisions in Federal highway legislation. They give dramatic emphasis, moreover, to the need for greater local initiative and to thee responsibility of the States and municipalities to provide financial support and effective governmental auspices for strengthening and improving urban transportation.

On the basis of this report, I recommend that long-range Federal financial aid and technical assistance be provided to help plan and develop the comprehensive and balanced urban transportation that is so vitally needed, not only to benefit local communities, but to assure more effective use of Federal funds available for other urban development and renewal programs. I recommend that such Federal assistance for mass transportation be limited to those applications (1) where an organization, or officially coordinated organizations, are carrying on a continuing program of comprehensive planning on an areawide basis, and (2) where the assisted project will be administered through a public agency as part of a unified or officially coordinated area wide transportation system.

(A) Long-range program

Specifically, I recommend that the Congress authorize the first installment of a long-range program of Federal aid to our urban regions for the revitalization and needed expansion of public mass transportation, to be administered by the Housing and Home Finance Agency. I recommend a capital grant authorization of $500 million to be made available over a 3-year period, with $100 million to be made available in fiscal 1963. Only a program that offers substantial support and continuity of Federal participation can induce our urban regions to organize appropriate administrative arrangements and to meet their share of the costs of fully balanced transportation systems.

This Federal assistance should be made available to qualified public agencies in the form of direct grants to be matched by local, non-Federal contributions. For rights-of-way, fixed facilities, including maintenance and terminal facilities, and rolling stock required for urban mass transportation systems, grants should be provided for up to two-thirds of the project cost which cannot reasonably be financed from expected revenue. The remaining one-third of the net project cost would be paid by the locality or State from other sources, without Federal aid. The extension and rehabilitation of existing systems as well as the creation of new systems should be eligible. In no event should Federal funds be used to pay operating expenses. Nor should parking facilities, except those directly supporting public mass transportation, be eligible for Federal grants.

While it is expected that the new grant program will be the major Federal support for urban mass transportation, it is important to have Federal loans available where private financing cannot be obtained on reasonable terms. I therefore recommend removal of the time limit on the $50 million loan authorization provided in the Housing Act of 1961. Federal loans would not be available to finance the State or local one-third contribution to net project cost.

Although grants and loans would be available only to public agencies, those agencies could lease facilities and equipment or make other arrangements for private operation of assisted mass transportation systems. The program is not intended to foster public as distinguished from private mass transit operations. Each community should develop the method or methods of operation best suited to its particular requirements.

A community should be eligible for a mass transportation grant or loan only after the Housing Administrator determines that the facilities and equipment for which the assistance is sought are necessary for carrying out a program for a unified or officially coordinated urban transportation system as a part of the comprehensively planned development of the urban area.

The program I have proposed is aimed at the widely varying transit problems of our Nation's cities, ranging from the clogged arteries of our most populous metropolitan areas to those smaller cities which have only recently known the frustrations of congested streets. There may, however, be some highly specialized situations in which alternative programs, for example, loan guarantees under stringent conditions, would be better suited to particular needs and the Congress may, therefore, wish to consider such alternatives.

(B) Emergency aid

Time will be required by most metropolitan areas to organize effectively for the major planning efforts required. Even more time may be needed to create public agencies with adequate powers to develop, finance, and administer new or improved public transportation systems. Meanwhile, the crisis conditions

that have already emerged in some areas threaten to become widespread. Mass transportation continues to deteriorate and even to disappear. Important segments of our population are thus deprived of transportation; highway congestion and attendant air pollution become worse; and the destructive effects upon central business districts and older residential areas are accelerated.

In recognition of this serious situation, I also recommend that the Congress, for a period of 3 years only, authorize the Housing Administrator to make emergency grants, (a) where there is an urgent need for immediate aid to an existing mass transportation facility or service that might otherwise cease to be available for transportation purposes, (b) where an official long-range program for a coordinated system is being actively prepared, and (c) where the facilities or equipment acquired under the emergency grant can reasonably be expected to be required for the new long-range system. This emergency aid should not exceed one-half of the net project cost. Upon completion of an acceptable areawide transportation program within 3 years, these emergency projects, if a part of the ultimate system, should qualify for the balance of the regular Federal assistance available under the long-range program.

(C) Role of highways

Highways are an instrumental part of any coordinated urban transportation program, and must be an integral part of any comprehensive community development plan. Accordingly, I have requested the Secretary of Commerce to make his approval of the use of highway planning funds in metropolitan planning studies contingent upon the establishment of a continuing and comprehensive planning process. This process should, to the maximum extent feasible, include all of the interdependent parts of the metropolitan or other urban area, all agencies and jurisdictions involved, and all forms of transportation, and should be closely coordinated with policymaking and program administration.

Progress has already been made in coordinated transportation planning for metropolitan areas through the use of funds made available under both Federal highway and housing legislation. To increase the effectiveness of this effort, I recommend that the Federal-aid highway law be amended to increase the percentage of Federal funds available to the States for research and planning. Legislation will be submitted to effectuate this change and to provide that (a) these funds should be available for planning and research purposes only; (b) the funds be matched by the States in accordance with statutory matching requirements; and (c) any funds not used for planning and research lapse.

In addition, I recommend that the Federal-aid highway law be amended to provide that, effective not later than July 1, 1965, the Secretary of Commerce shall, before approving a program for highway projects in any metropolitan area, make a finding that such projects are consistent with comprehensive development plans for the metropolitan area and that the Federal-aid system so developed will be an integral part of a soundly based, balanced transportation system for the area involved.

Highway planning should be broadened to include adequate traffic control systems, parking facilities, and circulation systems on city streets commensurate with the traffic forecasts used to justify freeways and major arterial roadways. Provision for transit and highway facilities in the same roadway, permissible under present law and already tested in several cases, should be encouraged whenever more effective transportation will result. Moreover, I have requested the Secretary of Commerce to consider favorably the reservation of special highway lanes for buses during peak traffic hours whenever comprehensive transportation plans indicate that this is desirable.

To permit the State highway departments greater flexibility in the use of Federal-aid highway funds to meet urban transportation needs, I further recommend that the Federal-aid highway law be amended to permit more extensive use of Federal-aid secondary funds for extensions of the secondary system in urban

areas.

I have asked the Secretary of Commerce and the Housing and Home Finance Administrator to consult regularly regarding administration of the highway and urban mass transportation programs, and to report to me annually on the progress of their respective programs, on the needs for further coordination, and on possibilities for improvement.

(D) Relocation assistance

Last year in a message to the Congress on the Federal-aid highway program, I called attention to the problems of families displaced by new highway construction and proposed that the Federal highway law be amended to require assistance

to such families in finding decent housing at reasonable cost. The need for such assistance to alleviate unnecessary hardship is still urgent. The Secretary of Commerce has estimated that, under the interstate highway program alone, 15,000 families and 1,500 businesses are being displaced each year, and the proposed urban mass transportation program will further increase the number of persons affected.

To move toward equity among the various federally assisted programs causing displacement, I recommend that assistance and requirements similar to those now applicable to the urban renewal program be authorized for the Federal-aid highway program and the urban mass transportation program. Legislation is being submitted to authorize payments of not to exceed $200 in the case of individuals and families and $3,000 (or if greater, the total certified actual moving expenses) in the case of business concerns or nonprofit organizations displaced as a result of land acquisitions under these programs.

(E) Mass transit research and demonstrations

Further, I believe that progress will be most rapid and long lasting if the Federal Government contributes to economic and technological research in the field of urban mass transportation. These research activities should be an integral part of the research program described later in this message. Important parts of this program should be carried out by the Housing Administrator directly, through contract with other Federal agencies, private research organizations, universities and other competent bodies, or through the allocation of funds to local public agencies for approved programs.

To facilitate this approach, I recommend that the $25 million authorized last year for demonstration grants be made available for broad research and development undertakings, as well as demonstration projects, which have general applicability throughout the Nation. That amount, plus an additional $10 million from the proposed capital grant funds for each of the years 1963, 1964, and 1965 should suffice for these purposes. These funds, together with research funds available under the Federal-aid highway program, can contribute to substantial advances in urban transportation.

(F) Interstate compacts

Finally, since transportation in many urban areas is an interstate problem, I recommend that legislation be enacted to give congressional approval in advance for interstate compacts for the establishment of agencies to carry out transportation and other regional functions in urban areas extending across State lines.

PART III. INTERNATIONAL TRANSPORTATION

We should endeavor, to the maximum extent feasible, to (a) gear international transportation investments to the requirements of our peacetime international trade and travel, and (b) provide incentives to users that will channel traffic to those forms of transportation that provide desirable service at the lowest total cost. The most critical problems associated with these policies are in the national defense area. Determination must be made as to whether the number and types of ships and aircraft adequate to meet long-range peacetime needs are also adequate to meet probable military emergencies, and if they are not, how best to meet these additional requirements.

(A) Merchant marine

In the Merchant Marine Act of 1936, the U.S. Government made a new start on the vexing problems of the American merchant marine in the face of repeated failure to improve its condition both before and after World War I. Subsequently, other aids in the form of cargo preference legislation, various "trade-out," "trade-in," and tax incentives devised to stimulate new construction, and a mortgage insurance program with up to 872-percent Federal guarantees were added to the arsenal of protection against the industry's exposure to low-cost foreign competition.

In spite of these aids, subsidies required for both construction and operations under the 1936 act have steadily increased. Operating subsidies will rise from $49 million in 1950 to over $225 million in 1963. Ship construction costs in U.S. yards are now approximately double those in Japanese and German yards. For this reason and because of an acceleration of the program beginning in 1956 to replace war-built cargo ships, Federal expenditures for new ship construction will rise to a postwar high of $112 million in 1963.