(5) Also, since regulation of minimum passenger fares presents no prob lem, exemption for this also could be eliminated.

The reason for a legislative proposal such as H.R. 4700 was aptly stated by the Secretary of Commerce when he said the Government has two choices; to con tinue to regulate more and more strictly "winding up with a Government domi nated transportation system” or to break with the practices of the past and put more and more responsibility on the industry to provide the transportation mervices we should have.

We are in a situation where we find that motor carriers are exempt from all regulation in the carriage of livestock and agricultural and fishery products, Competing railroads are not Water carriers are exempt from all regulation when carrying bulk commodities provided they do not carry more than three commodities in a vessel or tow. Railroads and motor carriers are not.

To equalize this situation, we have the two choices referred to by the Secretary of Commerce, more regulation or less.

Economic regulation is sometimes necessary to protect the public interest. But regulation slows down change even that which may be in the public interest. The same end result, without the inhibitions of regulation, can be achieved through equal and fair competition. The forces of competition encourage progress and time consuming regulation retards progress Equal and fair com¡œration produces actions which will generally prove to be in the public interest. HR 4700 moves in the direction of equality in regulation and of permitting the forces of competition greater opportunity to work if all carriers rail, motor, and water are relieved of minimum rate control on the products involved. to that extent at least, they will be placed on an equal footing And probably Just as important, they will be in a better position to meet the competition offered by bona fide private carriage and reduce unlawful for hire catringe

One form of transportation, however, shou'd not be placed in a podřion to dis crii, nate unduly between shippers or localities, Therefore we endorse the new language in section (a) which makes it clear that the Interstate Commerce Commission shall retain all currently effective authority and power over unjust dise erimination and undue preference or advantage. This provision shou'd prove ad-quate to protect against this type of problem. But, if it is not, it should be made so.

Some apprehension has been expressed in the past that the provisions of section 6 of the Interstate Commerce Act, requiring the filing of tariffs, might not be applicable if authority over the minimum rates involved is removed It should be made clear that this power remains undisturbed in order that all interested parties may be notified of rate changes,

With the removal of ICC authority over these minimum rates, we also recognize that one carrier might be able to eliminate others through predatory pricing This, of course, should not be permitted, as pointed out by the President in trans mitting his proposals. He said that the legislation should assure the protection of the antitrust laws against any destructive competition " We agree

In our view, however, the draftsmen have gone too far in HR 4700 in an effort to comply with this objective They have included under the head g of antitrust laws all of the various enactments referred to in section 1 of the Clayton. Act (15 US CA., sec. 12). Some of these laws are obviously not applicable and others the courts have ruled not applicable. Congress should delineate those antitrust sections that are to be applied. Certain of them are not applicable to transportation service and others duplicate provisions of the Interstate Commerce Act The legislation needs to be made explicit in this respect by clearly specifying the type of antitrust law that should be applied to safeguard against predatory pricing

In this connection, also, H.R. 4700 would remove the protection of section Ja of the Interstate Commerce Act (and applicable sections of other acts) with regard to the exempted minimum rates. This section enables carriers, under agreements approved by the Commission, to confer among themselves and with whippers with the objective of jointly establishing rates. This procedure has proved to be very valuable to both shippers and carriers. It should be retained. Conferences operate as open forums. Carriers and shippers are kept inf "med about matters in which they are mutually interested and opportunity for diso cussion is afforded all before a decision is reached. This is especially valuable to smaller shippers who might not otherwise be equipped to keep informed as to rate matters Also, under this procedure, it is possible to consolidate the fting of tariffs and make them available in one publication, this eliminating a multiplicity of individual tariffs.

Proposed rates are subject to the Commission's scrutiny and should it qu their legality from its own study or as the result of objections by any e party, it is empowered to suspend any change pending investigation and deca In this connection, it also should be kept in mind that carriers may not any rate they care to under this legislation. The proposed change men:s that the Commission can no longer question the reasonableness of a rate bezz it may be thought to be too low. Any rate, including a reduced rate, won 4 be subject to question on the grounds of discrimination, prejudice, preferent or advantage, or as predatory.

We urge, therefore, that the provisions of H.R. 4700, which would lamALI ference agreements to through routes and through rates, be eliminated

We also urge that because bulk commodities as described in the bill are 25 carried by air and the situation with respect to livestock and agricultura, as fishery products is quite different in air transportation, reference to air is portation and the Federal Aviation Act also be eliminated.

TRANSPORTATION ACT OF 1963

Now, I should like to turn to section 3 of H.R. 4701.

Right to ship vehicles or containers on carriers of other modes witkont discrimination

This provision of the bill would require railroads or common carriers by z vehicle or water subject to the Interstate Commerce Act to accept «♪ ** by any carrier, whether regulated or not, of loaded or empty vehicles or changes containers without discrimination as to service or rates. It is intendesi ". carrier-shippers, as a piggyback, the same service and rates as nobra shippers.

Since this proposal is designed to obtain improved coordination of " of transportation by providing equal competitive opportunities in cor with container transportation, we urge its enactment.

Enforcement agreements with States on highway transportation —sertu The purpose of this section is to help eliminate unlawful for-hire ca which is generally believed to be widespread because of nonuniformity in laws and practical limitations in enforcement. It would give the Inter Commerce Commission new authority to make cooperative agreements States to facilitate enforcement of both State and Federal laws.

The entire transportation industry is concerned about the inroads that been made by unlawful transport operators. Illegal for-hire carriage h ́s rea significant proportions according to reliable sources including the Inter Commerce Commission and the National Conference of State Trans;sor" Specialists. An authoritative industry source has estimated that u for-hire movements range between 5,000 and 30,000 trucks each day

There presently is a great deal of room for improvement in enforcement ties at both the Federal and State level, although efforts have been steigiam at both levels during the past several years. With passage of this leg authorizing cooperative agreements, Interstate Commerce Commission and officials should be able to get closer together on enforcement efforts dis against illegal for-hire truckers.

We urge enactment of this section because forceful and effective sterm be taken to eliminate nonlegal for-hire carriage. We do not believe that action would inhibit the operations of legitimate private carriage. Extension of civil forfeiture penalties of the Interstate Commerce Act—øvet This section would extend and increase the civil forfeiture provisions of act to any person who operates a motor vehicle in interstate or foreign coRIE without the operating authority required under the act.

The stated purpose of this proposal is to make the increased civil pens a significant deterrent to unlawful motor carrier operations and to as policing unscrupulous operators who have persisted in unlawful operations In addition to this, however, it would make the increased penalties ap to violations of safety regulations. These violations are sometimes t tional or of minor consequence. The amount of the penalty that would scribed for this type of violation is unnecessarily high and the availab: 1 civil forfeiture penalties for this type of violation could lead to harassmEmp We urge that this section deal only with unauthorized operations and violations of safety regulations continue to be dealt with as they now are

With this amendment, and without passing upon the reasonableness of the amount of forfeiture, we endorse the section.

Numm plification of Government transportation rates and procurement—section 9 The stated purpose of this proposal is to authorize simplification of rate structures for the procurement of Government transportation and by experiments develop systems that will make rate ascertainment and publication less costly and more convenient.

While simplification of the rate structure and experimentation are desirable obiectives and should be encouraged, it appears that the legislation as how drafted would permit the making of rates for Government transportation comIetely free of control. This could result in Government rates which would be lower than those available to commercial shippers.

Government agencies, as you know, are now permitted under section 22 of The Interstate Commerce Act, to negotiate rates with carriers free of any control of the regulatory body. Section 9 of HR. 4701 apparently would extend this freedom from control to the contemplated simplified rate structures.

The national chamber urges that charges for transportation service performed for government be subject to the same regulatory controls and rate policies as those which apply to the general public, except when authorized by the appropriate regulatory agency because of an emergency.

When the government is given preferential treatment in relation to transportation costs, the carriers must either subsidize the Government by absorbing part of the cost or, as is much more likely to happen, they must make up the ices by charging private industry more.

Private negotiations with carriers also encourage destructive competitive practices between and among the several modes of transportation In normal situations, destructive competitive practices can be prevented by the regulatory agencies

Such practices resulting from private negotiations, not subject to regulatory agency review, result in charges for services at levels below or perilously near the bottom level of cost of performing the service. This jeopardizes the financial stability of the carriers and violates the principles of of national transportation policy calling for the fostering of sound economic conditions in transportation and among the several carriers

Therefore, we urge that section 9 be amended to make sure that the rate simplification authorized will be subject to the same regulatory controls as those suplying to the general public. So amended, we would endorse this part of the proposal.

The section also includes language to give the Post Office Department greater flexibility in the use of motor common carriers for the transportation of mail. The Chamber has taken no position on this part of the proposal

Transfer of rail loan guarantee authority section 10

This proposal would transfer the railroad loan guarantee program from the Interstate commerce Commission to the Department of Commerce, as was done in the case of the air carrier loan guarantee program by the past Congresos (Public Law 87 820). However, in contrast with the precaution taken in the case of the latter, the present proposal does not require that the Department of Commerce seek the advice and consider the views of the regulatory coluluission, in this case the Interstate Commerce Commission, in passing upon loan guarantee applications. Since the Commission is expert in the field of railroad financing, we believe its advice should be sought and that a requirement to this effect should be added.

Otherwise, we believe the transfer should be effected since it should achieve better coordination with other related programs being administered by the Department of Commerce, improved administration, and more equitable treatment for the various carriers under the related programs.

Commodities clause repeal (H.R. 4850)

In addition to HR. 4700 and HR 4701, in his letter of transmittal, the President recommended among other things the repeal of the existing prolab,tion against rail carriers transporting commodities in which they have an interest, This is commonly referred to as the commodities clause.

This prohibition was originally intended to prevent discrimination and preferential treatment by railroads in the marketing of coal. However, it has served its purpose and now represents an unnecessary form of regulation that unfairly

20 516 63 pt 2 - 26

burdens one form of transportation. If any abuses such as it was intet de prevent should arise in the future, the unjust discrimination and undue pr ence provisions of the Interstate Commerce Act would be sufficient to 45 them.

We urge repeal of the clause.

STATEMENT OF JOHN D. CANNON, CHAIRMAN, RAILWAY PROGRESS INSTITUTE, A PRESIDENT, MORTON MANUFACTURING Co.

My name is John D. Cannon, I am president of the Morton Manufa Co, in Chicago. I am presenting this testimony as chairman of the Ra Progress Institute, the national association of the railway equipment and » industry. One hundred and twenty railway supply companies are members organization. They represent a cross section of our industry and inc 15, 20 large and small manufacturers. More than 1,100 officers of these cockerTM mo participate in the institute's work.

First, let me express our sincere appreciation for this opportunity to · our views on the two bills now under consideration, H.R. 4700 and HR Because we are suppliers, we frequently find ourselves buried under the term of "the railroads"-despite the fact that our industry is a separate significant multibillion-dollar segment of our national economy; part. important in terms of employment in our plants and in our purchases. quantities of such items as steel, aluminum, forest products, rubber, brass, cast iron, electrical equipment, paints and chemicals, insulation a ton products, machinery and petroleum products (to name just a fela thousands of items we purchase when we have railroad orders to work These purchases touch the economic life of almost every State in the I That is why we are grateful for this opportunity to present our views on the legislation now before you.

At the last session of the Congress and at these hearings you have heav! testimony in favor of these two bills. Perhaps the most convineir g of a arguments for this legislation was voiced by President Kennedy in his mess to the Congress on April 5, last year. As an organization, we have rej× a applauded the President's analysis and recommendations by meas of tions adopted unanimously by our 33-member governing board; by our 1. • company representatives at our last annual meeting; and again by our ese tive committee at a meeting in New York on May 7.

The President eloquently expressed our views when he said in his me to the Congress:

"The Congress and all citizens, as well as all Federal agencies, have at creasing interest in, and an increasing responsibility to be aware of the si comings of existing transportation policies ***. The diffcuity and the plexity of these basic troubles will not correct themselves with the mere ; of time. On the contrary, we cannot afford to delay further

F.. I

the realities of the situation, we must begin to make the painful decision a sary to providing the transportation system required by the United Stat today and tomorrow."

The many witnesses you have heard, and the President, has given a bit. valid reasons for the prompt approval of HR. 4700 and HR the reasons possibly except one. And that one heretofore unmentioned will be the the thesis of my presentation-because we believe sirvene v what we have to offer directly involves the public interest in this pres legislation.

The fortunes of our industry are wholly dependent upon the orders we from railroads for equipment, track, structures, yards, maintenance at ! facilities, signals, communications, and the thousands of other items tormentos safe and efficient rail operation.

For the 10 years, 1953 to 1962 inclusive, these orders (excluding fuel stem$2,075,048,000 a year, ranging from a high of $23, billion in 1957 to a about $11 billion in 1961. For the past 5 years, 1958 to 1962 inclusive ra purchases (again excluding fuel) have averaged only $1,757,880,000 a 29 percent less than the average for the preceding decade.

If we include the fuel purchases of the railroads, the average yearly spent by them in the 10 years from 1948 to 1957 was $3,025,944,000 Ir 5 years, 1958 to 1962, the eyarly average was only $2,130,418,000, or 30 per than it was in the preceding decade.

Breaking down these figures into the broad classifications of the things we make and sell to the railroads:

in the 1948 to 1957 decade, the railroads invested an average of $841,803,300 r year for cars and locomotives. In the past 5 years, this yearly average has ➡eri 36 percent less or only $540,247,000, dropping to a 15 year low of $427,154,000

Capital expenditures for roadway and structures averaged about $360 million 1 year in the 1948 57 decade. Since then they have averaged only $230,668,000 1 year, or 30 percent less

Similarly, material and supply orders averaged $1,274,112,800 a year in the 1948 57 decade. Since then (1958 62) they have averaged only $966,366,000 a benr, or 24 percent less,

Let me give you several other illustrations of what is happening to the vital rail segment of the Nation's transportation system:

In the past 5 years, from 1958 to 1962 (1962 estimated), the railroads retired 1500 freight cars. In the same period, they installed only 190,400 new freight

As a result, the Nation's freight car fleet has dropped from 1,745,721 units in 1977 to an estimated 1,550,000 units in 1962, a net loss of 195,700 cars, Locomotives tell the same story: a total of 4,100 units were retired in the 1958 62 period and only 2,500 units were added The locomotive fleet consequently dropped from 30:248 in 1957 to an estimated 28,635 at the end of 1962

The railroads' passenger car fleet has likewise dwindled from 39,142 cars in 1948% to approximately 23,160 cars at the end of 1962 – 41 percent fewer passenger

In 1961 and 1962, the railroads cut their average expenditures for the maintenance of equipment, roadway, and structures almost a half billion dollar **4:83,776.000) compared with 1957 and even more than that compared with the years of the preceding decade. This too affects our business because we prodice the machines, parts, and supplies used in maintenance work

The railroads" shopping list is reported to consist of about 100.000 items. Much the same situation prevails, I am sure, in every one of the fields involved By and large, the railroads, for more than 5 years now, have been compelled to limit their purchases They have been unable to buy many of the things that they need and want. We as suppliers, and the communities in which we have our plants or in which materials we need are produced, have suffered as a result,

I am sure that this would not be a matter of great moment; certainly not one to challenge the concern of the Congress if this significant drop in business involved only a handful of large manufacturing companies located in a few of our great industrial centers. But this is not the case

A couple of years ago in preparation for an appearance before a committee of the Congress, we made a quick inventory of the railway equipment and supply industry. The results amazed even those of us who have spent most of our lives in this field

The inventory disclosed that our industry operates 914 plants in 468 cities in 45 States, with concentrations of from 5 to 125 plants each in the 29 largest industrial centers in the Nation. Ours, therefore, is truly a national industry, with expeted concentrations of plants and employment in industrial centers Throughout the country

The important point I want to make here is the effect of these 5 years of des pressed railway supply business on our national economy; on employment in every industrial center in which our plants are located; on business conditions In thousands of other communities involved in the production or processing of the things we buy to carry on our manufacturing work, or the things we don't buy, because we have no railroad orders to work on.

To get some clue as to what has happened in these plants as a result of the 5 "famine" years we have had, we took a poll of RPI members on the number of en ployees in their plants when business was fairly good and now. This limited sarit le disclosed these distressing facts:

Where a few years ago we had 231,534 employees in 288 RPI plants in 36 States, we now have only 185,130, an overall reduction of 20 percent

In 42 of our plants in Illinois, this survey showed a drop from 24 011 employees to 18,106, or 25 percent.

In 25 plants in Pennsylvania, the decline was from 53.241 employees to 33 644, or 27 percent.

In 22 plants in New York and New Jersey, there was a drop of 20 percent in employment.