ably given by Mr. Jones, of Birmingham, with respect to that provision of the bill.

Now, I want to call attention to another feature of the bill, which I heartily commend, not because I am here to go over the features of this bill that seem to me to be desirable but because I think this might deserve some proper mention.

The thing that I want to mention specifically in that provision, the later part of subsection (a), section 313, is this:

or merge with, or acquire control of, any such common or contract carrier by motor vehicle, or to purchase, lease, or contract to operate its or their properties, or any part thereof.

Now, that is a very useful provision; it is useful, if the committee please, because in some States, under the limitations which rest upon railroad companies they are not permitted to buy and to acquire or to operate motor vehicles-that is true in Kentucky where that is not permitted to be done and I think if you are to do anything in the way of consolidating these forms of transportation this must be permitted.

Mr. HUDDLESTON. Would you allow, Judge, the rail carriers which own bus lines to compete with themselves in both rail and carrying? Mr. FLETCHER. I would leave that with the discretion of the Interstate Commerce Commission.

Mr. HUDDLESTON. If that were done it might permit the same company to monopolize both fields.

Mr. FLETCHER. Of course, that would depend upon the judgment of the Commission; they would have to go to the Interstate Commerce Commission and I think we would have to trust the Commis-sion in a situation like that. Yes; it might be very well, but they could only take bus lines which were not competitive in other waysbut that brings a lot of serious questions which I think only the Commission could decide what are competitors. Whether they would have to be parallel, and where they would leave off in deciding what was competition, and I think that belongs to the Interstate Commerce Commission.

The mere physical fact of parallelism may be far afield.

Mr. WADSWORTH. Judge, what suggestions have you to make in regard to giving to the Interstate Commerce Commission authority to prescribe through routes and through rates between railroads and bus carriers?

Mr. FLETCHER. I was coming to that, and I can discuss it just as well now.

I join with the counsel for the bus lines in my objection to that clause of the act in H. R. 5262 which gives to the Interstate Com-merce Commission the power to require and compel the making of joint through rates and establishing routes as between railroads and the truck and bus lines. I object to that. I do not know whether anybody here had the idea that that particular clause was of railroad inspiration or not. So far as I know it was not, and I am sure that the association with which I am connected has been consistently on record as opposing a clause of that kind. I think it ought to be left in such a way as would permit the railroads and the motor trucks and motor busses to join in contracts if both parties desire to do so, but there should be no authority vested in the Inter

state Commerce Commission to compel either party to enter into an arrangement of that kind.

Now I feel this rather strongly, and I would like to read what Mr. Eastman said. He is doubtful about it; he feels quite hesitant, at least, toward that particular feature. I think it is on pages 60 and 61 of his latest published report.

On pages 60 and 61 of House Document No. 89, from his language which I think it will be found more persuasive than I could hope to state it.

The question whether joint rates should be required between motor carriers or between such carriers and other agencies of transportation at this time or in the immediate future is open to some doubt. The requirement might entail a very considerable expense for tariff publication and the adjustment of interline accounts, owing to the great number of motor common carriers, the almost innumerable points at which connections may be made, and the possible lack of permanency of many present-day operations. Many complaints of discrimination as between different connecting lines might result. The lack of adequate financial responsibility on the part of motor-carrier operators, to the extent that it exists, is a deterring element. The requirement of joint rates might encourage industries to establish short motorvehicle operations, similar to those of tap-line railroads

it is handled that way

and thereafter to demand the establishment of through routes and joint rates with connecting bona fide common carriers by rail or motor vehicles and thereby unjustly deplete the revenues of the latter. These tendencies could, of course, be controlled to a very considerable extent by exercise of the jurisdiction vested in the Commission over the issuance of certificates and joint rates. The addition of the provision in section 315 for subrogating connecting carriers to the rights of shippers or consignees, under bonds furnished by motor carriers as assurance against loss, damage, or default, would afford some protection to carriers participating in joint rates but would not secure them against losses of revenues occasioned by failure of a motor carrier to account properly for divisions of such rates. The power to prescribe through routes and joint rates would need be exercised with great caution. A rather strong argument can be made that the better part of wisdom at this time would be merely to permit the establishment of through routes and joint rates, in the discretion of the carriers, and to refrain from any mandatory requirements, such as are found in the bill, until the motor-carrier industry has become better organized and the need for such provisions has been more fully demonstrated.

I think the committee could, at least, read between the lines which indicate the judgment of the coordinator that it would be best not to have that provision written into the bill at this time.

And with the permission of the committee I would like to ask that section 316 (a) be revised so as to read as follows:

It shall be the duty of every common carrier by motor vehicle to provide safe and adequate service, equipment, and facilities for the transportation of passengers or property in interstate or foreign commerce; to establish, observe, and enforce just and reasonable rates, fares, charges, and classifications, and just and reasonable regulations and practices relating thereto, and to the issuance, form, and substance of tickets, receipts, bills of lading, and manifests, the manner and method of presenting, marking, packing, and delivering property for transportation, the carrying of personal, sample, and excess baggage, the facilities for transportation, and all other matters relating to or connected with the transportation of passengers or property in interstate or foreign commerce, and the common carriers by motor vehicle, rail, express and water may, by agreement, establish reasonable through or joint rates, fares, and charges among themselves, and in case of such joint rates, fares, and charges, the carriers participating therein shall establish just, reasonable, and equitable division thereof which shall not unduly prefer or prejudice any of such participating carriers.

That leaves the parties, if they so desire, to enter into such contracts and does not give the Commission authority to compel them. and I think the reasons given by Mr. Eastman support that contention.

Mr. WADSWORTH. Would you allow the Commission to review those rates?

Mr. FLETCHER. I should think it would be best to do so. Of course, any shipper could bring a complaint about the kind of arrangement or contract entered into between the lines, and there should be included a provision for reviewing that.

I do not believe, Mr. Wadsworth, that it would be at all necessary to have previous affirmative approval, but it would be subject to attack by anybody who wanted to take advantage of that provision.

Now, may I say something about this matter of the Shreveport doctrine that has been discussed here at some length, at least, by the members of the State commissions; one member of the State commission discussed it with great emphasis.

In the original bill which I mentioned here a moment ago the railroads did not agree to that clause therein which takes away from the Interstate Commerce Commission all control over intrastate rates. That was one of the points of difference. It never seemed to us that it was quite the right thing to turn over interstate commerce to the State commissions, and that is what this comes to. Somebody has got to reconcile the differences that may arise as between the regulatory authority of a State and the regulatory authority of the Nation. I do not see how you can avoid that.

I recall some 2 years ago a gentleman testified before the committee, who lives in Cincinnati and he told the committee what was happening. He was speaking with reference to the movement of milk into Cincinnati; the dairymen living in Ohio moved their milk by motor vehicle into Cincinnati and were, of course, subject to the regulatory authority of the State commission. Whereas the dairymen over in Kentucky just across the river, just back of Covington and in that section, were able to move their milk into Cincinnati, for about the same distance, without any regulation whatever and that it would not be possible for the State commission to impose regulations with reference to the milk coming across the State line, whereas their competitors in Ohio were subject to State regulation.

Now, that is just one of the incidents which might be multiplied a thousand times over the country. Somewhere there must be lodged the authority to bring about some order in differences arising between interstate rates and intrastate rates.

Now, this question regarding the shipment of milk in Ohio, using my simple illustration, the shipper brought a complaint about the interstate rate and the interstate commission would be without any power, in that case, to affect the Ohio rate; they must be left entirely to the Ohio commission regardless of their effect upon interstate commerce. I think maybe my illustration should have been reversed. If the Kentucky shipper using the interstate rate fixed by the Interstate Commerce Commission as reasonable rates, finds he is being discriminated against by a State rate there would be no power to apply a corrective. The acepted theory on which we have

been proceeding in this country is that the Federal body is the body which has control over interstate commerce.

That is about all there is to the Shreveport doctrine. I always was interested in it because it had this interstate picture.

As you will recall, they started this Shreveport doctrine in the city of Shreveport. They started the thing, in the first place, because they were being badly hurt by the Texas rates. They were shipping stuff from Shreveport into Texas, just across the State line, and the Texas commission fixed rates so low that they said they could not compete, and that started this whole thing. And they got this doctrine of the Interstate Commerce Commission approved by the Supreme Court of the United States saying that Texas could not fix this rate so low as to keep competitors out of that market.

The next thing we hear of, Mississippi was complaining about Louisiana doing the very identical thing in regard to shipments from Mississippi into New Orleans and here was a case where Louisiana had been trying to establish a policy of which Mississippi complained.

The next thing we hear of is that Memphis, Tenn., was complaining about the Mississippi rate, and so it turned out just like a house built of cards, with one card put up against another, when you touch one the whole thing will fall. It seems to me without at all insisting upon this thing that it would be much more consistent to leave it as it is rather than to leave to the States to fix the regulation of interstate commerce.

I certainly feel very grateful to this committee for its courteous attention to these rather hastily put together views on this subject. It is not our job, I suppose, but it seemed advisable that the views of the railroads regarding this proposal might well be made known to the committee again, concerning the scope of regulation.

I thank you, Mr. Chairman.

Mr. HUDDLESTON. We thank you.

Mr. FLETCHER. I thank you.
Mr. HUDDLESTON. Mr. Maginnis.

STATEMENT OF S. ABBOT MAGINNIS,

REPRESENTING THE

AMERICAN SHORT LINE RAILROAD ASSOCIATION, WASHINGTON, D. C.

Mr. MAGINNIS. Mr. Chairman and gentlemen of the committee, my name is S. Abbot Maginnis. I appear before your committee on behalf of the American Short Line Railroad Association, which has a membership of 323 short-line railroads, located in practically every State of the Union. The membership represents a total of more than 11,000 miles of railroad, and about 75 percent of the independently owned and operated short-line mileage of the United States.

With the exception of two amendments, which I shall shortly deal with, the bill now before you, that is H. R. 5262, has the endorsement and approval of our association.

We do not endorse or urge this legislation with the thought of penalizing the motor-vehicle transportation industry. On the contrary, we believe that the bill will be a distinct benefit to that in

dustry, and to the transportation industry as a whole, because it will aid in the stabilization of the industry, and allow each of the agencies of transportation to perform that service for which it is best fitted. Our association has consistently urged before the committees of Congress, the Interstate Commerce Commission, and the Federal Coordinator of Transportation that there should be an equality of regulation of the various competing agencies of transportation in order that each agency may have an equality of opportunity for service, and then there can be a fair determination of which is the most economic and useful agency in the respective territory for the service of the needs of that community.

The majority of the short-line railroads for whom I speak are less than 100 miles in length. Due to the shortness of their traffic haul they have suffered most severaly by reason of the competition of the unregulated motor vehicles. Since 1921, at least 70 of these socalled "short-line railroads " have been compelled to cease operation by virtue of the competition of unregulated motor vehicles. Even a return to normal business conditions will not relieve the situation of these small roads if they are to continue to be faced with unregulated competition.

These short-line railroads, in many instances, furnish the only rail transportation service available in the territory which they serve, and, consequently, furnish the only adequate transportation service required by many industries and communities along their line. The railroads operate every day of the year, in all kinds of weather and under all kinds of conditions, and these communities look to them for stable and reliable transportation service the year around. In many instances the motor truck service is irregular and undependable due to weather conditions and the topography of the country. There are many communities which cannot afford to keep up the smooth paved highways necessary for the operation of the motor trucks and busses.

It seems to us that there are two facts that stand out particularly in this situation:

It seems to be agreed by those who have given thorough study to the question that the public interest requires the regulation of interstate motor vehicle transportation.

It has also been pretty clearly demonstrated that there can be no effective regulation of interstate motor vehicle carriers except by the Federal Government.

We believe that the smaller shipper will pretty generally agree with the proposition that the regulation of motor vehicle carriers is to the best interest, because in that way the unreliable carrier will be eliminated from the picture and he will have reliable and dependable motor vehicle transportation along with reliable and dependable rail transportation, enabling him to use that agency which best serves his needs.

It is believed that every carrier for hire engaged in interstate transportation should be regulated by the Federal Government. Any system of unknown transportation charges and practices, built up by unregulated transportation agencies, can result only in demoralizing the economic structure of the country.

You have already had suggested to you that the provisions in the bill relating to establishment of joint through rates and routes by