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pletely. We have taken the position that the Government should pay the same rates as everybody else, except where there is an emergency or a war. I think it might be said that we feel that way because it might impede the national defense to have the Government bound by that type of public tariff, sir.

Mr. Hinshaw. I have not understood, Mr. Arpaia, why it is that the Government does that very thing which the Interstate Commerce Commission itself is attempting to prevent, and that is the use of the so-called—what some people call-the fly-by-night transportation agencies, and to take whatever rate they are willing to haul it at. Mr. ARPAIA. Yes; they continue to do that and have

Mr. Hinshaw. Yes; especially at the Army posts when they want to transfer a sergeant from, say, the east to the west coast, or from the North to the South.

Mr. ARPAIA. Incidentally, the Commission is unanimous in its opinion for abolishing section 22 quotations for Government on household goods. All of the Commission feels that way.

Mr. Hinshaw. I am glad to hear that. I trust that in these papers someplace

Mr. ARPAIA. Yes, sir. Mr. Hinshaw (continuing). That we may refer to it and refresh our understanding of the situation in due course. Mr. HARRIS. Will the gentleman yield? Mr. HINSHAW. Yes. Mr. HARRIS. Why do you take the position that you would not favor continuation of the procedure of the past in connection with handling household goods, and say that you would want to continue the authority with reference to other phases of the transportation of goods? Mr. ARPAIA. In the case of household goods, the situation is probably so bad that some quotations have been as low as 25 to 50 percent of the published rates, and there is tremendous competition that has brought those rates down very low, and, of course, the average person who moves household goods will have to make it up. And you see household goods move for the inexperienced shipper, the average householder, who has not had too much experience with moving traffic

. It is very difficult and a very trying thing, and those rates are high, and are going up because of the tremendous burden due to many movements of household goods for Government personnel at extremely low rates, as Congressman Hinshaw has pointed out.

Mr. HARRIS. Is not that, however, just picking out a single commodity or a single type of movement and saying that because of that, and because of disagreement with that precise movement, we are going to take a different attitude? Does not that indicate that the policy or the principle involved may not be altogether sound and that we should try to approach it from the standpoint of policy or principle instead of approaching it from the standpoint of an individual commodity as the conditions might present themselves, when it develops! Mr. ARPAIA. The situation is the same with reference to everything else

, except that you have practically no household goods moving in time of war. It is not any different than it is in time of peace-whereas , in time of war, there are unusual types of movements that have to be made. Under those circumstances, we feel that perhaps the Government should have the protection of special rates.

78456-56-pt. 1

20

Now, in the case of household goods, of course, during wartime, they do not move too many household goods. There is not enough transportation plant to take care of that. So, of the two reasons there, first, the type of shipper that is involved, and because today it is a very expensive thing for an ordinary householder to have his goods moved any distance. It is causing a tremendous burden, and that burden is being created by very, very low quotations which are being accepted by the Department of Defense particularly, but also by the Government generally.

Mr. Harris. I could appreciate that, and I appreciate the individual situation that develops.

I was hoping, however, that whatever consideration we should give to the problem here, we would deal with it on a matter of principle or policy and not have to deal with it on a specific commodity.

Mr. ARPAIA. In effect, we are saying that we believe that the Government should not have special rates, except in time of an emergency or war, and that those rates when made then, even during time of emergency or war should be binding, in the absence of fraud and clear error, because you have this tremendous problem where, years later, they try to “renegotiate” the rate, and you have a lot of litigation resulting from that. They again try to obtain even lower rates for the past movements.

Mr. Harris. That is the policy which the Commission has unanimously approved here with the exception of the separate views of Commissioner Mitchell ?

Mr. ARPAIA. Judge Mitchell would abolish section 22 completely without having that reservation in time of emergency or war.

Mr. Harris. Now, the views of the majority of this Commission in this respect coincide with the views expressed by the Department of Commerce here to us in the last couple of days in that respect.

Mr. ARAPAIA. No.

Mr. HARRIS. I understood that that was pretty much what they said.

Mr. ARPAIA. No, the Department of Commerce report as expressed by Mr. Smith here yesterday still wants special rates. Only the special rates would be sort of hemmed in by certain restrictions.

Mr. HARRIS. In other words, they want this more restricted than does the Commission, then?

Mr. ARPAIA. No. They want to be free to make special rates for the Government traffic.

Mr. HARRIs. Yes, I understood that, and the Commission says, “We do not want to have that freedom except under certain conditions."

Mr. ARPAIA. Certain times, of war and emergency.
Mr. HARRIS. Yes.

Mr. Hinshaw. Mr. Smith said yesterday in his statement that the Government rates they paid even under negotiation were 14 percent higher than the commodity rates on the basis of, I believe, statistics furnished by the Commission.

Mr. ARPAIA. I am afraid that those statistics are a little bit misleading.

The fact is—I think Mr. Jelsma should explain that to you. Mr. JELSMA. Those rates which he spoke of deal only with the 1 percent waybill, assignments. It is a statistical analysis taken from waybills.

Now, they are comparable rates of commodities, or statistics, and as you pointed out yesterday, Congressman, about the “cockeyed movement," those rates take into consideration that type of movement. That is why, because they are for different movements than normal flow of traffic. That is why in comparing mile block with mile block, 10/mile block with 200 mile block, there are instances where a commality rates under section 22 is higher than other commodity rates not under section 22; but that in no way changes the fact that section 22 rates are below the established rate.

Mr. Hinshaw. That has been my impression.
Mr. JELSYA. That is correct.

Vr. Hinshaw. And I, of course, was a little bit surprised to find this article in the statistics magazine for December 24, 1955, which points out the section 22 rates averaged 13 percent above other rates in 1951 and that the Interstate Commerce Commission is responsible for the article.

Mr. JELSMA. We are responsible for the article. There is some misunderstanding about the word "comparable.” Comparable does Dot mean "identical.”

Mr. Hinshaw. That is my understanding of it, too.

Thank you. And I think that if there is to be refutation of that portion of Mr. Smith's statement by your unit, that a careful brief statement or study of that matter should be made as quickly as possible for the committee, as, of course, Mr. Smith's statement, based on another set of statistics, will hold unless this refutation is presented.

Jír. ARPAIA. Well, we could have Mr. Jelsma prepare a statement which would explain that figure that was used here.

Jr. Hixshaw. Very good.
Mr. ARPAIA. And file it with the committee.
Mr. HINSHAW. Yes.
Jír. Harris. Yes, we will be glad to have you do that.
(The information referred to, later submitted, is as follows:)

INTERSTATE COMMERCE COMMISSION,
BUREAU OF TRANSPORT ECONOMICS AND STATISTICS,

Washington, May 1, 1956. Subject: Request of ('ongressman Hinshaw in regard to section 22 rates pub

lished by Bureau of Transport Economics and Statistics Hou. OREN Harris, House of Representatives,

Washington, D. C. MY DEAR CONGRESSMAN: In response to subject inquiry regarding testimony of Earl B. Smith, Director of Transportation and Communications, Office of the Auxistant Secretary of Defense, you are advised that a large volume of Government traffic consists of commodities moving between points for which no comLidity rates exist. As a consequence, in the absence of any other arrangement, is, would be necessary to pay high classification ratings for this traffic. Section 3 bowerer, provides a means for the Government to negotiate reduced rates abich are in this sense similar to the negotiated commodity rates granted commercial shippers for volume movements.

Analyses by the Bureau of Transport Economics and Statistics based upon the Commission's 1-percent rail carload waybill sample have compared the section quotations with commodity rates for similar but not identical commercial rattie Section 22 traffic for specific commodity classes, territorial movement,

duud length of haul were compared to commodity rated traffic covering the same 13 modity classes, territorial movement, and length of haul. It must be em

plus sized that similar moves only could be compared since in no case are there

movements on both commodity rates and section 22 quotations on the same com modity between identical points. These comparisons of similar movement showed that the section 22 quotations averaged 13 to 14 percent above com modity rates for the years 1950 and 1952 through 1954.

The fact that the section 22 level was somewhat higher than average compar able commodity rates is not unexpected in view of the different types of traffi involved. A substantial portion of the section 22 reductions applies where ther is infrequent movement or movements in the opposite direction of established volume traffic. Section 22 quotations, however, are always reductions below established rates and provide for lower freight charges to the Government than would otherwise be the case.

Specific cases of actual reductions are shown in the exhibits following page 96 of the hearings before a subcommittee of the Committee on Interstate and Foreign Commerce, United States Senate, 83d Congress, 2d session, on S. 904 and S. 906, April 26 and 29, 1954, amendments to section 22 of the Interstate Commerce Act, which cover certain military shipments for a period in 1951 and 1952 (exhibit attached). Similar reductions from otherwise applicable rates exist on traffic moving under section 22 quotations today.

This exhibit is based on a 30-percent representative sample of all Government bills of lading covering Departments of the Army and Air Force carload traffic and all Government bills of lading for the Department of the Navy, including the Marine Corps. They cover transcontinental territory for the period June 1, 1951, through May 31, 1952. The exhibit includes carload traffic between all points for which there was a movement of the commodity shown of 1 million pounds and over. They represent 83 percent of the section 22 transcontinental traffic. All of this traffic would be subject to class rates in the absence of rates made available under the provisions of section 22 of the Interstate Commerce Act and the applicable rate in the absence of section 22 quotation is shown in column 13. The quotation rate is shown in column 8. Sincerely,

E. R. JELSMA, Director,

, Statement showing transcontinental territory dec. 82 traffic for the military { shipments of 1 million pounds or more moved during the period

(Rates in cents per 100 pounds including all increases)

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[graphic]

See footnote at end of table.

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