Mr. LEVITUS. On behalf of both of us, I want to thank the committee for letting us come here and air our problems.

The company I am with is a comparateivly new company, only having been in business 5 years, and a relatively small company. We are engaged principally in carrying agricultural exempt commodities throughout the country for the majority of our time.

Mr. Tucker asked us if we could make application for authority to transport certain processed commodities of his into Texas. We applied for that authority on June 9, before the ICC, on Docket No. MC 114789. The hearing was held on the afternoon of November 12, 1954, and a decision was rendered by the Interstate Commerce Commission on November 2, 1955.

We sought authority solely for the right to act as a contract carrier for one single shipper, namely, Land O'Lakes Creamery. They were a Minnesota dairy operation, representing nearly 2,000 other dairies. They had a special need for the transportation of their products into this Texas market, which they hadn't been in before, and for which they hadn't been able to get required service from any other carrier. Their shipment was different in that it involved the need for speed and special handling of dairy products. There was no available through service such as they required at the time.

Only common carriers were offering any service at all. No single truckline or railroad offered through service from Minnesota to Texas. The common carriers authorized were limited to the number of pickups they could make.

All carriers, now authorized, must interchange their cargo either at Chicago, St. Louis, or Kansas City. Most of them interchange at Chicago, which is over 400 miles further than the most direct route. No single one could service all the different points they asked for. No common carrier was willing to carry this cargo in spite of numerous requests by Mr. Tucker. No shipments of this kind had been made by any of the existing carriers. We offered to perform the service they required because we had performed it on exempt commodities in the past, and some of the nonexempt commodities through a lease arrangement. The shipper found the service satisfactory and desired it.

At our hearings, we were opposed by railroads and common carriers, mostly those operating between Illinois and Minnesota. The application was denied by the Interstate Commerce Commission on the ground that no public need exists. That is briefly it.

The CHAIRMAN. Mr. Tucker, are you giving a statement?

Mr. TUCKER. I wish to.

The CHAIRMAN. Go ahead, sir.

Mr. TUCKER. My name is Donald Tucker. I am assistant traffic manager of Land O'Lakes Creamery, 2215 Kennedy Street, Minneapolis, Minn.

I have been authorized by our traffic manager, Mr. F. P. Donohoe, to represent the Land O'Lakes Creamery at this hearing.

Now the Land O'Lakes Creamery is in Minnesota, a Minnesota organization incorporated under the Minnesota cooperative laws, originated in 1922 with a group of farmers associated with Mr. John Brant, who were determined to produce and distribute to the American people a fine dairy product.

In the ensuing years they have proven his philosophy to be correct. We have grown to distribution of our dairy products in about 35 of the 48 States, with a gross of approximately $150 million per year; which represents, of course, a great deal of income, Government taxes, in all the States where we do business.

Now, we have three quite important factors in the dairy business, Due to the fact that the profit from the processor or handler to the distributor and retailer is very small, transportation is of vital importance to us.

It is our job in the traffic department, of course, to seek out and maintain and to supervise the most efficient and practical and economical transportation for the distribution of our products. Now, through the years, we have been very successful in maintaining a very high standard of transportation, both by rail and, since the motor carriers have come into being, in all of the States east of the Ohio River, and some in the Midwest, by truck.

Now, in December, I believe, of 1953, the board of directors made a decision that we were going to open up a district branch in the city of Houston, Tex. It became my job as assistant traffic manager and analyst as far as costs of transportation are concerned, to analyze the cost of distribution which is the first factor we have to consider before we can take our product to market.

Because of the margin of profit, it is a very important factor that we do not go beyond our limit in the margin of profit and pay it all out in transportation costs.

In my research during the following weeks, I contacted personally and by phone several of the common carriers who have terminals in St. Paul, Minn., and have common carrier authority with connecting lines into the State of Texas; there being no one carrier operating from Minnesota to Texas on a common-carrier basis-that is, a highway carrier.

My analysis showed from the research I was required to do on a distribution in Texas, which we would have to maintain, would cover about 15 or 20 towns in the State of Texas, including Houston, and there was no common carrier who could offer an efficient, suitable transportation, which we require for our dairy products. In other words, we expect and desire a through movement-not a transfer of our lading from one vehicle to another, or rehandling in traffic. It deteriorates the quality of the product, and slows the transportation down. In this day and age, the housewife is very conscious of quality and of dated merchandise, and, as you are probably well aware, the eggs are dated, and they have a date on quality butter.

So it is a very important factor that we make this transit as fast and efficiently as possible, and with the least number of handlings in traffic. The result was, from my analysis here, that no common carrier offered this service. One of them came to me with a program which was not effective, for the simple reason that they couldn't originate the lading or the commodities from points and places in Minnesota and Wisconsin which we required. They couldn't fully guarantee the handling of the merchandise on a refrigerated unitwhat we call insulated trailers and Thermo-king units to all the distributing centers in the State of Texas.

Now, the fact that we were opening a new branch in Houston-contemplated opening a new branch-made it necessary to do a lot of

research in the sales promotion field, and we had no way of knowing what the volume would be. We couldn't tell whether we were going to make a success of it, or not. We had no way of knowing. We had to take our product to the people in Texas, which we feel is the finest in the world, and see if they wouldn't pay for it.

Well, the result was that after several weeks of communication with these people, no service was offered. The board of directors had set a date of March to open up the branch. Our salesman was delegated to that branch, and he was moved there. We were in business, with no transportation suitable to our products. I called on Mr. Cy Levitus, who was associated with Nationwide, to help me out with our problem, and we worked on it for quite some time, and we agreed that a leasing arrangement was the best under the situation. So the attorneys drew up the lease and it was presented to the district director of the Interstate Commerce Commission at Minneapolis, and although he didn't put his stamp of approval in writing on the case, it passed his requirements. So we opened up that operation by leasing the equipment from Nationwide Carriers, Inc. We carried on that leasing arrangement with the intermediate trucking shipments from Minneapolis and New Richland, Minn., and Albert Lee, to such towns in Texas as Sherman, Tyler, Mount Pleasant, Palestine, Longview, La Grange, Temple, Austin, Waco, San Antonio Beaumont, Galveston, Corpus Christi, and Houston.

We had a very successful relationship, both from a service point of view and from a cost point of view. It was quite satisfactory with the management, the arrangement I had made with them, and presumably the leasing arrangement had passed approval and was perfectly legal.

However, we found through our own experience that we were slightly in violation of the leasing law, leasing, according to the Interstate Commerce Commission. So we mutually agreed between the Nationwide, Inc. and Land O'Lakes Creamery, to cancel our lease, which made it necessary to dissolve that transportation program and made it necessary for us to go into the private trucking business.

Now, it is a well-known fact that Land O'Lakes Creamery has been in the trucking business for quite some time through necessity, both in Minnesota and Wisconsin, due to the Inland Dairy Creameries, which are not located on railroads, and which railroads since have been dismantled and discontinued.

So the advent of that termination of service made it necessary for us to go into the trucking business primarily for a service to the farmer patrons, and through that service, we would bring the farm products which were produced, to our concentration centers in Duluth and Minneapolis, and make the necessary grading and processing for redistribution.

However, this after we were in business in Houston, Tex., naturally we had our backs to the wall so we had to continue on and have continued on with the private trucking. We have, at the present time a lease with another carrier which we ultimately use with our own vehicles. But the cost is prohibitive for the simple reason that we have no products to come back, so our cost of operations is quite high. as you might realize.

Now, the fact that

The CHAIRMAN. Which one is prohibitive, the operation of your own vehicles, or the private contract?

Mr. TUCKER. The private operation is equally expensive as the lease, because it is the same cost.

The CHAIRMAN. Does this apply to both of you, that you have to come back empty?

Mr. TUCKER. Yes. We have some procurement material which we can order ourselves, so to provide us with adequate transportation, we have to deadhead back. We do not carry back competitive products which some other carriers do.

For the simple fact that Land O'Lakes is a free-enterprise gifted from our forefathers, we naturally produce a very fine product, and it is through effort in our sales department to go into distribution when we do not have distribution and open up new fields. It is a natural expansion. The American people are entitled to our good products, and the patrons and owners are entitled to a good return.

Well, the fact that we are restricted under this application does not allow us to expand sufficiently as we might see fit in that area, due to the high cost, because it is only commonsense that it costs more to operate this vehicle the way we have to rather than to do it with a contract carrier. The contract would call for a definite cost, and we would know from that what our cost is going to be. When we operate our own vehicles, we don't know what it would be. We just do it for service now, because we are open for service in that area.

The CHAIRMAN. You have to carry on the operation or else call it off?

Mr. TUCKER. It is a given thought that you have to do that. But the board of directors don't see fit that we should have spent several thousand dollars in sales campaigns and promotion campaigns in TV and radio, as we do, and forsake all that because we don't have transportation. So, to continue that we have this private operation and this other operation which is legal, because we run it in both directions.

The CHAIRMAN. But the point is that you do not feel that the Interstate Commerce Commission has allowed a proper and appropriate transportation facility for the orderly distribution of your product. In other words, from your standpoint, the need is there.

Mr. TUCKER. Let me state here, in my 13 years with the Land O'Lakes Co. I have never had a quarrel with the Railroad Warehouse Commission or with the Interstate Commerce Commission in their opinions, law, interpretation, and so forth. But I do feel that from my point of view, as a matter of distribution down there, that the examiner was in error in declining this application, in restrictng us— in other words, putting up a barrier where we could not promote sale of our product.

I know the two Senators from our State and Mr. Benson are very happy to have people go out and sell butter rather than sell it to the Commodity Credit Corporation or for use as foreign relief. It is a wonderful thing, this foreign relief, but I think the American people should be permitted to buy that product, rather than put it on a taxpayers' burden.

Now, my interest here in this particular case, my reason for being here, is that I think we are going to attempt to have or at least I

have been advised-to have a reconsideration of this application. I think it justifies some investigation, and I think it justifies some consideration from the small carriers' standpoint, and from the standpoint of small business.

We are small, considering large business in the United States, although we are one of the largest distributors of dairy products.

I think we should be permitted to go into an area where we are permitted to go to the expense of sales promotion; we should be allowed to use the type of transportation which is tailormade and suited to our needs and by a carrier who has proven they are willing to do it and proved their suitability.

Land O'Lakes is a very creditable organization, and it stands to reason we wouldn't go into anything where we didn't think the carrier was perfectly reliable.

The CHAIRMAN. Yes, sir.

Mr. TUCKER. I feel as though Land O'Lakes should be represented in Texas and all its fine products the same as it is in Washington and Baltimore or Philadelphia, or any place else in the United States.

I think with a little further study of this thing, if the examiner would restudy it, and the Commissioner would restudy it, I think from the testimony I offered at the first hearing, they would certainly see that we are restricted due to the fact of the limited amount of transportation.

Now, I submitted a request to four carriers who were intervenors in this matter on January 25, 1955. I stated my case which I had already related on the witness stand, and there were about 15 carriers, both trucks and rail, who according to their testimony, had every piece of equipment and all types of service to offer me for this distribution of this product, the way we wanted it and the way we needed it.

Subsequent to that hearing not one carrier came to me and offered me the service. So on January 25, 1955, I submitted a request to four of the intervenors who have terminals in Minneapolis and St. Paul and serve that territory through Kansas City and St. Louis, outlining my needs of transportation. Three of them replied. I have samples of the replies here. The fourth hesitated to reply for some reason I don't know; maybe they weren't interested in the business.

Being a traffic manager, it isn't a habit of the traffic manager to go out and ask carriers to do business. These carriers are continuously soliciting me for business on the lines they service, east of Chicago, and so on. Not one of them came forward with a good concrete plan

The CHAIRMAN. When you solicited, you got replies?

Mr. TUCKER. The replies I had from the three carriers were favorable to a certain point, but they couldn't give good service either to the point of destination or in the areas I wanted.

The CHAIRMAN. In other words, the service they were able to give was not adequate.

Mr. TUCKER. That is right. That is why I would like to see consideration of that decision.

The CHAIRMAN. Thank you very much, Mr. Tucker, and both you gentlemen.

Senator HUMPHREY. Mr. Levitus, does your service that you could offer to Land O'Lakes vary greatly from that of common-carrier serv