tions. It also weakened the competitive position of all common carriers.

The Commission has also noted the disability of common carriers by rail in fourth section cases arising out of efforts to meet motor competition. In Filing of Contracts by Contract Carriers by Motor Vehicle, 20 M. C. C. 8, 15, it said:

In this connection, the rail carriers point out that in the disposition of fourth section applications, wherein permission is sought to meet motor-carrier competition, we have consistently demanded of them a showing of the motor-carrier charges which they are called upon to meet, which showing they cannot now make.

There is no question of the power of Congress to require the filing of actual rates. Stephenson v. Binford (53 F. 2d 509, affirmed 287 U. S. 251 (1932)); Champlin Refining Co. v. U. S. (329 U. S. 29 (1946)).

It seems equally clear that compliance with the filing requirements of the bill would not conflict with the provisions of sections 220 (a) or 222 (e) of the act which prohibit the disclosure of business transactions of shippers, because, as pointed out by the Commission in the Justification of its Recommendation 15 which accompanied its transmission of this bill to the Congress, "it would not be necessary to show a connection between the actual rates filed and the shippers to whom they apply."

The objective of the bill to render more equal the competition between common and contract carriers appears to be in all respects consistent with the stated policy of the Congress as enunciated in the national transportation policy "to provide for fair and impartial regulation of all modes of transportation."

This competition afforded rail and highway common carriers by motor contract carriers is not illusory. The growth of motor contract carriage has been striking. According to the October 1956 issue of Transport Economics published by the Bureau of Transport Economics and Statistics, Interstate Commerce Commission, the intercity ton-miles of class I, II, and III contract motor carriers increased 108.57 percent between 1939 and 1955 (preliminary figure.) There was a 37.14 percent increase between 1954 and 1955 (preliminary figure.)

The growth of contract carriage may be expected to increase as a result of the decision last year of the United States Supreme Court in Contract Steel Carriers, Inc. v. United States (350 U. S. 409), wherein the Supreme Court said:

We hold also that the fact that appellee has actively solicited business within the bounds of his license does not support a finding that it was "holding itself out to the general public." A contract carrier is free to aggressively search for new business within the limits of his license.

It is noteworthy that the facts in this case show the contract carrier to have had one customer on May 1, 1950, 13 contracts by July 1951 and 69 contracts at the time of the hearing.

Fifty or more contracts are not uncommon among some of the contract carriers. Accordingly the line of demarcation between a contract carrier serving a few customers and a common carrier who holds himself out to serve all customers requiring his services has

91714-57-15

become difficult to establish in view of this expanded growth of contract carriage.

It, accordingly, has become more imperative than ever before that the regulatory inequalities which have favored the contract carrier at the expense of common carriage be promptly rectified if common. carriage, which has aptly been termed the "hard core" or "backbone" of the Nation's transportation system, is not to be further weakened. It must be borne in mind that this bill is one of two bills submitted by the Commission to deal with this problem. The other is S. 1384 which redefines "contract carrier by motor vehicle" and empowers the Commission to limit the person or persons and the number of class of persons for which a contract carrier by motor vehicle may lawfully perform transportation services without additional authority. Our industry plans also to support the objectives of that bill when it comes on for hearing.

I said at the outset that the railroad industry supports the objectives of S. 943. We do this despite the very limited scope of the measure for the reason that it is definitely a step in the right direction, although falling short of correcting all of the inequalities pertaining to contract carriage which we have consistently in the past advocated be rectified.

It has always been our view that contract carriers should be required to maintain just and reasonable rates without discrimination or prejudice. We have also consistently advocated that the Commission should be empowered to prescribe reasonable and nondiscriminatory rates, rules, regulations, and practices for contract carriers.

We further believe that the Commission should likewise be granted full powers of suspension and investigation to the end of insuring maintenance of such reasonable and nondiscriminatory rates, rules, regulations, and practices. This bill would not accomplish these objectives.

Nevertheless we support it for the reason that in requiring the filing by motor contract carriers of actual rates it would tend to make more equal the competition between common and motor contract carriers. More important, it would help to prevent further weakening of the common carrier segment of transportation, upon which the national economy necessarily depends. Thus the bill would be a step in the right direction.

I come to that point over on page 5 of my prepared statement where I make reference to the decision last year by the United States Supreme Court of Contract Steel Carriers, Inc. v. United States, reported in 350 U. S.

In that case the Supreme Court held that the fact that the appellee has actively solicited business within the bounds of his license does not support a finding that it was holding itself out to the general public.

A contract carrier is free to aggressively research for new business within the limits of his license. It is noteworthy that the facts in this case show the contract carrier to have had one customer on May 1, 1950, 13 contracts by July 1951, and 69 contracts at the time of the hearing.

Records on file with the Commission indicate that 50 or more contracts are not uncommon among some of the contract carriers.

Now you heard yesterday a representative speaking on behalf of the National Industrial Traffic League making the point the contract

carriers are really not in competition with common carriers, that they provide a specialized service or are in fact a substitute for private carriage.

That is true as to a segment of the contract carrier industry. There is no doubt about it. Some of these contract carriers have 1 or maybe only 2 contracts. They provide a htoroughly specialized service by providing a special fleet of trucks, drivers, and so on, to handle the particular work of a company, or they perform what in effect is the work of a transportation department of the industry, if the industry saw fit to go into private carriage.

It apparently hasn't. It prefers to have one man to come and do. it all. We work very intimately with the industry. Now in those cases I think it can probably be fairly said that there is at best a limited amount of competition with common carriers, and probably common carriers should not complain too much about the relationship being secret as between the industry and this particular one contract carrier. However, when you get into a situation which, as I pointed out, is far from uncommon, as exemplified in this case which was decided by the Supreme Court of the United States, you have totally a different situation.

I reread this decision yesterday afternoon to get the facts again clearly in my mind and I was interested to note that this Contract Steel Carriers firm had contracts covering most of the receivers of steel out in one of the Western States and they solicited business very hard out there. They didn't have enough trucks of their own to handle the business. So they quite regularly leased livestock-carrying vehicles which had come east to Chicago with livestock and would have gone back empty, but they were going by this point where these contracts originated and they took them back with steel.

Now certainly one can't argue that the common carriers have not an interest in the rates charged in a situation like that. We think we have a very real and a bona fide and proper interest.

We also think that the smaller shippers of similar products to steel who are normally dependent upon common carriage for their transportation likewise have an interest. And it seems to me that certainly in those cases where the contract carrier is clearly performing a broad-surface service which is definitely competitive with common carriage, it is in the general broad public interest that they be required to file their actual rather than their minimum rates so that the common carriers may have an opportunity to compete with them. Now that seems

Senator LAUSCHE. What do the historical facts with regard to this law, basic law, show concerning the number of contractors that these contract carriers had in the early days of their development? Are you able to answer that?

Mr. MACKIE. Numerically, I am not able to answer it; no, sir. But I think I can answer the thought underlying their being set apart when the motor carrier act was originally enacted, namely, that the thinking then was that they were then performing a specialized service and were in effect a substitute for private carriage.

Now, they have the "green." And this Supreme Court decision has taken the lid off Pandora's box and they can solicit anything they

want.

Senator LAUSCHE. What was the date of that decision?

Mr. MACKIE. It was late 1956, and it is reported in 350 United States Code at 409, Supreme Court of the United States.

Senator LAUSCHE. Your position in substance is that there are still some contract carriers who fall within the spirit of the law as it was originally written and that they should be given this special dispensation in the law. But the great majority of them now have changed their form and fall into the category which you just describedactually soliciting business, not specializing, and competing generally with the carriers?

Mr. MACKIE. Well, let me put it this way, Senator. It is a minor variation, but I have to bear in my mind that my own industry has not specifically taken a position that there shouldn't be across-the-board publication of actual rates.

My personal view is that I think as we get along with this and find more people studying it, that there may well be a line of demarcation. A man who has 1 contract or at most maybe 2, he might be treated as they have in the past, have allowed to file their minimum only because there isn't a public interest.

But certainly once you get into multiple contracts, I think they should be required to file. I know I have authority to go that far with

it.

The other: I think as this unfolds, this whole subject of contract carriage and you will recall we have another bill coming up for hearing on the matter-that perhaps the transportation industry, I am hopeful, will get together on the whole thing under the auspices of the Transportation Association of America, as was discussed with

you.

Senator LAUSCHE. Do you see any technical difficulty in an attempt to separate these 2 groups that you have just mentioned and to have 1 covered by the law and the other not?

Mr. MACKIE. Well, I think an amendment of the law would be required which might make a proper and valid legal classification whereby one group would be under one requirement and the other group

under another.

Senator LAUSCHE. You think a classification of that type could constitutionally be made?

Mr. MACKIE. I would think so; yes, sir.

Senator LAUSCHE. At least, the Commission has thought that the present S. 943 is the mode, the proper mode of reaching it.

Mr. MACKIE. Yes, sir, and we support the Commission in its think

ing.

it.

Senator LAUSCHE. All right.

Anything further?

Senator PURTELL. I don't have any questions.

Senator LAUSCHE. Senator Smathers?

Senator SMATHERS. No questions.

Senator LAUSCHE. Thank you, very much, for your testimony.

Is there one more witness from out of the city?

Take the chair, will you? I am glad to give it back to you. Keep

Senator SMATHERS. Mr. Boyle.

All right, sir. Mr. Boyle, we are happy to have you. You go right ahead.

STATEMENT OF ROBERT E. BOYLE, JR., CHAIRMAN, SOUTHERN FREIGHT ASSOCIATION, ATLANTA, GA.

Mr. BOYLE. Thank you.

Mr. Chairman and other gentlemen of the committee, my name is Robert E. Boyle, Jr., 101 Marietta Street, Atlanta 3, Ga. I am chairman of Southern Freight Association and Southern Classification Committee. I serve also as chairman of the executive committees of Southern Freight Association, Southern Classification Committee, and Southern Weighing and Inspection Bureau.

I appear here today, however, for the Association of American Railroads by authority of its board of directors.

Mr. Chairman, in deference to the request for brevity and assuming that my entire prepared statement will be made part of your record, I will skip most of it and read only selected portions.

Senator SMATHERS. That will be appreciated, and I assure you that all of your statement will go in the record.

Mr. BOYLE. Thank you.

Now, I appear in support of Senate bill 937.

The Association of American Railroads is a voluntary, unincorporated organization including in its membership railroad companies operating more than 95 percent of the total railroad mileage in this country and having operating revenues which are more than 95 percent of the total railroad operating revenues.

The Southern Freight Association functions under section 5 (a) of the Interstate Commerce Act as a sort of clearinghouse for all changes and adjustments in rail freight rates within, from, to, or through southern territory.

We also act as tariff publishing agent for the railroads and maintain an extensive organization for that purpose.

Presently we compile and distribute freight tariffs which in the aggregate exceed 30,000 pages per annum. In all essentials the Southern Freight Association is similar to like railroad organizations in eastern and western territories.

I appear in support of S. 937, a bill advocated by the Interstate Commerce Commission to amend the long- and short-haul rule of section 4 of the Interstate Commerce Act.

This bill would permit carriers operating over an indirect line or route to meet the charges of the same type of carrier operating over a more direct line or route to or from competitive points, subject however, to all the standards of lawfulness set forth in the act.

My statement will primarily concern the problems of railroads in the South and their patrons. But I should emphasize that these problems are typical and fully representative of those of all railroads and shippers in every other section of the country.

The long and short haul clause of section 4 is a model of brevity and simplicity. It merely provides that it shall be unlawful to charge more for a shorter than for a longer distance over the same route in the same direction, the shorter being included in the longer. But in its practical application this simple provision of the act is incredibly complex.

I think this rule, especially as it applies to indirect routes, is perhaps the greatest single obstacle to the prompt and orderly adjust