TRANSPORTATION ACTS AMENDMENTS-1962 TUESDAY, JULY 24, 1962 HOUSE OF REPRESENTATIVES, COMMITTEE OF INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The committee met, pursuant to recess, at 10:10 a.m., in room 1334, New House Office Building, Hon. Oren Harris (chairman of the committee) presiding. The CHAIRMAN. The committee will come to order. We will resume our hearings on the transportation bills, and with particular reference to H.R. 11583 and 11584, the subject of the message of the President of the United States, and related bills thereto. Our first witness will be our friend and colleague, Arnold Olsen, from Montana. We are pleased to have your statement, sir. STATEMENT OF HON. ARNOLD OLSEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MONTANA Mr. OLSEN. Thank you, Mr. Chairman and members of the committee. I appear today before your committee to present my views on H.R. 11583, a bill to exempt certain carriers from the minimum rate regulation in the transportation of bulk commodities, agricultural and fishery products, and passengers. The people of my district favor this legislation. First, I would emphasize the size of the transportation industry in our country today. In the most recent report I have read, published by the Transportation Association of America, it is stated that one out of every five dollars spent by the U.S. citizen each year goes for some kind of transportation service cost. It was reported by the TAA that the 1961 freight bill was estimated at $44.1 billion. In 1961, Americans spent $53.4 billion for passenger travel. Each year, it is estimated that $2.5 billion is spent by the Federal and State Governments for transportation facilities, over and above the direct reimbursements from the users. The cost of transportation to our citizens is thus more than $100 billion a year. This figure would amount to about one-fifth of the gross national product. The total cost of our national defense budget is yet only half of the amount spent for transportation in our country. The cost of the freight bill alone has risen $3.5 billion from 1958 to 1961, amounting to a total of $44.1 billion. Trucking service amounted to two-thirds of the total amount; railroad services amounted to 21 percent with approximately $1 billion by handlers of freight cars; overland pipeline amounted to over $1 billion; water carriers about $2.8 billion; airlines collected $382 million 91497-62- -18 in freight and mail revenues. While it is a fact that the citizens of our country do not pay for this item directly, they do pay for them when they build a home, buy clothing, food and other essentials necessary for daily living. To recapitulate, the total amount of freight and passenger costs for trucks, busses and autos represents an amount of $80 billion. This represents 80 percent of $100 billion of the transportation bill and 15 percent of our country's amount spent on goods and services annually. Mr. Chairman, this cost factor charged annually to the citizens of our Nation is the reason for my testifying before your committee in support of H.R. 11583. This bill will go far in clearing up the transportation mess that has weakened our national transportation and our national welfare. This bill will introduce competition into this phase of our national industry and will reduce the cost of living by saving the public hundreds of millions of dollars each year by lowering some high freight charges. The termination of some regulations would give the carriers independence in fixing minimum freight and passenger rates. It would instill individual initiative consistent with public interest. This measure would not interfere with Interstate Commerce Commission's regulations of maximum rates. It would end ICC's jurisdiction over minimum rates on bulk commodities and on agricultural and fishery products, and include passengers. These rates, henceforth, would be subject only to the antitrust laws. This bill would enable the railroads to compete with other modes of transportation for the great tonnages of bulk commodities and agricultural products which now move largely in private and unregulated highway trucks and waterway barges. This proposed legislation gives railroads nothing that other forms of transportation do not already have, and nothing to which they have not long since been justly entitled. Mr. Chairman, we are living in competitive times, not just within our own country, but throughout the world. Today in Europe, there is being established a cohesive and unified transport policy that can have the effect of integrating all modes of transportation into one vast, efficient complex, serving the Common Market countries. Gentlemen, an efficient and dynamic transportation system is vital to our domestic growth, productivity, and progress. In every way, this legislation is in the best interest of our national well-being. The CHAIRMAN. Thank you for your fine statement, Mr. Olsen. If there are no questions of the committee we will continue with our next witness, Mr. Jervis Langdon, Jr., president of the Baltimore & Ohio Railroad. Mr. Langdon, we are glad to have you back with us, and we will be pleased to have your testimony. STATEMENT OF JERVIS LANGDON, JR., PRESIDENT, THE Mr. LANGDON. Thank you, sir. My name is Jervis Langdon, Jr., and I am president of the Baltimore & Ohio Railroad Co., with headquarters at Baltimore, Md. Primarily, my testimony will deal with H.R. 11583, which, along with H.R. 11584, was introduced to give effect to some of the proposals contained in the President's message on transportation. So far as H.R. 11584 is concerned, I would endorse the testimony already submitted Mr. D. P. Loomis, president, Association of American Railroads. A greater degree of equality in the treatment by Government of the several forms of transportation is undeniable. H.R. 11584 would move in this direction by exempting the railroads from ICC control of minimum rates when hauling (a) Bulk commodities that water carriers transport without economic regulation under part III of the Interstate Commerce Act; and (b) Agricultural and fishery products that motor carriers transport without economic regulation under part II of the same act. It is to be emphasized that H.R. 11583 would take no more than a step toward equality. When handling bulk commodities, water carriers would continue to be subject to no regulation at all; they could make secret rates, contract or otherwise; rebate at will; and discriminate without restraint. No publication of their rates is required and no notice to the public. Motor carriers, when moving agricultural and fisher products, would continue to have the same freedom. Under H.R. 11583, on the other hand, railroads would be under full economic regulation in relation not merely to maximum rates but also to every conceivable form of discriminatory rate practice. Even as to minimum rates, the proposed legislation would not give the railroads equal standing. For railroad rates on bulk commodities and agricultural and fishery products would continue to be published on 30 days' notice and be subject to rejection or change if found unduly preferential or prejudicial or unjustly discriminatory. In supporting the proposed legislation, which I do most enthusiastically, it is not necessary to argue in favor of equal treatment for the railroads. Everyone concedes this, even spokesmen for inland water carriers. In a speech before the New York Security Analysts on May 24, 1962, Mr. J. W. Hershey, chairman of the board, American Commercial Barge Line Co., pointed out: The regulated carriers, who handle some 40 percent of the total traffic on the Mississippi-Ohio River system, have also long favored the repeal of the exemptions and the application of ICC regulation equally to all modes. Only last month, on June 12, 1962, this position was echoed by Capt. A. C. Ingersoll, Jr., president, Federal Barge Lines, Inc., in a speech before the ICC Practitioners in Washington, D.C., who said: For more than 10 years the water common carriers have joined the railroads and the Interstate Commerce Commission in pointing out the inequity of the bulk exemption and have urged repeal in the interest of the "fair and impartial regulation of all modes of transportation" urged in the national transportation policy. The principal point I want to make in this statement is that this equal treatment of the several forms of transportation-an objective that everyone accepts can only be approached (by legislation such as H.R. 11583) and ultimately achieved (by further legislation in the years ahead) by exempting the railroads and not be regulating the other forms. The reasons for this conclusion follow: First: There is the very practical consideration that regulation of water carrier rates on bulk traffic and motor carrier rates on agricul tural and fishery products is "deadlocked" and thus impossible to achieve. On prior occasions, when the subject has been up, strong opposition on the part of industry, commercial interests, and particularly farm groups has presented itself, and there is no reason to believe that such opposition would be less articulate or effective if the possibility came up again. Moreover, the carriers engaged in this exempt transportation are themselves opposed to regulation. As frankly acknowledged by Captain Ingersoll of the Federal Barge Line during the course of the same speech previously referred to: This perennial recommendation (that water carrier rates on bulk traffic be put under regulation) has been opposed by the growing body of exempt bulk water carriers, apparently laboring under the unwarranted delusion that economic regulation would be injurious to them, and by shipper organizations, apparently believing that economic regulation would necessarily reduce competition. A deadlock has resulted. * With the stated justification for the proposal, "equal competitive opportunity," we completely agree. We are sorry if the deadlock on the extension of regulation prompts this proposal to correct the longstanding inequity by an experiment in a partial deregulation of the railroads In the past, when railroads have been brought under regulation and certain other forms under partial regulation, it has been accomplished with the approval, at least tacit, of many of the carriers concerned and also of the shipping interests who have been the users. Here, the situation is radically different. Extension of regulation to bulk traffic moving by water and agricultural and fishery products moving by highway would be fiercely resisted. Accordingly, the Congress, in moving toward equality, has no alternative but to go in the direction pointed to by the proposed legislation. Second: Even if, expressly contrary to the conclusion just stated, it were feasible to put the water transportation of bulk commodities and the highway movement of agricultural and fishery products under regulation, equality among the several forms would still not be achieved. Private transportation on the waterways and highways would, of course, remain untouched. It is realized that when equality of regulation among transportation modes is referred to, only public carriers are meant. But equality, so limited, has little meaning as private transportation, unrestrained by any form of regulation, leaps forward and displaces public carriage. Railroads and other public carriers must be free to deal with private transportation and to offer the shipper a more attractive proposition. The ICC, in its regulation of competitive railroad rates, is willing to be more lenient when the competition being faced is private carriage, but it is often disabled from being so because the public water and motor carriers will invariably oppose the railroads as a matter of routine even when their primary target is private transportation. In other words, regulated carriers are often prevented from dealing with the true competition, which is private transportation, because of opposition (of a nature that the ICC customarily recognizes) from public carriers of the same form as the private ones. Third: Since World War II there has been a practical demonstration of the inability or incapacity of a public agency to preside over the competition of different forms of transportation in a manner which at once (1) promotes competition, (2) encourages the use of |
