The present law has been on the books for 6 years and so far as we know no freight forwarder or any other carrier has suffered any injury. Why should it be removed now? We have discussed some of the reasons, but the real reason is that some people, somewhere, want to establish a merger of freight forwarders.

This is apparent from what is taking place in the other House. The corresponding bill in the House, H. R. 2297, contained the same provisions included in section 24 of S. 290, but after a while the proposed amendment to section 411 (c) was taken out of the bill and introduced as a separate measure known as H. R. 3692.

Ultimately, the remainder of section 24, providing protection for employes of freight forwarders in case of a consolidation or merger, was also deleted and this entire section does not appear in H. R. 5623, the House version of the Commission's bill as amended by the House committee.

In addition to the threat of widespread consolidations, there is also the danger of certain selfish individuals and companies taking over all the less-than-carload freight of the railroads and making an arrangement whereby they could undercharge the freight forwarders for work performed and get their profit out of the freight forwarder whom they control.

We have not the slightest doubt of the ability, honesty, and integrity of the Commission, but we cannot help feeling that if section 411 (c) were amended as suggested it would be extremely difficult to develop who was manipulating behind the scenes and controlling the puppets who would be steadily, but surely, killing the freight forwarding industry.

In order to avoid such a state of affairs which we consider contrary to the public interest, we respectfully urge that this section be stricken from the bill.

After all, as a labor organization seeking to protect the involved employees, it is not to be expected that we would view favorably the consolidation or merger of the freight forwarders which would entail a reduction in the number of employees.

In the event that you do act favorably on the proposed section 411 (c) and the other provisions of section 24 of the pending bill having to do with the consolidation of freight forwarders, it will be necessary to provide protection for the employees, and in this connection your attention is directed to the proposed section 411 (h) (2) on page 16, lines 16 to 22, inclusive.

This section affords some measure of protection to the employees, but, as worded, is inadequate.

Under section 5 (2) (c) of the act protection of employees is optional with the carrier in case of consolidation. Section 5 (2) (f) contains the mandatory provisions of the Harrington amendment and upon handling this matter with the Commission, it was asserted by that body that the omission of section 5 (2) (f) was an oversight and should be corrected.

In a letter to Hon. Charles A. Wolverton dated July 18, 1947, Commissioner Splawn recommended inserting a comma after (e) and adding thereafter "and (f)."

It is understood that in a revised draft of this bill, the Commission has recommended the incorporation of the words "and (f)" and this draft of the bill will no doubt be found in this committee's file.

The effect of the addition of the words "and (f)" would be to afford the same protection to employees of freight forwarders under part IV as presently applies to employees of carriers under parts I, II, and III of the Interstate Commerce Act.

This is the recommendation of the Commission and we concur in it. We think it is consistent and justified. We urge this protection, although we deplore and oppose any consolidation of freight forwarders.

We hope you can see your way clear to delete section 24 in its entirety as we believe its inclusion to be opposed to the public interest by establishing a monopoly, or form of control, harmful to freight forwarders, the railroads, or possibly both.

If, however, section 24 is retained, especially section 411 (c), then we must of necessity plead for employees' protection by amending the proposed section 411 (h) (2) to provide mandatory protection of the employees involved on the same basis now applicable in consolidations or mergers involving employees of carriers subject to parts I, II, and III of the act.

Senator REED. All right, Mr. Barber. Thank you.

Mr. BARBER. Thank you ever so much, Senator.
Senator REED. Very well.

Mr. Morrow?

STATEMENT OF GILES MORROW, GENERAL COUNSEL, FREIGHT FORWARDERS INSTITUTE

Mr. MORROW. Mr. Chairman, my name is Giles Morrow. I am executive secretary and general counsel of the Freight Forwarders Institute, with offices in the Colorado Building, Washington, D. C. I appear as a representative of that organization. Senator REED. Do you have a prepared statement?

Mr. MORROW. I have not, but I have only a few words to say, Senator.

Senator REED. All right.

Mr. MORROW. If I am correct in my understanding that the present bill, S. 2426, which is now before your committee, has supplanted or superseded S. 290, I will have very little to say, Senator.

Senator REED. You can stop right there. This is intended to replace S. 290.

Mr. MORROW. Then the freight forwarding industry has no objection to S. 2426, and we endorse that bill.

I believe, Senator, if you will indulge me just a minute, I should say a word about Mr. Barber's presentation in which he discussed certain features of S. 290 which have now been eliminated, because that matter may come before your committee at a later date.

There is pending in the House now, as Dr. Splawn pointed out this morning, a bill known as H. R. 3692. That bill proposes to amend section 411 (c) in substantially the same manner in which that section was proposed to be amended by S. 290.

It is on the Consent Calendar now, as Dr. Splawn explained. The real purpose of that bill-and I am very well acquainted with the whole history of it-is to relieve one owner of a small freight forwarder of a very bad situation. That individual is Mr. Fisher G.

Dorsey, who had a great deal to do with the drafting of part IV of the act.

Through an unfortunate technicality of the law-and I am sure that is all it is—Mr. Dorsey, who owns some motor-carrier interests, and has an interest in some freight forwarders, must dispose of some of his interests. He owns one freight forwarder outright, and the way the law is worded today, that is perfectly permissible, but he owns less than a controlling interest in another forwarder, and because of a technicality of the law he is under an order of the Commission to sell that minority interest in his second freight forwarder before June 30 of this year.

There are no consolidations or mergers involved, so far as I know. It is addressed to what is apparently an obvious conflict in the law, and if H. R. 3692 comes before your committee, I hope you will give consideration to it on its merits.

STATEMENT OF JOHN V. LAWRENCE, MANAGING DIRECTOR, AMERICAN TRUCKING ASSOCIATIONS, INC.

Mr. LAWRENCE. My name is John V. Lawrence, and I am managing director of American Trucking Associations.

I shall be as brief as I know how. I have a prepared statementwhich was addressed to S. 290, and I would like permission to tender it for the record, with one exception, which I have deleted, referring to the definition of an association, which has been cleared up in the new bill which has been presented.

Senator REED. Proceed, sir.

Mr. LAWRENCE. American Trucking Associations is known to most of you, but I might say for the record that it is the national trade association of the trucking industry, representing all types of carriers, both for-hire and private, and having affiliated associations in all 48 States, the Territory of Hawaii, and the District of Columbia. Our offices are located at 1424 Sixteenth Street NW., Washington, D. C.

I well recall that Senator Reed, the chairman of this subcommittee, held extensive hearings on forwarder legislation just prior to the war. Out of them grew the enactment by the Senate of S. 210, which passed the Senate on March 24, 1941. During those hearings, on more than one occasion, Senator Reed pointed out the incongruity of an officer of a carrier sitting down with himself as an officer of a forwarding organization to work out arrangements for carriage. This becomes particularly incongruous when the individual in question may be a stockholder or have some other pecuniary interest in the forwarder.

The provision now found in 411 (c) appeared first in S. 210 as it passed the Senate.

Following conference between the two Houses it was retained in the final bill.

This section of the bill S. 290 is incorporated in H. R. 3692, recently reported out by the House committee. It has been called up twice on the Consent Calendar in the House, but both times has met objection. In the House committee report on H. R. 3692, there is included

a letter from the Interstate Commerce Commission. In that letter the Commission states it feels that this absolute prohibition now contained in 411 (c) against an officer, director, or employee of a carrier to own, lease, control, or hold stock in any freight forwarder, directly or indirectly, should be modified and the Commission should be given more leeway in its administration.

They refer to the case of one motor carrier who owns a forwarding organization and to the status of the directors of one or more railroads which own forwarders as showing the need for this modification.

This handful of situations may cause some concern to the Commission. We do not, however, feel that the bars should be let down. Once we do, we do not know how many new situations will develop.

We have been consistent for years in our position that carriers and forwarders should be kept independent. We, therefore, oppose this change in 411 (c) as proposed in section 24 (a) of S. 290.

There is one comment I should like to make on another section of the bill before us. It differs from its counterpart in S. 290, and from a cursory reading it is probably tighter than its predecessor provision. I refer to section 3 of S. 2426, on page 2.

One of the fears we have had of this provision has been that it might cause a flood of proceedings without a hearing involving acquisitions by railroads of other forms of transportation, particularly motor ·

carriers.

We do not want to stop progress, and we realize, as Dr. Splawn indicated, that there is a great number of minor proceedings on which a hearing is unnecessary, but I think most of our people would like to be sure that they would be heard on these acquisition cases. I see that there has been a redraft of that section. By just looking at it cursorily, it looks like it has been tightened up by placing the burden on the Commission to make a finding that a public hearing is not

necessary.

We do hope that the utmost care will be used in the final legislation to cover that point and set people's fears at rest.

In this presentation which we were addressing to S. 290, if you do not mind, I would like to have it incorporated in the record in connection with H. R. 3692. We were out of town when it was under consideration by the House committee, and I notice that the report said there was no objection to it. It was reported out when we were away, so we did not have an opportunity. I would like, if it were possible, to file the balance of the statement showing our objection to the amendment to 411 (c).

As I recall the Commission's letter in connection with H. R. 3692, it not only referred to the difficulties of one motor carrier, but also the difficulties of some railroad directors who were stockholders in their railroads which, in turn, controlled the forwarding companies. We were mindful of the fact that that particular provision 411 (c) was first placed in S. 210 which went through conference and had not been amended since enactment.

Our feeling is that certain situations like this might come up, but we see no reason for the complete change in psychology, you might say, of that paragraph, from an absolute provision to giving the Commission full leeway.

While we have the highest regard for the Commission, and we know they would only have certain points to cover now, that would be law

that would continue for years, and 10 or 15 years from now we will have situations coming up and being approved under that provision, that today we never envisioned.

Our feeling is that if an order can be written to cure some of these situations not previously envisioned, legislation could be written, and we would rather see a proviso, or something of that nature, incorporated specifically to cover a specific situation in the legislation, rather than that complete let-down, of the present prohibition.

Outside of that, we would not have anything further to say, Senator, and we want to thank you for the opportunity to appear here. Senator REED. Very well; thank you.

Senator REED. Mr. Souby?

STATEMENT OF JAMES M. SOUBY, GENERAL SOLICITOR, ASSOCIATION OF AMERICAN RAILROADS

Mr. SOUBY. I want to take but a few minutes, Mr. Chairman. My name is J. M. Souby, general solicitor of the Association of American Railroads.

I am appearing here for the association, and its members. I had submitted, Mr. Chairman, an extended memorandum containing certain suggestions which we thought would improve S. 290.

Fortunately, everything we suggested in that memorandum, with one exception, has been taken care of in the new bill that has been introduced here, your bill S. 2426, so I will not find it necessary to refer to my memorandum.

S. 2426, in its present form, corresponds to the bill recently reported by the House Committee on Interstate and Foreign Commerce, H. R. 5623.

When that bill was up for hearing before the House committee, I appeared over there and stated that it was entirely satisfactory to the railroads. We had no objection to it whatever, but unfortunately the committee, in reporting the bill, made a few minor changes in it, and one rather important change in a provision in which we were particularly interested. That is the one to which Dr. Splawn has called attention in his statement.

Section 5 of this present bill, S. 2426, proposes to amend paragraph (5) of section 6 of the Interstate Commerce Act by the mere addition of a proviso to the sentence that now constitutes that paragraph.

As that provision was in the House bill originally, it was based on a recommendation of the Commission to substitute for paragraph (5) of section 6 an entirely different provision which was modeled after the corresponding provision contained in parts II, III, and IV of the act.

Paragraph (5) of section 6, which has been in the act ever since it was enacted, is a mandatory requirement on every carrier, subject to part I, to file with the Commission a copy of every contract that it is a party to, relating to traffic.

We have never known, and I do not think the Commission has ever known exactly, what that comprehends. The Commission finally agreed to recommend a modification of it which would simply empower the Commission to require the filing of any contract relating to traffic that it might call for. That was entirely satisfactory to us. The only difference is that as the provision is now worded in your bill, based