Section 1(b) would amend section 5a of the Interstate Commerce Act so as to make the relief provided therein from antitrust laws inapplicable "to any party to an agreement with respect to any rate, charge, or fare" exempted from minimum rate control by H.R. 11583. Under the provisions of section 5a, the Interstate Commerce Commission is authorized to approve and regulate agreements relating, among other things, to procedures for the joint consideration, initiation, or establishment of rates, fares, and charges. Parties to any agreement approved by the Commission are relieved from the antitrust laws with respect to the making of such agreement, and with respect to the carrying out of such agreement in conformity with its provisions and in conformity with the terms and conditions prescribed by the Commission."

It is recognized that the underlying proposal on minimum rates is not dependent on modification of section 5a procedures. With section 5a left intact the conference method of making rates under agreements approved by the ICC would be continued on agricultural and bulk commodities and in setting passenger fares. Without the conference method of ratemaking under section 5a the normal procedures and channels available to shippers for rate adjustments would be disturbed. There is a choice of whether to lessen antitrust immunity specifically as provided in section 1(b) of the bill, or leave undisturbed the present arrangements satisfactory to carriers and shippers. I think this is largely a question for Congress to determine.

Section 2 would amend section 303 (b) of the Interstate Commerce Act, which is the present dry bulk commodities exemption, by removing the requirement that no more than three such commodities can be carried in one vessel or tow and by revising the definition of bulk commodities to eliminate the requirement that the commodities must have been treated as bulk commodities in 1939. This has the effect of exempting bulk commodities transported by water carrier from all regulation.

Section 3 would amend section 418 of the Interstate Commerce Act to include all carriers authorized to transport bulk commodities as carriers, the services of which freight forwarders may utilize. The amendment merely takes account of the fact that the bulk commodities exemption has been extended to carriers other than by water.

Section 4 would extend to intercoastal water carriers the same exemption from minimum rate control for the transportation of person or bulk commodities or agricultural or fishery products as is proposed for carrier subject to the Interstate Commerce Act under section 1. Section 5 would amend the Federal Aviation Act to limit the authority of the Civil Aeronautics Board to the determination and prescription of just and reasonable maximum rates or charges for the transportation of bulk commodities or agricultural or fishery products. As to these items of freight, air carriers would be as free from minimum rate control as carriers subject to the Interstate Commerce Commission or Federal Maritime Commission. Antitrust laws would be applicable in the same way.

Such freedom from minimum rate control has not been extended to the carriage of passengers by air as with the other carriers, in recognition of the present precarious financial condition of many airlines more gradual deregulation of passenger fares in air transportation is called for under present circumstances. The intent of Con

gress to attain this freedom from minimum rate control is expressed in the last subsection so that business incentives and competition may play a more influential role in the pricing of air transportation.

Taken together the two administration bills, H.R. 11583 and H.R. 11584, along with several other bills already discussed, provide a fundamentally new direction to national transportation policy. The new direction will bring the economic laws of enterprise and competition into prominence in transportation, as a more effective supplement to regulatory laws and provisions. We retain a good measure of regulation in the public interest, but we also believe that public interest is also served by the basic economic forces which have applied to industry generally. Law must be used more to achieve equalized competitive opportunity, to protect the public interest in a sound. common carrier system, and to bring about improved coordination in the administration of Federal transportation programs.

This aim must be achieved in several fields at the same time; in taxation and user charges, in promotional and investment programs, and in regulation. These fundamentally important actions require legislation. The President's legislative program for transportation is now before you, and we urge its favorable consideration.

The CHAIRMAN. That completes your statement, does it?
Mr. MARTIN. Yes, sir, Mr. Chairman.

The CHAIRMAN. Mr. Secretary, I must say that you and Mr. Martin have presented a most comprehensive statement, and a rather bold approach to transportation problems. Certainly I have been impressed by the statement, your views and recommendations, and I am sure other members of the committee, if not all, have likewise been impressed with it. You have covered so much area, however, that I am sure there are innumerable questions arising in the minds of the members, and no doubt would require some time to obtain further clarification.

In view of that fact, I want to suggest to our colleagues on the committee that the first round of the questioning be limited to approximately 5 minutes for each member, so every one can have an opportunity, without too great a delay, of making an inquiry of any question or two or three they may have.

Mr. Williams?

Mr. WILLIAMS. Mr. Chairman-Governor, Mr. Martin, I want to join with my chairman in commending you on making a very comprehensive and clear presentation of your program. But I may say that if this committee gets around to considering all of the proposals that you have put to us today, I am afraid we will be here until Christmas, and perhaps even Christmas day, if the Supreme Court.

outlaws that.

I would like to say that I think it is refreshing to find a Government agency coming in before this committee asking that Government controls and regulations be relaxed rather than tightened up. I have any number of questions that I would like to pose dealing with specific provisions of these bills, the general purpose of which I am sure no one can disagree with. But as to specifics, I think, Mr. Chairman, I would prefer to let some of the others develop their questions before I reach mine. I have a series of questions. I think perhaps I will wait until the second round to get into that.

The CHAIRMAN. Mr. Springer?

Mr. SPRINGER. Mr. Secretary, this is approximately 34 pages of testimony, which has taken roughly 40 minutes. I want to see if, in 5 minutes, I can reduce this to what the fundamentals are.

First as I understand it, you want to remove the prohibition, insofar as railroads are concerned, in the hauling of bulk commodities in competition with water. Is that one?

Secretary HODGES. Yes sir.

Mr. SPRINGER. Second, you want to remove the prohibition as far as regulations concerned as to railroads with reference to agricultural produce and fish. That is two, is that correct?

Secretary HODGES. That is right-railroads and other carriers other than motor carriers which now have it.

Mr. SPRINGER. Now, what about air transportation?
Secretary HODGES. Same thing.

Mr. SPRINGER. Same thing. What about passengers?

Secretary HODGES. The same thing on passengers, except we would go more slowly in deregulating the minimum rates for air passengers. Mr. SPRINGER. Air passage is the only one you have. So, in essence, then, I take it in all of these fields, with reference to these particular products I have mentioned, there would, in essence, be no regulation.

Secretary HODGES. Minimum regulation.

Mr. SPRINGER. There would be no minimum regulation.

Secretary HODGES. Minimum rate regulation.

Mr. SPRINGER. No minimum rate regulation. With reference to passengers, the same would be true.

Secretary HODGES. Except for air.

Mr. SPRINGER. Except as to air.

Now, will you give me any other thing, other than safety, that is before us; is that correct?

Secretary HODGES. That is it basically. There are other details. But you have put your finger on the important ones.

Mr. SPRINGER. Those are the four.

Now, may I ask you, and may I ask the Under Secretary for Transportation if there are any other important changes in the law that you are requesting by legislation.

Secretary HODGES. I think we have covered it. I don't recall any others from this. The record speaks for itself, of course, Mr. Springer. Mr. SPRINGER. So much for that. I have just one other thing. Mr. WILLIAMS. Will the gentleman yield at that point?

Mr. SPRINGER. If it will come out of your time.

Mr. WILLIAMS. I just wanted to ask one question: Is the overall purpose of these bills to provide, insofar as possible, the ability to exploit the inherent advantage of the respective modes of transportation insofar as possible?

Secretary HODGES. That is right, sir.

Mr. SPRINGER. Mr. Secretary, on page 1 of your report, beginning in the third paragraph

recommendations for legislative changes necessarily were subdivided according to subject matter.

Consequently, bills concerning the transportation excise tax and urban transportation, 11158 and 12135, have been introduced separately, and have been considered by other committees of the Congress.

Will you turn to the top of page 2?

The bills concerning urban transportation are proposals sponsored by the administration. They would encourage the planning of areawide transportation systems and would assist in their development and financing.

My question is this: Is it your philosophy, as a result of this introduction of these bills-is it your philosophy that the Federal Government should finance mass transportation for the city of Cleveland, the city of Chicago, the city of New York, the city of Los Angeles, or the city of Philadelphia?

Secretary HODGES. Basically, Mr. Springer, considering the very great need of urban areas, the Federal Government would, under our proposal, aid cities and urban areas in the planning of ways and means to work out their mass transportation problems.

Mr. SPRINGER. What about the cost of it?

Secretary HODGES. Well, of course when you are dealing with a thing like this, it will be pretty heavy.

Mr. SPRINGER. You are planning, in this legislation, to pay for the cost of the proposed system, such as, we will say, underground? Secretary HODGES. No, no. Basically, at the moment, we are talking about helping in the planning costs of all these.

Mr. SPRINGER. Do you mean the drawing up of plans?

Secretary HODGES. That is right. The drawing up of the plans, and the very great amount of research, Mr. Springer, that will be required. This is a very large problem.

Mr. SPRINGER. Is that all that is contemplated?

Secretary HODGES. You have certain grants in there-I don't recall the details of the bill.

Mr. SPRINGER. What about the grants?

Secretary HODGES. Can you answer that, Mr. Barton?

Mr. BARTON. Yes.

The CHAIRMAN. I think you had better identify yourself for this record.

Secretary HODGES. This is Mr. Frank Barton, the Deputy Under Secretary for Transportation. He knows the details on this.

Mr. BARTON. The bill would provide $500 million over 3 years, to be used in making grants. The grants will be made to the extent of one-half for emergency projects, and two-thirds for long-range projects in urban transportation.

Mr. SPRINGER. Those would be grants for construction.

Mr. BARTON. Yes, sir, that is right.

Mr. SPRINGER. Are you familiar with the fact that the Municipal Mayors Association appeared before this committee March 1959, before the subcommittee, of which Mr. Williams is the chairman, and we had hearings on this thing, and rejected this plan?

Mr. BARTON. Yes, sir; I understand that.

Mr. SPRINGER. You understand they did.

Mr. BARTON. Appearances were made before the Senate Commerce Committee when I was with the committee to ask for help.

Mr. SPRINGER. And then because they couldn't get that legislation from this committee, they went over to the Banking and Currency Committee for the purpose of circumventing this committee, and got a Federal charter, which came under the jurisdiction of that com

inittee.

91497-62- -5

Mr. BARTON. The same was done in the Senate-came to the Senate Commerce Committee first, and then the legislation

Mr. SPRINGER. And the Senate Commerce Committee wouldn't okay that legislation?

Mr. BARTON. They took no action.

Mr. SPRINGER. That is all, Mr. Chairman.

The CHAIRMAN. I think, in order that the record may be clear on that subject, it might be well to recall, also, that it was either during 1958-along in there that a group from the transportation industry came down and had a conference with several of us. I am not sure, Mr. Springer, if you were present or not. In this conference, such a proposal was offered. And at that time I advised them that if the bill was introduced, as they proposed, it would go to the Banking and Currency Committee, because of the fact that it would establish a Federal charter.

Mr. SPRINGER. This conference, Mr. Chairman, was in the fall of 1958. The hearings which we had, in which the railroads testified. were in the fall of 1958. The conference that we had in this room, at which the mayors testified, was in March of 1959.

The CHAIRMAN. Very well.

Mr. Roberts?

Mr. ROBERTS. Mr. Chairman, I would like to pass at this time.
The CHAIRMAN. Mr. Schenck?

Mr. SCHENCK. Thank you, Mr. Chairman. I greatly appreciated the testimony of Secretary Hodges and Under Secretary Martin. I am deeply interested in this entire question. It appears that you have developed the millennium here in many ways. I think my colleague, Mr. Springer, put his finger on an extremely important point, and that is that in the development of urban transportation, mass transportation, that you or the administration or somebody decided that it best can be done under some sort of public facilities legislation, which comes generally under housing. Was that the reason for that?

Secretary HODGES. That is right. Commerce comes into it, Mr. Schenck, through public roads. So that the matter of planning for public roads in an urban area shall be tied in with overall transportation systems. That is the reason that Commerce gets in there with HHFA, in this discussion.

Mr. SCHENCK. The basic reason for this mass transportation is to save the downtown areas in urban areas; is that right?

Secretary HODGES. Yes, and to really preserve the cities which are getting so clogged up at the present time because of transportation problems. They are not oriented to present conditions.

Mr. SCHENCK. Well, now, Mr. Secretary, there is only one source of money for any Federal program, and that is the people themselves. Do you agree with that?

Secretary HODGES. Yes, sir. I think all the money comes from you and me.

Mr. SCHENCK. And consequently, the more money we take to operate the Federal Government, the less opportunity there is for local and State units of government to finance their own operations, isn't that true?

Secretary HODGES. I think that is basically correct. The more you take from one place, the less you have in total, whichever it may be,

sir.