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COMPETITION

During the last generation many changes have taken place, among them being the freedom of highway transportation; resulting in a situation which should properly be controlled. The maintenance of lower rates by one medium than by the other is not a healthy situation, and in the best interests of all concerned rates between competitive points via rail or highway should be on a basis of equality.

FINANCES CONSOLIDATION AND TAXES

I have no views as they are more properly matters in which the interested directly involved should have recognition.

In submitting my views as above I feel that these viewpoints, gained by knowledge through experience, may be of value and are submitted without any desire of being personally insistive.

Yours very truly,

C. T. STRIPP, Traffic Manager.

WHARTON SCHOOL OF FINANCE AND COMMERCE,

UNIVERSITY OF PENNSYLVANIA, Philadelphia, April 4, 1939. Hon. CLARENCE F. LEA, Chairman, Committee on Interstate and Foreign Commerce,

United States House of Representatives, Washington, D. C. MY DEAR MR. LEA: The argument concerning the principles and policy of regulation of interstate carriers by water contained in a book upon "Government Regulation of Transportation" that I published about a year ago having come to the attention of some officials of intercoastal carriers, the suggestion was made that I set forth in a brief statement what I think should be the scope of Federal regulation of carriers by water and especially of intercoastal and coastwise carriers, and by what governmental agency such authority should be exercised. The accompanying statement stresses the importance of vesting regulatory funetions in a semijudicial administrative body having jurisdiction over the several kinds of interstate transportation and carriers. The desirable scope of the regulation of intercoastal and coastwise carriers is succinctly stated.

Transportation conditions as a whole make manifest the need of rounding out and integrating Government regulation with a view to developing a well-balanced and coordinated national transportation system. It is to be hoped that Congress will be successful in the most commendable effort now being made to accomplish that result.

The companies that have endorsed the accompanying statement, and that have requested that it be sent to you, include two intercoastal lines, the AmericanHawaiian Steamship Co., which is also a Pacific coastwise carrier, and the Luckenbach Steamship Co. which operates intercoastally from the North Atlantic and the Gulf ports. These two companies handle a large share of the intercoastal traffic. Two large coastwise steamship lines have given their approval of the statement submitted. They are the Eastern Steamship Lines, and the Merchants and Miners Transportation Co. Each of these companies serves several ports and is a large unit in the coastwise trade.

Sincerely yours,

EMORY R. JOHNSON.

STATEMENT BY EMORY R. JOHNSON CONCERNING FEDERAL REGULATION OF CARRIERS

BY WATER

Bills are pending in Congress for amending and broadening the scope of present legislation regulating transportation and carriers. This statement is submitted to emphasize the importance of one phase of the proposed legislation, the regulation of interstate carriers by water, by applying to such carriers the principles and policy of regulation that are being applied to interstate railroad and highway carriers with results that are beneficial to the public and to those that are regulated. Without minimizing the necessity of action concerning other parts of the pending legislative program, this statement will consider only the regulation of interstate carriers by water, and will present briefly without much discussion the main provisions that should be included in such legislation.

In adopting any legislation for the regulation of the transportation business and of the carriers engaged therein, special consideration should be given not only to the scope of regulation but also to its administration. Many wellmeaning laws fail to accomplish their purpose as fully as they might, because appropriate provision is not made for their administration, for their effective impartial application to the problems to be solved. The long experience that the Federal Government has had in the regulation of railroads, and the experience now being gained in the regulation of other carriers shows clearly the importance of placing in charge of a strictly impartial, semijudicial authority or commission, concerned only with the task of regulation, the control of rates and services, of determining the number and kinds of carriers needed in the public interest, the competitive relations of carriers with each other, and of deciding upon the principles and practices that shall be observed in securing from the public the requisite corporate funds.

Congress has wisely made provision for the development of an American merchant marine of the character and size that will be commensurate with the needs of foreign trade and national defense. The United States Maritime Commission is performing with commendable zeal and efficiency the task that has been entrusted to it of constructing vessels, of assisting ocean carriers in securing newly built vessels, and in subsidizing steamship lines essential to the country's foreign commerce. The work of the Maritime Commission is primarily promotional in character. It is also the owner of several steamship lines. At least one of these lines operates in interstate commerce in direct competition with privately owned American steamship lines as well as with rail transportation. Its losses in this operation are being financed by loans from the Public Treasury. The Maritime Commission's large construction plan, as it is carried out during the coming years, will doubtless increase the number of Governmentowned vessels operated either by corporate agents of the Commission or by private companies to whom vessels have been leased under charter.

In carrying on its promotive work of building up the merchant marine the Maritime Commission will be extensively engaged, directly and indirectly, in vessel operation. Moreover, the activities of the Maritime Commission in connection with shipping in the foreign trade cannot be without effect upon private companies engaged in the coastwise and intercoastal trades. The domestic and foreign-trade shipping interests are interrelated. Some American companies engage in both trades. Vessels may be transferred from the foreign trade to the domestic trade, as was done in the case of an American line a few months ago. In other words, the Maritime Commission in rendering its valuable promotional service as the builder, owner, operator, and lessor of vessels is a competitor of private enterprise; and, in no small measure, of such enterprise in the coastwise and intercoastal shipping services. The public regulation of rates, services, and the competitive relations of carriers in coastwise and intercoastal commerce ought to be by an impartial, semi-judicial authority concerned only with regulation.

The establishment of equitable rates by coastwise and intercoastal carriers and by railroad carriers, and the maintenance of a just relationship between water and rail rates, would not be aided by the repeal of the present long-andshort-haul section of the Interstate Commerce Act, as some have recommended. The need is not to open the door wider to cutthroat competition but to make possible, by common regulation of both rail and water carriers, the maintenance of water and rail rates on levels that are reasonable and just per se and in their relation to each other. The limits placed upon competition by the present fourth section of the Interstate Commerce Act will be of advantage to both the railroads and their competitors by water when both are subject to like regulation by a single authority. The provisions of the section are not unduly rigid. The Commission has and will continue to have, if the section remains unamended, authority so to administer the section as to deal properly with situations requiring special action.

The transfer of the functions of regulating interstate carriers by water, as regards rates, services, permission to engage in business, their competitive interrelations, and such corporate practices as require public control, from the Maritime Commission to such an agency as the Interstate Commerce Commission, with whatever enlargement and functional reorganization that may be necessary or desirable, would be in no sense a reflection upon the Maritime Commission. It has been entrusted with a large constructive, promotional task, the successful performance of which will be a work of great magnitude. The regulation of carriers is not the real task that the Maritime Commission was created to perform; it is a function that ought to be transferred to a semi-judicial body

having regulatory jurisdiction not only over interstate carriers by water but also over the other carriers with which those by water must compete. Such a transfer will be of assistance in bringing about the desired coordination of transportation agencies and facilities. What is needed by the public, by those who serve, and by those who are served is a national transportation policy that will provide for impartial Government regulation of each class of carriers and of their relations with each other as component parts of a coordinated system. The general scope that should be given to the future regulation of interstate carriers by water is indicated by the preceding statement. Bills for the regulation of carriers by water that were under consideration by Congress in 1934, 1935, and 1936, but which were not acted upon, would in general have provided for the regulation here suggested. The main provisions of those bills should now be included in legislation amending and supplementing transportation regulation.

The importance of transferring the regulation of interstate carriers by water from the Maritime Commission to a semijudicial, impartial authority such as the Interstate Commerce Commission having like jurisdiction over the several kinds of carriers rendering complementary and competitive services has been duly emphasized in the statement here made. Moreover, as has been done in the case of motor carriers by the act of 1935, provision should be made for the regulation of contract carriers by water to the extent that such carriers are in substantial competition with common carriers.

Provision has been made by the acts of 1923 and 1938 for the regulation of the rates of common and contract intercoastal carriers and for the regulation of "every common carrier by water in interstate commerce, as defined by section 1 of the Shipping Act of 1916." The recommendation here made is that the regulation of rates be transferred to a semijudicial body such as the Interstate Commerce Commission and that provision be made for keeping the charges of contract carriers by water, coastwise and on the Great Lakes, in proper relation to the regulated charges of competing common carriers. A logical further step to be taken now or as soon as practicable is to apply to interstate common and contract carriers upon inland waterways other than the Great Lakes the policy of regulation that is adopted for other carriers by water in domestic commerce.

The effective regulation of all classes of carriers, those by water as well as others, must begin with requiring those rendering services for hire to secure the authorization of the regulatory agency permitting them to begin and carry on their activities. Unless common carriers are required to obtain certificates of public convenience and necessity and unless contract carriers are obliged to secure permits, it will be impossible for the regulatory body to keep irresponsible parties from entering the field, to keep the number of carriers and the investments in facilities from being greater than are needed for adequate public service, and so to control and adjust the competitive relations of carriers as to enable each class of carriers to render economically and efficiently the services it can best perform.

To maintain a proper adjustment of the several classes of carriers with each other it is necessary to give to one impartial government authority jurisdiction over the several carriers as regards the issue of certificates of public convenience and permits, and the establishment and maintenance for each class of carriers of rates that are reasonable per se and that have an equitable relation to the rates charged by other carriers. Interstate carriers by water will be benefited quite as much as will other kinds of carriers by the regulation of competing carriers by a common authority. The competitive relations of the several kinds of carriers can thus be kept within reasonable limits, and thus services can be duly coordinated and made beneficially complementary.

Any authority that regulates the rates and services of carriers must needs have jurisdiction over the capital obligations that carriers assume; and, in order to obtain the information requisite for intelligent and effective regulation, the authority must prescribe the form and scope of the accounts kept by carriers. These essential features of regulation are quite certain to be included in legislation.

While the present necessitous condition of the railroads naturally causes them to receive special consideration in proposed transportation legislation, it is to be hoped that other important and pressing transportation problems may also be solved, that the scope of the regulation of interstate carriers by water may be broadened, and especially that the regulation of such carriers may be vested in an authority having regulatory jurisdiction over the several component parts of the transportation system as a whole.

NATIONAL ASSOCIATION OF RAILROAD
AND UTILITIES COMMISSIONERS,
Chairman, Committee on Interstate and Foreign Commerce,

Hon. CLARENCE F. LEA,

House of Representatives, Washington, D. C.

DEAR SIB: Upon my appearance at the hearing before your committee on H. R. 2531 and H. R. 4862, I presented a statement covering intrastate railroad rate cases before the Interstate Commerce Commission during the past 8 years, which have arisen upon complaints of the rail carriers that the State commissions, by failing to permit advances in intrastate rates corresponding to advances allowed in interstate rates by the Interstate Commerce Commission, had violated setcion 13 (4) of the Interstate Commerce Act.

I showed that in the 8 years such intrastate rate complaints had been made involving only 19 States, although each of the two general freight-rate increases permitted by the Interstate Commerce Commission in that period has involved substantial increases effective throughout the United States, and involving rates in all States. I showed that in four of these cases the complaints of the carriers had been sustained-one of these cases involving a single commodity; that in two others the complaints were sustained in part only the State commission rates upon important commodities having been sustained; and I further showed that in nine cases the carriers' complaints, after investigation and hearing, were denied in toto, all of the State commission rates involved being sustained 100 percent.

Respecting the other 4 of said cases, which arose out of the so-called Fifteen Percent case (226 I. C. C. 41), decided last year, I stated that the same had not yet been decided. One of these was the Texas case. My statement was begun on April 5, 1939. I was in error in saying that the Texas case had not then been decided. It had, in fact, been decided by the Interstate Commerce Commission on March 29, 1939, but the mimeographed copy of the decision had not reached my office, and at the time of making my statement I was not aware of the decision.

In Texas, because of the rate situation existing there, and especially of the extremely high level of then existing intrastate rates in so-called "differential territory," the Texas Commission denied advances for intrastate rates, in whole or in part, as to a considerable number of important freight commodities throughout the State of Texas, and as to all commodities within "differential territory." The decision of the Interstate Commerce Commission just now handed down by Commissioner Mahaffie, after investigation and hearing, justifies the State commission rates almost 100 percent, while sustaining the carriers' complaint in two minor respects only.

I have covered this decision of the Interstate Commerce Commission in the Texas case in summary fashion in a bulletin just sent to the State commission. I think that this bulletin should be included in the printed record of the hearing before your committee, for the correction and completion of my statement mentioned above.

I attach a copy of that bulletin hereto and would respectfully request that this letter and the attached bulletin be printed in the record of the hearing on H. R. 2531, if that may be done.

Yours very truly,

JOHN E. BENTON,

General Solicitor.

Copy to each member of the Interstate and Foreign Commerce Committee.

NATIONAL ASSOCIATION OF RAILROAD AND UTILITIES COMMISSIONERS,

Washington, D. C., April 13, 1939.

The Texas commission has come out of a cooperative hearing in its thirteenth section case, which grew out of Ex Parte 123, with a decision from the Interstate Commerce Commission, which sustains almost 100 percent all of the departures which the Texas commission made from the percentage increases which had been allowed in that case. Following Ex Parte 123, the Texas commission allowed the same rate increases which the Interstate Commerce Commission had allowed, with certain exceptions to be mentioned, except within so-called differential territory. Within that territory, because of the already extremely high level of then existing rates, it denied all the increases. Outside differential territory, the Texas commission refused to permit the same advances as the Interstate Commerce Commission in the following instances: Upon logs, posts, poles, piling, pulpwood, and box and crate material the Texas commission allowed a 5-percent increase in place of 10 percent allowed interstate; it denied any advance on newsprint paper and tin cans in certain special rates between certain specified points; upon cotton, carloads, it denied increase in group rates between certain specified points; upon gasoline and kerosene it denied any increase for 160 miles and less, and on casinghead gasoline from several producing points to Colorado and Big Spring, Tex.; upon cement, cottonseed and its products, fruits (other than citrus), melons, and vegetables, horses and mules, edible livestock, sand and gravel, crushed stone and asphalt rock it denied increases. Texas carriers complained, and a thirteenth-section proceeding was instituted. The Texas commission thereupon reopened the State proceeding, and a cooperative joint hearing was arranged and held. The decision of the Interstate Commerce Commission is set forth in a report of Commissioner Mahatfie, adopted March 29, 1939, just now available in mimeographed form. The report shows a very thorough investigation of all the departures made by the Texas commission, and of the reasons for those departures, including a very careful comparison of intrastate and interstate rates. It is due Commissioner Mahaffie to say that there is no kissing by favor with him when questions of railroad revenue and of intrastate discrimination are concerned.

The conclusion of the Interstate Commerce Commission is that all the Texas departures were justified except only as to the rates on horses and mules for distances of over 420 miles between points in Texas, and as to fruit (other than citrus), melons, and certain vegetables. Increases were prescribed for such fruit, melons and vegetables outside differential territory, but the State commission rates upon beets, carrots, parsnips, rutabagas, and turnips with tops were sustained. Upon horses and mules increased rates were prescribed for distances within Texas points in excess of 420 miles; but for 420 miles and less the Texas commission rates on horses and mules were sustained. This certainly comes very close to being a 100-percent approval. Commissioner Caskie, in a brief separate report, expressed the opinion that on sand, gravel, crushed stone, and asphalt rock the intrastate rates discriminated against certain Louisiana shippers, but concurred otherwise. Commissioner Splawn, in a like separate report, expressed the opinion that the railroad petition should have been denied in toto, and all intrastate rates sustained. The report contains the following paragraph:

"The Railroad Commission of Texas has notified us that it will permit the increases herein approved to become effective without delay. Therefore, no order is necessary."

This decision illustrates the value of the existing practice under the cooperative plan and shows why so-called Shreveport litigation in the courts has now almost disappeared.

JOHN E. BENTON, General Solicitor.

[H. R. 4862, 76th Cong. 1st Sess.]

A BILL To amend the Interstate Commerce Act, as amended, by extending its application to additional types of carriers and transportation, modifying certain provisions thereof, and creating and establishing a Transportation Board to administer certain provisions thereof; to create a Reorganization Court, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE I-AMENDMENTS OF INTERSTATE COMMERCE ACT

SECTION 1. The Interstate Commerce Act, as amended, including both part I and part II thereof, is hereby codified and amended to read as follows:

"DECLARATION OF POLICY

"SECTION 1. It is hereby declared to be the national transportation policy of the Congress to provide for fair and impartial regulation of all modes of transportation, so administered as to recognize and preserve the inherent advantages of each; to promote safe, economical, and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for

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