2. EX RIVER GRAIN-I. & S. DOCKET 3928

In this instance, the Commission restricted the application of proportional rates on grain to grain which had arrived at the intermediate market by rail, and assessed the local rate from the intermediate market to beyond when grain had arrived at the former by water. To illustrate, the basic principle, and what I consider a clean-cut violation of section 2, involving unjust discrimination, I will give an example.

Grain may be shipped from Pekin, Havannah, and Peoria into a river-front elevator at St. Louis either by rail or barge. If shipped by rail, it may move on the lines of the Alton or the Illinois Central. At St. Louis, the grain goes into an elevator where it is mixed with grain which arrived by barge, by rail and by truck and may be stored for months in this elevator awaiting final market. The grain in the elevator is the same kind and quality and the grain brought in by barge is undistinguishable from the grain brought in by rail. If the grain is finally sold in Atlanta, for example, it would move out over the rails of the lines of the Southern Railway. On the grain which came in by barge to the elevator to St. Louis, the local rates would apply, even though the service performed by the Southern in transporting the grain from St. Louis to Atlanta was identical in every way, and even though the kind, quality and quantity of grain was the same, and the transportation charges to the Southern were the same in either case.

A petition for a reopening and rehearing of this case before the entire Commission was again denied by the Interstate Commerce Commission by the close vote of 5 to 4.

3. RAW SUGAR FROM NEW ORLEANS TO GRAMMERCY AND RESERVE, I. & S. DOCKET 4015

Raw sugar goes into New Orleans by boat at Port Chalmette, where it is transferred to railroad cars of the New Orleans Terminal Co. It is then switched to the line of the L. & A., which does not serve Port Chalmette, and is then carried by line haul to Grammercy and Reserve, La., where it is refined; after which it is shipped out for distribution by either rail or water.

Prior to 1924 the Port Chalmette-Grammercy and Reserve rawsugar rate inbound was 6 cents, which was subsequently reduced to 32 cents. This latter rate applies on inbound raw sugar regardless of the line which might transport the refined sugar outbound. The vice president of the L. & A. Railroad referred to this 31⁄2-cent rate as one "which did not cover the actual out-of-pocket cost", because the L. & A. was required to absorb the switching charge of 12 cents assessed by the New Orleans Terminal Co.

Subsequently, the inbound rate on raw sugar was reduced to 2 cents, with a restriction as to the route over which the outbound movement of refined sugar might move. If the raw sugar inbound to Grammercy and Reserve moves outbound by rail, the inbound rate is 2 cents, out of which the L. & A. absorbs 11⁄2 cents switching.

If the refined sugar moves out over the line of any water carrier, the inbound rate on raw sugar from Port Chalmette to Grammercy and Reserve of 31⁄2 cents is assessed, which is clearly a violation of sections. 2 and 3 of the act.

This is the situation that exists today and which was permitted by the Interstate Commerce Commission.

The Interstate Commerce Commission now has a further petition for reopening and rehearing by the full Commission of the proposal of the L. & A. Railroad, once denied, to further reduce the inbound rate to 1 cent, out of which the L. & A. absorbs 11⁄2 cents switching, this 1 cent inbound rate to apply only when the refined sugar outbound moves over the lines of the L. & A. Railroad.

4. FOURTH SECTION RELIEF TRANSCONTINENTAL LINES. I. & S. 14080

The action of the Commission in granting fourth section relief to the transcontinental lines on sugar to the water-competitive points of Milwaukee, Chicago, and St. Louis of 65 cents per hundred pounds, while maintaining an 84-cent rate to intermediate points.

The examiner in this report states this to be the policy of the Interstate Commerce Commission:

The rate adjustment under which both rail and water transportation might be fostered and preserved in full vigor we conceive to be one under which the spread in rates would be narrow enough, and yet wide enough, to permit of a competitive relation as between the two classes of carriers. In order for a competitive relation to exist between the two methods of carriage, it is evident that there must be some differential in favor of the less desirable mode of transportation. But it is equally apparent from the evidence herein as to the shifting of a competitive traffic from the one to the other mode of transportation, that a narrower spread than that now existing is necessary in order to maintain such a competitive relation. What that spread must be cannot be determined by a mathematical formula, and we believe can only be determined by the method of trial and error. We shall, therefore, fix a relation which, upon the present evidence in our best judgment, must be the spread necessary to bring about a competitive relation between the two classes of carriers. Should experience prove our judgment to be in error, a petition from either side making a proper showing will open the door for further consideration of the matter.

I fail to see in the above where the interest of the public has in any way been considered. Nor, indeed, do I find that any consideration has been given to the beet sugar industry in its endeavor to enter the Chicago markets, in competition with sugar which is shipped raw from the Philippines and Hawaii, refined on the West coast, and then shipped to the Chicago markets at a less rate than the beet sugar, which is grown in our own country and refined in our Middle West, can be shipped in to the same market.

The Commission is even now considering another application of the transcontinental lines under this same application, 14080, to further reduce the rates on sugar to Milwaukee, Chicago, and St. Louis to 48 cents.

5. FOURTH SECTION ORDER 11702. REDUCED RATES ON SUGAR, ATLANTIC SEABOARD TO CENTRAL TERRITORY, TO MEET BARGE-COMPELLED RATES OF SOUTHERN RAILROADS

Granted by Division 2 of the Interstate Commerce Commission in fourth section order 11702, reduced rates on sugar from the Atlantic seaboard territory to central territory, while maintaining higher rates

to intermediate points. In this case Commissioner Tate, dissenting, said:

The

* * * That in his opinion there was no special case made out which would justify the exercise of the Commission's discretion to grant relief. The competition alleged by the applicants, he said, did not even purport to be competition between the same points of origin and the same points of destination. alleged competition, he said, was from a different point of origin. By analogy, he added, the Commission might grant fourth section relief because of market competition from any part of the United States. He said he did not mean by that that market competition might not, under any circumstances, be made the basis for permitting reduction in freight rates, but he could not see market competition in this instance, as a reason for grant of relief. He said that if the applicants desired to make lower rates because of competition coming from an utterly different point of origin the least they should do would be to put in the lower rates without fourth section relief.

6. JOINT RATES OF AMERICAN BARGE LINE WITH RAILROADS ON STEEL PRODUCTS FROM PITTSBURGH TO SOUTHWEST

The fixing of the divisions between the rail carriers and the American Barge Line on steel and steel products from the Pittsburgh district to the Southwest.

In this case the American Barge Line Co., operating on a certificate of public convenience and necessity granted by the Interstate Commerce Commission in ex parte 99 in compliance with the provisions of the Denison Act, participated in a joint rail-water route on steel and steel products. The rates involved in this movement were fixed by the Commission and were on file before that tribunal.

The Commission permitted the delivering rail carriers to the river ports to assess such a large percentage of accruing revenue as its division of the through rates as to make the movement prohibitive for the American Barge Line Co. The division given the rail lines as their share of the total revenue was in some instances two or three times as high as the local rail rate up to the port of interchange.

This is the first time, to my knowledge, that the Interstate Commerce Commission has permitted such a division. Heretofore the local rail rates to and from the ports have governed as the absolute maximum amounts which the rail carriers received as their division in a joint movement.

Stated in a different way, the Commission, having jurisdiction over the American Barge Line in through rail-water routes, deliberately penalized the barge line for operating under a certificate of public convenience and necessity, which the Commission itself had granted; in that the unregulated water carriers operating on their unregulated port to port rates not on file with the Commission received the advantage of being required to pay only the local rates on the same movement of steel and steel products to the river ports.

7. TRANSCONTINENTAL STEEL

Ordinarily transcontinental steel for construction work on the Pacific Coast moves either all-rail across the continent; or by rail to the Atlantic seaboard, ocean through the canal; or rail to the Gulf ports, ocean through the canal; or by all-water via the Great Lakes and ocean, or via the Mississippi River and ocean.

The joint rail-ocean rates via both the Atlantic Seaboard and the Gulf are usually less then the all-rail continental rates and the allwater rates are less than joint rail ocean rates.

At the time the construction of the great bridge connecting San Francisco with Oakland, Calif., was begun the railroads reduced the all-rail rate from $1.15 per hundred pounds to 75 cents a minimum 80,000 pounds and blanketed this rate so that it applied in all the territory between Pittsburgh on the east and Denver, Colo., on the west; a blanket consisting of approximately two-thirds the width of the continent.

This all-rail rate was lower than the combination rate that would apply over any rail and ocean route through either the Atlantic or Gulf ports.

The Commission refused to suspend the rail tariffs upon the protest of the steamship lines and permitted this 75 cents rate to become effective.

It is such decisions as those above referred to which confirm me in my belief that if the Interstate Commerce Commission is to be the body to regulate all forms of transportation, as advocated by the Federal Coordinator, the law must contain that affirmative declaration of policy by Congress which makes it mandatory upon the Commission to consider the broader interests of the public and the interests of other forms of transportation.

This honorable committee, in view of what it has just heard, might reasonably ask:

"Since these conditions exist, why are you in favor of regulating all transportation facilities through the Interstate Commerce Commission?"

My answer is:

"Conditions as they exist cannot be any worse; and it is time for a change, so that the public and all forms of transportation may have a new and square deal.”

I am in entire accord with the statement made by the Federal Coordinator of Transportation in a recent speech before the Chamber of Commerce of the State of New York, as follows:

In the past 15 or 20 years the transportation facilities of the Nation have been tremendously expanded, with the result that there is a great oversupply and conditions of the most intense competition between the different forms of transportation and within each group. The railroads are not the only carriers that are suffering. They are all suffering and dissatisfied. Conditions are chaotic and demoralized. This is not good from either the carriers or for general business. It is essential that the Government intervene to promote order and stability. It must act, not for the purpose of suppressing or hurting any form of transportation, for they all have their place, but for the purpose of putting competition under reasonable control and preventing it from sapping the foundations of the entire transportation system. The vital thing is to deal with this situation for the good of the Nation as a whole. Special interests are presenting their claims, each trying to put an edge on its own special ax, and among them they are likely to defeat any reasonable program, unless our lawmakers are able to see the public interest through the fog which these special interests create.

I wish I had it in my power to impress this honorable committee with the gravity of this transportation situation, and the necessity of the enactment of these bills.

S. 1635, taken in conjunction with the policies enunciated in H. R. 5379, provides a means by which the situation may be remedied. It is to be presumed that the President, in his appointment of additional commissioners, will select the most competent experts he can find to represent water carriers, pipe lines, motor carriers, and air carriers.

These additional members will introduce new elements, new methods of approaching the vital problem of coordination and cooperation of all forms of transportation. They will not be handicapped by a habit of mind formed through the approach of the problem with the primary end of adding to the revenues of the railroads, but of giving to the public the best and cheapest form of transporttion available. Naturally they will be assigned to the water carriers and pipe line division, and to the motor carrier and air carrier division.

The organization of the Control Board is excellent, and I find none of the disadvantages therein quoted by the Commissioner, who disagree with the Federal Coordinator. I concur in toto with Mr. Eastman's analysis of the necessity of the Control Board.

The Control Board is to be composed of the chairman of the Commission and the chairman of the four permanent divisions. The Federal Coordinator becomes a member only when matters concerning legislation are under consideration.

The Board of Control, therefore, will consist of: (a) the Chairman of the Commission, (b) the Chairman of the Finance Division, (c) the Chairman of the Railroad Division, (d) the Chairman of the Water Carrier and Pipe Line Division and (e) the Chairman of the Motor Carrier and Air Carrier Division.

Although the rail division will have 5 members, and the other divisions have only 3 members each, the decisions of the final control board which consists of 5 members, "shall be controlling as to procedents upon all divisions, individual commissioners, and boards of employees." As every form of transportation will be represented on the Control Board, there can be no "habit of mind" formed covering the whole board, through its duty as a whole to coordinate all forms of transportation.

It seems to me that there is a very distinct function for every commissioner, whether he be on the control board of not. Each commissioner will be upon some special division, and certainly the matters to be referred to and handled by the division are important enough to dignify the members as more important than examiners simply.

Certain objections might be advanced to the power conferred upon the Chairman of the Commission to initially designate the members of the respective permanent divisions. Such objection could be based solely upon the fact that the chairman might unfavorably "pack" certain committees.

I have no respect for such objection, for the assumption would be that any man of sufficient character and importance to be appointed Chairman of the Commission, would lend himself to such procedure. In the remote contingency that such procedure should be attempted, the President still has the power to remove any member for malfeasance in the office, inefficiency, or neglect of duty.

One of the great objections to the present procedure of the Commission as organized is the delay experienced in reaching definite decisions. A division, as at present constituted, may have its decision questioned. An appeal may be made to the Commission for a rehearing by the entire Commission, with a request that the effective date of the decisions be postponed until such hearing has been concluded. Suppose a rehearing be granted before the full Commission. The whole case is reopened, the decision of the division suspended, and months may elapse before a final decision.