It is also our opinion that the elimination of the futures market will concentrate the marketing process in the hands of a few large, diversified corporate organizations who possess the financial ability to assume the hazards of exposure to unprotected price risks. Under these circumstances, most of the price risk will eventually fall back on the primary producer--the farmer.

The impression seems to exist that the grain industry is generally opposed to a reduction in rail grain rates. This appears to be the result of frequent and strong opposition by the grain industry to selective, often diserinanatory, and * piecemeal" rate reductions. We can only speak as one member of this industry, but it is our belief that the grain industry would welcome a general and substantial reduction in rail grain rates. This could be of great benefit to the producer, the processor, and the consumer, domestically and abroad. It is extremely important, however, that these rate reductions are accomplished with proper regard to their full impact on the grain pricing and risk bearing system.

The major loss of grain tonnage by the railroad industry has largely developed since World War II. The railroads themselves have, since this time, made repeated requests for increased rates by "across the-board ex parte increases.” I was has been the background and reason for the now frequently referred to *#*-brella" which the railroad industry today holds in certain areas over its “unregulated" competitors. The railroads, by the same process, could decrease grain rates and the umbrella would no longer exist. This can be accomprished without may new legislation The process of "rolling back" rates would keep in harmony the general aforementioned territorial relationships which we cot sider só esettial to the preservation of a strong futures markets system and related good marketing patterns, principles, and economics between the producer and the final consumer of our agricultural products.

We believe regulation of the railroad industry must be continned beenuse of the importance of uniform rates from competing rail lines serving the same general area of production. Industry as well as producers within a territory must be nevorded similar rate treatment. Deregulation could lend to severe discrimination under these circumstances. Entire industries can be shifted geograph

ially by relative freight rate advantages,

The railroad industry has recently demonstrated considerable interest in multiple car rates, point-to point rates, and special rates in special equipment. This desire to reduce transportation costs is commendable and should be encouraged; it is in the best interests of our grain and national econery and is Irmissible under existing law However, the obvious danger of placing large shippers or receivers in a position to receive preferential treatment also den.ands in itself, the need for continued rate regulation

Simultaneous with the railroad industry's reunest to selectively reduce grain transportation rates, it has requested increases in accessorial charges for various miscellaneous services. One such proposed increase is in the use of 'transit" There appears to be some lack of understanding by many of the importance of "transit” to the grain and related industries

Earlier in this presentation we referred to the importance of the futures markets. These markets are very dependent on transit arrangements a vehicle that permits the buyer to acquire grain for storage at pollits intermediate bes tween the producer and ultimate consumer with the knowledge it pay eventyalls be moved beyond to a number of different destinations without penalty in relation to uninterrupted through movements. This provides a market with a broad spectrum of demand

Central Soya again provides a good example of the utility of transit arrange ments The cost of processing soybeans is related to volume and capacity at a particular plant. This is because of high fixed costs which exist in xu h operations. If our source of soybeans were confined to the immediate area surrounding a processing plant, volume would be substantially reduced and processing costs significantly greater. By the use of transit we are permitted to buy beatin from more distant origins without material penalty in relation to the uninter rupted through rate from the origin point to the ultimate destination of our meat Our originating area under transit arrangements is expanded to a radus of at least 150 miles and on accasion to points even further removed 1s a.ds greatly in procuring an adequate supply of soybeans for our high-capacity, lowcost processing plants to the benefit of the agricultural economy

Transit also permits grain to move into the terminal markets for storage by producers. When this stored product is eventually offered for sale it has the advantage of increased demand because many buyers are located in markets

beyond the immediate market. Transit permits the most economic movez of the products produced from the grain to the final point of consumption. Transit is an important advantage in determining the movement of graz rail in preference to other modes of transportation. The rail industry has 2 transit a service of considerable importance which has held and secured tot:_: to the rails. In our opinion, the elimination of transit would increase marke 4 costs by bringing about the development of new grain storage facilities at eve the producer end or the consumer end of the movement while reducing the m of large amounts of existing intermediate terminal storage capacity. In ef a movement on a point-to-point basis commits the product to one buyer result is to the disadvantage of the producer and will lead to the ever elimination of the "transit operator" who is vital to the futures markets stāt – Deregulation would lead to considerably less attention being given the portance and continuing need for transit. Undoubtedly some changes shor made in existing rules of transit. For example, the number of transit permitted can no doubt be reduced and circuity of movement can be restri These changes could be brought about without undue injury to the f markets and with economies for the railroads. This will still permit the continue to offer an attractive adjunct to transportation which is not genera afforded in the use of other modes.

We have limited this brief discussion to only two facets of the problem te cause, to our knowledge, we feel that these major considerations have not covered in other testimony. We should be pleased to furnish any add., Pa material which the committee needs to render an intelligent decision.

STATEMENT OF RICHARD D. CHUMNEY, COMMISSIONER, DEPARTMENT OF AE CULTURE AND IMMIGRATION, COMMONWEALTH OF VIRGINIA, RICHMOND, VA Mr. Chairman, and members of the committee, my name is Richard D. (... ney, commissioner of agriculture for the Commonwealth of Virginia. I w. like to thank the committee for the opportunity to make this statement in port of the provisions contained in H.R. 4700.

The interest of Virginia agriculture is concerned with the production, mats ing, transportation, and distribution of agricultural commodities and far:. duction supplies. Enactment of the principles contained in H.R. 4700 wil. -— much toward strengthening our total industry of agriculture.

The department is supported in this position with resolutions and req from a number of farm organizations in Virginia, as shown in the att statements. These organizations include the Virginia State Poultry Federa the Virginia Farm Bureau Federation, the Virginia State Dairymen's Ass ation, and the Virginia State Feed Association.

We have on our staff a full-time transportation service composed of pers: with many years of experience in the agricultural transportation field. T experience includes employment in industry, Government, and various fields commercial endeavor in transportation.

In our transportation work, we are naturally interested in the welfare of a modes of transportation. We also know that to have an efficient industry agriculture, it is essential that we have healthy transportion facilities services.

We do not favor one form of transportaiton over another. We do think, I. ever, that the different carriers should be on a competitive basis and that n form of transportation should be given special treatment. We also believe it is to the economic advantage of our industry of agriculture in Virgin a the forces of competition should play a greater role in the setting of muti... rates.

Mr. Chairman, we urge the passage of II.R. 4700 for the following reasons (1) Virginia is a deficit grain-producing State, our poultry and livestock dustries need relief by reduction of rates on all grain transported into Virg: a It is essential that these industries secure competitive rates to remain on a e petitive basis with other production areas of the Nation.

(2) We favor the provisions to extend exemptions to the railroads that s now enjoyed by other modes of transportation. We believe that this is Foxym sary so that the railroads may have the opportunity to take advantage efficiencies and technologies that have been developed by this industry.

Our farm groups are generally opposed to repealing any provisions of the gucnature commodities exemptions in the Interstate Commerce Act.

The greatest expansion and development of Virginia's industry of agriculture ithin the foreseeable future will be in the area of poultry and livestock protion The progress we will be able to make is going to depend in part on ringing into our State commodities, such as grain and supplies at minimum ransportation rates. This will help keep our cost of production on a more comsetitive basis with other areas.

It is in the best interest of the economy of Virginia's industry of agriculture hat we urge the passage of H.R. 4700.

STATEMENT OF M. F. Crass, JR, SECRETARY-TREASURER, MANUFACTURING CHEMISTS' Association, Inc., Washington, D.C.

We have a major interest in the legislative proposals in HR. 4700 and, therefore subject to the limitations set forth in the following, the Manufacturing Chemists' Association, Inc., favors adoption of this bill, and it is respectfully retested that this letter be entered in the permanent record of these proceedings, The Manufacturing Chemists' Association, Inc, hereinafter referred to as the assemiation, is a nonprofit trade association of chemical manufacturers, organized in 1872 Its members represent over 90 percent of the productive caity of the chemical industry within the United States. They have more than 1000 plants located throughout the United States, with representation in aitnost every State They have a vital interest in all types of transportation in connew tion with the assembly of raw materials to be used in manufacturing proeesses and in the distribution of manufactured products. All forms of transportafon are used by them for the shipment of numerous chemicals in interstate and foreign commerce

In order to permit the railroads and other forms of transportation equal competitive opportunity, the association supports the principles and objectives of HR 4700 to exempt railroads and others from minimum rate regulation on bt, keen-modifies and agricultural and fishery products, etc., provided the orderly rate procedures under section 5(a) of the Interstate Commerce. A t are f's preserved and the carriers are protected against antitrust actions there

The antitrust protection afforded under section 5(a) of the act extends only to actions taken under the procedures followed under approved agreements It does not relieve against carrier actions which are collusive or in restraint of competition, such as conspitary to destroy competitors

subject to the foregoing amendment, the association supports HR 4700 in its et.firety

We greatly appreciate this opportunity to express our views.

STATEMENT OF CAUGHEY B. CULPEPPER BEFORE THE SENATE COMMERCE
COMMITTEE ON 8. 1061, MAY 7, 1963

My name is Caughey B. Culpepper. I am secretary and general manager of the Atlanta Freight Bureau, which position I have held since 1951. My connextion with the bureau dates from July 1, 1937; and, during that time, I have had ample opportunity to become familiar with the workings of the various transportation agenices throughout the country, both from the standpoint of

rates and service.

The chairman and certain members of this committee should know that the Atlanta Freight Bureau has participated in all the major general rate adjustmetits, beginning even prior to ICC docket 13194 and including such cases as those covered by dockets 2×300 and 28310. In fact, the bureau worked closely with the Southern Governors rate conference in these latter cases and prepared Learly all of the exhibits presented by the conference in the proceedings on these two cases; and I personally supervised the preparation of many of these

ext.ibits,

During the last 10 years the Atlanta Freight Bureau has greatly expanded its membership and now carries on its roster many nationally known manufacturing and distributing compantes who utilize the full scope of our services, including the handling of rate adjustments and research and survey ac ivities,

We have maintained a highly professional attitude toward our work e enjoy the confidence of everyone with whom we deal, including the t and commissions of the U.S. Government, as well as the various State regunte bodies.

With this background, I feel that I can with some authority testify as to content, the intent and the effect of the bills under consideration, exper_" Senate bill S. 1061.

While we are interested in S. 1061 in its entirety, we are especially → cerned with reference to the provisions which would relieve the Inter Commerce Commission of its power to fix minimum rates. Although we i stanch supporters of the Interstate Commerce Commission and consider it th outstanding governmental bureau, both as to integrity and high purisse 1as to the qualifications of its individual members, we are firm believes 21 policy that would tend to relieve all common carriers of as much reg as is consistent with the public interest.

We have come to the definite conclusion that any transportation ar should be permitted to publish and establish as low a level of rates of commodity as will provide that carrier with a return adequate to cover cost of operation plus a reasonable profit. If this procedure results in loss of business by some other carrier or some other type of carriers, should not be considered a reason for prohibiting the establishment of sai rates; and the only item which the Commission should consider in connect, a with a minimum basis is whether or not such low rates are compensaturs

Compensatory rates are not, and have never been, cutthroat in nature sa. because they are competitive.

We fail to see where the imposition upon the Commission of the duty «<> veloping and preserving a strong and adequate national transportation stim either directs or implies that the Commission should undertake to protect aä" carrier or any type of carriers, when the clear and patent laws of nature violated by holding over such carrier or type of carriers an umbrella toy the detriment of competitive enterprise and the arbitrary denial to any ra or motor carrier the privilege of seeking business by the establishment of a man rates that are compensatory.

.

We realize that the Interstate Commerce Commission, as a body, holds to i premise contrary to these views. However, the Commission has appanen become imbued with the philosophy that its prime duty is to protect the cam under its regulation both from one another and from the shipping public. 2 fact members of the Commission have publicly stated that, while previons? á was faced with protecting the public from the carriers, it now is forced to pre tect the carriers from the public.

This is a fallacious premise; and it is our contention that the prime duty of th Commission is to see that both the carriers and the public are treated fa.r and that when a carrier, either rail, truck, or water, can establish a con ;» tory low rate upon a commodity, the shipping public is entitled to the beze of such low rate, in order that industry might be profitable and develop.

It is realized that the provisions of S. 1061 apply specifically to so-called !J commodities and so-called exempt commodities; and, for this reason, not mườ members of the Atlanta Freight Bureau would be directly affected by lowe rates and charges which any common carrier might publish or put into efas a result of the passage of this bill. However, the legislation contains i principle to which we subscribe and for which our members emphatically stast As stated above, we are aware that the Interstate Commerce Commissie hge expressed opposition to the bill under discussion. However, we fail to find a the expressed opposition of the Interstate Commerce Commission any regane I that goes beyond the support of its very apparent belief that it has what amongs to an almost single duty to protect the various segments of the transportar a industry from one another and to protect the individual carriers within various categories from each other; and to protect all of the regulated carre from what is implied to be a predatory shipping public.

This position has two flaws. The first is that, while the Commission is ebgemel with the duty of using its authority to assist in building up and n. unta. a strong national transportation system, it is not given the right nor the per to accomplish such end by the illogical protection of any weak, mistr = * or outmoded transportation agency or group of transportation agencies are quite sure that Congress never intended to give to the Interstate Com*g** Commission the right nor the power to decide what transportation agency & be favored and what transportation agency should be penalized. In fact,

aw specifically instructed the Interstate Commerce Commission to give attenion to the inherent advantages enjoyed by each form of transportation.

Second, the Interstate Commerce Commission is in error to even consider that he transportation agencies under its regulation should be protected against the shipping public, except to the extent that it is duty bound to protect either the arriers or the shippers against illegal and unlawful action by either party. To rand efforts by shippers and groups of shippers to secure lower rates which are compensatory as being illegal and predatory takes the Commission about as tar from its proper aims and purposes as can be imagined. In fact, this attitude in the part of the Commission is about as illogical as any premise it could adopt

☛ assume.

of devided and natural interest to members of the Atlanta Freight Bureau and shippers generally is the fact that following the enactment of the Transportation Act of 1958, wherein section 15a was amended to carry the two foljowing subsections:

mc2) In the exercise of its power to prescribe just and reasonable rates the Commission shall give due consideration, among other factors, to the effect of Tates on the movement of traffic by the carrier or carriers for which the rates are prescribed, to the need, in the public interest, of adequate and efficient railway transportation service at the lowest cost consistent with the furnishing of such service; and to the need of revenues sufficient to enable the carriers, under honest, economical, and efficient management to provide stich service,

263) in a proceeding involving competition between carriers of different modes of transportation subject to this Act, the Commission, in determining whether a rate is lower than a reasonable minimum rate, shall consider the facts and Circumstances attending the movement of the traffle by the carrier or carriers to winch the rate is applicable. Rates of a carrier shall not be held up to a particmar ieved to protect the traffe of any other mode of transportation, giving dse consideration to the objectives of the national transportation policy declared in, this Act * [Talie supplied }

lue raltroads have clearly indicated, through the publication of lower rates on various commodities, a tendency to provide for the shipping pubile more ev opomical costs in transportation. We think this is germane to the subject. We believe that lower rates and charges by any m de of transportation when jodo; shed on a sound compensatory basis will do mu h to retain for, and return to the common carrier industries immense amounts of traffic that have been, and are beilut ca erted to private carriage

To as thus is a more logical dinner in which to serve the public interest and a u rad ag a souté national transportation system However, the position of the Pacers ate Comerce Commission on this legislation seems to draw an mitogether different line of ha'tle Apparently, the immediate economie welfare of the supper is considered of no moment and the effect of the level of the rates on the shipper's business is not even discussed.

The opponents of this bill take the position that if it is passed the Commission will not be able to comply with the directive contained in the preamt le to the Interstate Commerce Act entitled "National Transportation Policy" We con.d ***biy agree with that line of reasoning if we interpreted the intent of Congress in the same manner that it is interpreted by the Interstate Coinn.erce Commission and its supporters However, in seeking definitions for "unjust” as it describes discriminations, "undne" as it describes preferences, ard “unfair" as it modifies con petitive practices, we find that "unjust" means "contrary to justice and right; wrongful"; we find that "urdue" means inaj; ropri ate, unsuitable; not right; not lawful or legal"; and we find that “unfair" means hot frank and candid; using or involving trick or artifice: dishonest, unjust We fail to see where one mode of transportation can by improved operation, good management, and economical handling move a certain commodity at a re duced rate and make money on the operation will provide discrimination that is contrary to justice and right, unlawful or illegal preferences or dishonest and unjust competitive practices,

Finally, we think it extremely important that the Congress has already given full sideration to the very apparent need of the railroads for assistance in reclaiming their vital position in the national transportation system through the passage of the Interstate Commerce Act of 1958 and point out that the law of the land already states in language adopted by our Congress that Rates of a carrier shall not be held up to a particular level to protect the traffic of any other mode of transportation, giving due consideration to the objectives of the national transportation policy declared in this Act."