I am confronted by the same situation as Mr. McGregor. I have no interstate highways in my district. I am interested in all the Federal roads and highways, and I do desire to see sufficient money provided to take care of that situation.

One of the things I believe all of us desire to have cleared up is, what will be the policy under this law of allocating back to the States money that has been expended on highways that come up to the interstate standard. That would help in providing for better primary and secondary systems.

I agree thoroughly with your interpretation but I am not certain as to whether this bill is specific enough. We should put a ceiling of $622 million on the Federal money to be matched for the primary and secondary highways.

Mr. HALVORSON. The language certainly leaves room for that interpretation. We would like to have it clarified.

Mr. SCUDDER. I believe we should have an interpretation, making it a definite obligation on the Congress, the only way we can pay indebtedness of the Interstate System is by freezing present taxes, or increasing the amount of revenue being derived from the gas tax.

Mr. HALVORSON. I think we have some reason to be afraid that that interpretation is correct, because we have heard some enunciations from certain people connected with the administration that they might even want to cut back the Federal-aid appropriation from the farm-to-market roads from where it is.

Mr. SCUDDER. I believe there should be a very definite obligation on the part of the Congress to fulfill the contract if this bill is adopted. Mr. FALLON. Are there any other questions?

Mr. SCHWENGEL. I would like to have you write me a letter answering this question: On page 2 you say:

We look upon the cost of the Interstate System as a profitable investment rather than as an operating expense. If financed by loans it is a capital outlay and not deficit spending.

Mr. HALVORSON. Yes; I will.

Mr. FALLON. Are there any other questions?

(No response.)

Mr. FALLON. Thank you very much.

Mr. HALVORSON. I appreciate very much the opportunity to present

the Grange's views.

Mr. FALLON. Mr. Lawrence.

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

Mr. LAWRENCE. Yes, sir, Mr. Chairman. Do you want us to begin for the 2 or 3 minutes we have remaining?

Mr. FALLON. Mr. Lawrence, do you have a prepared statement?
Mr. LAWRENCE. Yes, sir.

Mr. FALLON. Mr. Lawrence, would you mind if we incorporated the statement in the record and then you give us the highlights of your statement quickly?

Mr. LAWRENCE. It is going to be pretty difficult. I have about 3 minutes to summarize this in.

Mr. FALLON. Well, go ahead.

Mr. SCHERER. It is a short statement.

Mr. LAWRENCE. I mean, would we not have the opportunity to come back at some other time and continue?

Mr. FALLON. We cannot do it today and our schedule is filled up for next week.

Mr. LAWRENCE. We will hold ourselves in readiness at your disposition, Mr. Chairman.

Mr. FALLON. Why do you not proceed as far as you can, and maybe we can come back?

Mr. Lawrence, will you give us your full name, title, and occupation? Mr. LAWRENCE. My name is John V. Lawrence, and I am managing director of the American Trucking Associations, Inc. Our offices are located at 1424 16th Street NW., Washington 6, D. C.

The American Trucking Associations, Inc., is a federation that was established in 1933 as the national trade association of the trucking industry, representing all types of motor carriers of property, both for hire and private. We have affiliated associations in all 48 States and in the District of Columbia. In addition, we speak for 11 affiliated conferences, as follows: Automobile Transporters Conference; Regular Common Carrier Conference; Common Carriers, Irregular Route Conference; Contract Carrier Conference; Private Carrier Conference; Movers Conference of America; National Tank Truck Carriers, Inc.; Local Cartage National Conference; Munitions Carriers Conference; Oilfield Haulers Conference; Film Carriers Conference.

As our first witness, I will endeavor to outline our policy and position in general terms with respect to the matters which are directly before the committee.

Our second witness, Mr. Bresnahan, will concentrate upon two questions which were directly before the Senate committee and which have arisen indirectly during the hearings of the House committee. These questions have to do with (1) the trucking industry's tax payments in relation to its tax responsibilities and (2) motor vehicle size and weight regulation.

Like the governors' conference and the American Association of State Highway Officials, the policy and position of the trucking industry has undergone an evolution in recent years.

For many years, in common with numerous other groups and organizations, it was our position that the Federal fuel taxes and automotive excise taxes should be repealed.

This position was based upon the legislative history of these taxes as well as the legislative history of the Federal highway-aid program. Historically, there was no connection between the Federal highwayuser taxes and the Federal highway-aid program.

In recognition of the Federal Government's constitutional responsibilities with respect to provision for the common defense, provision for the general welfare and establishment of post offices and post roads, Congress began appropriating money for roads long before the highway-user taxes came into being.

Federal appropriations for roads actually date back as far as 1806, when Congress appropriated funds for the improvement of the National Pike, or Cumberland Road. The first highway-user taxes were enacted in 1918 as emergency war measures with the understanding they would be repealed. They were repealed in the 1920's, but reenacted in 1932 as emergency depression measures, again with the under

standing that they would be repealed when the emergency was over. They have not been repealed, of course, and instead the rates have been increased from time to time.

The legislative history of more recent years has given a strong indication of revised congressional thinking-a tendency to relate and establish a link between the highway-user taxes and the Federal highway appropriations.

Congressional sponsors of Federal highway-aid legislation in recent years have cited collection of the highway-user taxes as one of the justifications for the gradually increasing aid program, although the taxes always have substantially exceeded the appropriations.

An even more significant indication of congressional adoption of the linkage theory came in 1951. The Federal tax on gasoline has always applied to every gallon of gas, regardless of the purpose for which the fuel was used. In 1951, Congress levied the 2 cents per gallon on diesel fuel as well as gasoline. Significantly, however, the .diesel fuel tax was limited to diesel fuel used for highway purposes and was therefore not applicable to diesel fuel used for other purposes, such as that used for operating railroad locomotives.

This revision of congressional thinking, this rather clear-cut congressional decision to treat the fuel tax and the automotive excise taxes as highway user taxes and to relate them to Federal highway expenditures, has caused the trucking industry and many other groups to reappraise their long-standing position in favor of repeal.

In the face of clear-cut congressional actions to the contrary, it appeared that our long-standing and flat position in favor of repeal of the taxes had been rendered unrealistic.

Therefore, at its annual meeting in 1953 our board of directors expanded our organization's policy to embrace a recommendation that if the Federal taxes were to be continued as highway user charges the level of Federal highway appropriations should be increased to a level at least approximating the Federal fuel taxes, and that the bulk of the increase be earmarked for improvement of the National System of Interstate Highways.

It became necessary for us to take still a further look at our policy when, in the middle of last year. the President announced his ideas for a greatly expanded program of highway improvement.

The President's message to the governors' conference last July presaged a greater role of the Federal Government in the financing of highway construction in this country. This being so, we felt we needed an industry policy. Our governing body gave it to us and we outlined it in our appearance before the President's Advisory Committee (Clay Committee) as follows:

The current Federal-aid program of $875 million breaks down like this: (a) $315 million for the primary system, with States matching on a 50-50 basis.

(b) $210 million for secondary roads, with matching on a 50–50 basis. (c) $175 million for urban streets, with matching on a 50-50 basis.

(d) $175 million for the 40,000-mile National System of Interstate Highways, on a matching basis of 40 (State) and 60 (Federal).

We would recommend continuation of the current Federal-aid program with respect to the primary system, secondary roads, and urban streets, on the existing matching basis ((a), (b), and (c).)

We would recommend discontinuance of the current Federal-aid program (4) with respect to the National System of Interstate Highways, thus relieving the States of the necessity of matching current Federal appropriations for that

purpose, and enabling the States to use the money thus saved for other roads and streets.

We would recommend that the Federal Government assume full financial responsibility for building the National System of Interstate Highways under a Federal-States relationship that would be substantially similar to that which ́has prevailed in the past with respect to Federal aid, except that there would be no matching by the States.

Generally speaking, House bill 4260 coincides with our policy. It recognizes the overriding importance of the Interstate System and would concentrate increased Federal funds upon that system. It seems only logical for the National Government to concentrate its efforts on this National Highway System, particularly in the light of current world conditions.

By the same token, it is logical that the States have concentrated and will continue to concentrate upon roads and streets of local rather than national importance. This understandable tendency in the past accounts largely for the finding in the report to the 81st Congress in which the National System was laid out, that:

Of the entire street and highway network, the Interstate Highway System, its most important segment, is by and large the most seriously obsolescent part. It might be said that to date even the National Government has given the Interstate Highway System much less than top priority. In the current Federal-aid program of $875 million, only $175 million is applied to that system.

I will say there, that was a marked improvement over the $25 million that had previously been allocated.

When this is matched by the States on the current 60-40 basis, the total annual amount going into the system is less than $292 million. At that rate, it would take more than 90 years to complete the system up to requirements of 20 years hence.

Witnesses, well qualified to speak on the subject, have for years testified before the Senate and House committees as to the importance of the Interstate System to our national defense and, more recently, to our civil defense. If the Interstate System is as important to the military and civilian defense of the Nation as indicated, the 10-year program provided for in House bill 4260 seems vital. Current newspaper headlines would indicate that if we had the system today it would be none too soon.

Keeping in mind the highly competitive character of the transportation business, we urge the committee to give careful and earnest consideration to the status of the Federal fuel and automotive excise taxes.

All of the Federal taxes applicable to railroads are also applicable to the owners of motor vehicles. In addition, for many years, the owners of motor vehicles have been paying special taxes on their equipment and fuel, while no such taxes have been levied on the equipment and fuel of the railroads.

This has placed highway transportation at a competitive disadvantage that is artificial and inequitable, and it has been offset only in part by Federal expenditures for highways.

Just in the 13-year period from 1942 through 1953, the special Federal motor-vehicle taxes exceeded Federal highway appropriations by approximately $10 billion.

Even if the $10 billion overpayment by motor-vehicle owners in the past is overlooked the Federal Government could come pretty close to

financing the Interstate System on a current basis over the next 10 years just from its special highway user tax revenues.

At the rate of $2,177,272,000 collected in 1953, the revenue from these taxes in the next 10 years would aggregate almost $22 billion. With anticipated year-to-year increase in the yield from such taxes the total could be expected to equal or exceed the $25 billion that is required.

Thus, even if it is assumed that the cost of constructing a highway system vital to the lives, property, and welfare of the entire Nation is the special and sole responsibility of the owners of motor vehicles, the owners of those vehicles have paid and currently are paying more than enough to meet such an obligation.

For this reason we have felt that, if possible, the Federal Government should finance the interstate system without placing any additional special tax burdens upon the owners of motor vehicles, particularly since the States are finding it necessary to steadily increase their highway taxes to meet State highway needs.

In making this suggestion, we are not necessarily contending that there should be a direct legislative linkage of the taxes and the expenditures. But we are asking that Congress give due consideration to the fact that the taxes have been and are being paid; that Congress already has clearly indicated an unofficial linkage of the taxes and expenditures, and that unless the Federal expenditures are increased to an amount approximating the taxes it is unjust to continue the taxes since comparable taxes are not levied against the railroad competitors of highway transportation.

Despite these considerations of equity, we are practical enough to know that under existing conditions it might be very difficult for Congress to raise the necessary money out of current revenues to finance the Interstate System on a pay-as-you-go basis, unless present expenditures for foreign aid or other purposes were curtailed.

For this reason, the idea of paying for the interstate system on the installment plan, as outlined in House bill 4260, has appealed to us. According to the press, the Senate committee has rejected proposals to carry out the Clay Committee's plan for bond financing and, instead, has recommended a 1-cent increase in the Federal fuel tax.

We favor the bond-financing plan because it would obviate the need for further increase in Federal automotive taxes which we believe are already adequate to more than cover the responsiblity of motorvehicle owners with respect to proposed expansion of Federal highway expenditures. However, we do not want that interpreted as opposition to a 1-cent increase in the fuel tax if Congress decides the bond financing plan cannot be adopted.

If Congress determines that such an increase in the fuel tax is the only feasible way of getting the Interstate System of Highways, our organization will bow to such congressional determination.

However, we must object vigorously to any proposal to single out the trucking industry to carry the full burden of any tax increases, such as was proposed in Senate bill 1573. Our position on this question will be developed more fully by our second witness.

Although we endorse House bill 4260 in general, we are deeply disturbed by a portion of section 207 dealing with credits for foll roads. We feel that this section, as now written, would encourage