SECTION 22. QUOTATIONS ON MOVEMENT OF AMMUNITION, EXPLOSIVES AND/OR FIREWORKS BETWEEN DANA, IND., AND MILAN, TENN. On February 15, 1956, the rate was: 124 cents per 100 pounds, volume minimum weight 30 M pounds, subject to a T. L. minimum weight of 19,500 pounds per vehicle used. On April 10, 1956, as a result of a rail reduction the rate became : Volume minimum weight-60,000 pounds: 90 cents per 100 pounds; and, subject to a T. L. minimum weight of 30 M pounds per each vehicle used. 72 cents per 100 pounds on the weight in excess of 30 M pounds loaded in the same vehicle. Then on October 4, 1956, due to an additional reduction by the rails, the rate was: 70 cents per 100 pounds, and minimum weight of 30 M pounds per each vehicle used. On November 21, 1956, the following rates and minimum weights were quoted by rail: 60 cents per 100 pounds for the first 50 M pounds; and, 48 cents per 100 pounds for that portion of weight in excess of 50 M pounds loaded in the same car. The motor carriers were no longer able to compete. Mr. BURNS. Yes, sir. Now, in connection with part VI-I don't read that whole paragraph there, but I would like to point out that I have been confused about the statements made by Government representatives as to the amount of money that the Government would have to incur if section 22 were repealed. There have been so many different figures given in hearings before this committee and in hearings before the House that I don't quite know just what the situation is. For example, last year, Mr. Smith stated that it would cost the Department of Defense $215 million if section 22 were repealed. Now, at that same time, Mr. Brucker, Secretary of the Army, who spoke for and on behalf of the Department of Defense, in response to a letter from Senator Magnuson, concerning S. 2114, which was counterpart during the past session of Congress, stated it would cost $29 million. This year Mr. Smith said it would cost $200 million. Perhaps it wouldn't cost the Government anything at all if section 22 were repealed. In answering a question, assuming the Government agencies could negotiate, as they can, on the same basis as commercial shippers, there is no reason in the world why the Government agency should incur any substantial additional increase in transportation costs, if, as Mr. Smith said, they can secure the same rates as are available to commercial shippers. Mr. BARTON. I understood Mr. Smith to say just the opposite, that if the commercial shippers could get the same rates as the Government, it would be better. Mr. BURNS. Yes, sir; he did, but it comes out to the same conclusion, though. Now, passing over quickly to page 16, I won't take the time to recite the so-called evils of section 22, but I would like to point out that those evils most certainly do occur. On page 17, for example, the Presidential Advisory Committee on Transport Policy and Organization recognized the evil of section 22 and they said as follows: The use by carriers of that portion of section 22 of the Interstate Commerce Act granting free or reduced rate transportation to Government traffic has given rise to abuses and evils which are not in the public interest. And in the next quoted statement, Mr. Smith in testifying on H. R. 525, during the past session of Congress, stated: It is certainly true that the present wording of section 22 contains the seeds for destructive rate wars Mr. BARTON. Did you hear Mr. Rothchild's testimony the other day? Mr. BURNS. No, sir; I wasn't here. Mr. BARTON. With few exceptions, he stated the position of the Department of Commerce as being about the same as that of Mr. Smith, that is, a consistent position with few exceptions. I thought I would just mention that. Mr. BURNS. I did read that. I wasn't here, but I read that state ment. Now, on page 17, I have listed several current examples of which most of us are complaining about in supporting this bill. As I say, there are many others, too, but I won't take the time to go through those. Now, the bad feature, as I see it, about section 22, is not the fact that the Government shipping agencies do not attempt to negotiate for rates on a firm and reasonable basis with shippers, as to commercial shippers, when they attempt to secure rates from the transportation rate bureaus. The real abuse in section 22 is that there is no way of controlling the rates from spiraling downward unchecked. Admittedly, the Government shipping agencies have stated they have no control, there is no way of stopping those rates from going downward. So the situation being what it is, with human nature as it is, one carrier is pitted freely against another for the purpose of allowing the rate to gravitate downward in a noncontrolled manner. I would like to skip over now quickly to my concluding remarks on page 19. I again won't take the time to read all that. I have already mentioned the fact that Commissioner Eastman has stated in the past with respect to the same principle involved here that the Government ought to pay the same rates for carriage of traffic as are paid by its own citizens who really make up the Government. Mr. Chairman, on behalf of the members of the Munitions Carriers Conference, and I am speaking for the American Trucking Associations, I respect fully urge that S. 939 be favorably considered by members of this subcommittee, so that this important piece of constructive transportation legislation can be acted upon faithfully at this session of Congress. Senator SMATHERS. All right, sir. Thank you very much. I understand you have done a good job. All of your statement will be made a part of the record. Mr. BURNS. Thank you, sir. Senator SMATHERS. I understand there is a Mr. McBride here. Senator SMATHERS. You have a very short statement? Mr. MCBRIDE. Very short, sir. Senator SMATHERS. All right. STATEMENT OF ROBERT J. MCBRIDE, AMERICAN TRUCKING ASSOCIATIONS Mr. MCBRIDE. First of all, Mr. Chairman, I wish to express the appreciation of our group for the privilege of appearing before you here. Senator SMATHERS. We are always happy to have you. Mr. MCBRIDE. You are very thoughtful. My appearance is limited to S. 943. This bill would carry out the intent and purposes set forth in the Commission's legislative recommendation No. 15. Now, simply stated, the single purpose of this bill is merely to require motor carrier contract carriers to file their actual rates and charges with the Commission in the same manner and fashion required of common carriers by all modes of regulated transportation, including rail and highway, and we favor enactment of the bill. Our group consists of the common carriers of general freight. We hold ourselves out to the public Senator SMATHERS. Common carriers; yes, I see, common motor carriers. Mr. MCBRIDE. Yes, sir. We have two common carrier conferences within the ATA umbrella, Mr. Chairman. One is the regular route operators who operate on schedules, and the other are the irregular route carriers, both common carriers of general commodities. Senator SMATHERS. Thank you. Mr. MCBRIDE. The irregular route group have authorized me to say they joint in my statement. Senator SMATHERS. Thank you. Mr. MCBRIDE. I might say in passing that the various conferences in the ATA are almost continuously in session to try to eliminate and certainly reduce the area of differences between them. We are devoting this entire week to that very thing, sir. Senator SMATHERS. That is fine, keep chopping away, because there is still some areas of disagreement it appears. Mr. MCBRIDE. That is right, sir. Holders of contract carrier permits select their clientele and enter into individual transportation contracts or agreements with such persons and file copies of the contracts with the Interstate Commerce Commission. Now, these contracts are not open for public inspection. Consequently, the agreed rates and charges contained in the contracts are not available to competitors of the employing shipper or competitors of the contract carrier. The enactment of S. 943 would merely require contract carriers to file their actual rates. Now I would like to go on to page 3, if I may, the second complete paragraph. The requirements relating to contract carriers' rates were modified in 1940, but the intent of the act has not been accomplished. A review of Commission decisions since that date indicates that the minimum rates and charges published in the minimum schedules are more in the nature of paper rates and not truly representative of the rates actually collected. The Commission said at one stage, a contract carrier's minimum rates, unlike common-carrier rates, do not represent a stated price for which a shipper can demand service. The minimum rates of con tract carriers are in fact not rates at all in the common-carrier sense of the term, they are simply a floor for the charges actually to be made. Now examination of minimum schedules on file with the Commission, and I have made such an examination, sir, shows that in many instances the most recent filings of some carriers date back 5 and even 8 years. Now with the well-known increase in trucking operating costs in general, maintenance of such filings are unconvincing as to their accuracy, but it appears that nothing can be done about it. I would like to make one suggestion, sir. We have received numerous telegrams about these bills, and here is one instance in which a manufacturer, a large manufacturer, wired to one of our people. I would like to substitute letters "A" and "B" for these shippers rather than the names of the shippers. Senator SMATHERS. All right, sir. Mr. MCBRIDE. Here is the actual situation. A company in New York states they are unable to compete in the market in Ohio and Michigan with the "B" company, by reason of the fact that “A” company was using common-carrier trucklines, whereas "B" company employs the services of contract carriers, and people were unable to determine the precise rates. As a result, shipper "A" is out of the market because of their inability to secure equal rates to move a commodity on which there is very narrow profit margin. Now in conclusion, I would like to say that our contract carrier brethren have urged a special consideration might well be given to contract carriers serving but one shipper, that is, a contract carrier having but a single contract. They suggest an exception be provided permitting a contract carrier so long as he serves but a single shipper, to file minimum rates and charges, and finds it in the public interest to require filing of the actual rates and charges. Our conferences see no basic objection to the inclusion of such an exception. Now, Mr. Chairman, you posed a question to John Lawrence when he was on the stand about how long this legislation has taken place. Senator SMATHERS. Yes, sir. Mr MCBRIDE. I happened to receive before I left the office this morning a copy of the Transport Topics. That, sir, is the newspaper of the trucking industry, the world's greatest newspaper, we think. Senator SMATHERS. Undoubtedly. Mr. MCBRIDE. They run in each issue what was going on 20 years ago in Transport Topics. Senator SMATHERS. Yes. Mr. MCBRIDE. Well, there are two subjects, subjects in which you are interested. One has to do about safety records and safety of operation, of not the regulated common carriers or the contract carriers, but the nonregulated, exceptions to hours of service. So 20 years ago we were very much concerned about that, and you still have it on your agenda now. The next thing they were discussing was the form of contracts that should be made and filed by contract carriers, and so we are still on that. Senator SMATHERS. That is very interesting-20 years ago? One comparison that might be made to emphasize the amount is to say that the passenger deficits in the single year of 1953 and 1954, for example, amounted to more than all of the losses on price support operations of agricultural commodities from 1933 to 1950. Senator SMATHERS. That is one to say, the farmers like to say it that way. Mr. Loos. The farmers are so frequently reminded of the fact they receive subsidies from the National Treasury that they rather like to compare the passenger deficit in 1 year with the total losses to the Treasury which these subsidy operations of farm price supports have amounted to, and while the passenger deficits are not paid out of the Federal Treasury, they are nevertheless a subsidy, which, as I shall try to point out, is paid by the freight shippers, among whom are the farmers who ship farm commodities. The contribution, if any, which I hope to make, is to suggest that something might be done about this that might have some hope of giving us some result, and the suggestion we have to offer is embodied in a resolution which was passed by the council at its last annual meeting, copies of which I have asked be placed before you. (The material referred to is as follows:) RAILROAD PASSENGER DEFICITS 1 That Ser of y The substantial increases in freight rates which have been authorized by the Interstate Commerce Commission during the years following the close of World War II have been justified in part upon the basis of the large deficits in passenger train service amounting to more than one-half billion dollars annually. Prior to 1920 it was held by the Interstate Commerce Commission and the United States Supreme Court that losses in passenger service could not be con sidered a part of the cost of freight service in determining the reasonableness of freight rates. The change in this rule of law has been stated by both the Commission and the court as resting upon amendments to the Interstate Commerce Act enacted by Congress in the intervening years, although no such amendments directly dealt with this particular subject. It is believed that many Members of Congress are not aware that they are charged with the responsibility for this radical change in determining the law fulness and reasonableness of freight rates, and Congress should be requested to review the subject matter for the purpose of ascertaining a direct expression of congressional intent with respect to the future application of this rule. That relates to the rule of law which is in force with respect to the treatment of these passenger deficits by the Interstate Commerce Commission in its consideration of freight rates. Per When I started to practice before the Commission in 1914 there was a well-recognized rule of law that passenger deficits couldn't be considered as a factor in determining the validity of increased freight rates, and that rule is perhaps best stated by the Commission in the old Five Percent case decided July 29, 1914, in 31 I. C. C. In that case the Commission said: We know of no provision of law under which we should be justified in increasing freight rates to provide a return upon property used exclusively in the passenger service, much less to take care of losses incurred in such service. In our opinion, each branch of the service should contribute its proper share of the cost of operation and of return upon the property devoted to the use of the public. 1 Policy resolution adopted by National Council of Farmer Cooperatives in annual session at Chicago, Ill., January 17, 1957. |