If the Government, and in particular the General Services Administration, is receiving preferential treatment under the law as it now exists, which I do not admit, I say that it is wrong. I do not think that any government has the right to say to the other shippers of America or to the American taxpayers or people who do shipping that our traffic, the Government's traffic, should be moved at a smaller or lesser charge than that imposed upon others of comparable size.

I do not think that there should be an open season on the Government. I am not seeking to shift the burden or the cost of Government shipping to the backs of industry or the taxpayers generally, aside from the costs which result from the movement of traffic, but I do say that the Government is entitled to the same fair and square treatment that is given to others. That is all we are entitled to. We are entitled to no better and we will not be satisfied with less.

Mr. HINSHAW. That is exactly what H. R. 525 proposes to do. Mr. HYDE. If that is the sole purpose of H. R. 525, and I am not disputing that, Mr. Hinshaw, because you introduced that bill, as I recall it, what I would like is an objective study to be made under some responsible agency of the Government to answer the question that has developed in the two schools of thought in this country.

Are the shippers of this country right when some of them assert that the Government is getting its traffic moved cheaper than they are? In that connection, one of the most important agencies of the Governmen is the Interstate Commerce Commission. They have caused two different studies to be made by one of their divisions. I believe they call it the Economics and Statistical Division down there.

I do not know the formula they employed but I do know that they came up with the statement that the Government was paying more. Mr. HINSHAW. Did you hear the statement made this morning? Mr. HYDE. I did. I heard his statement this morning but if that formula that they adopted was incorrect, then they must have been incorrect in the statements they published to the American people.

I did hear his statement this morning with reference to the suggestion in answer to the statement of the Congressman on the right that he was making a further study in the matter. I hope the formula this time will result in establishing the truth.

We want to get at the bottom of it. We have no right to ask the support of a Congress if we come up here with unclean hands and assert or agree that we are getting our traffic moved at the expense of the American shippers of this country.

Believe me when I tell you that no one wants to conduct an auction shop. I want every carrier that does business with the Government to feel that based on their costs they are making money, they are entitled to make money, pay dividends to their stockholders, that they are entitled to make money to pay taxes and employ labor and maintain a high standard of living in this country.

I believe fundamentally in that and I know that money costs money, not only in the field of transportation but in the field of public utilities as well, but I cannot agree with the suggestion of some in this country that we are at this time moving our traffic at a lower charge or rate than are other large industrial shippers of America. If we are, then we ought to be stopped and I would be in favor of the repeal of section 22.

Somewhere there lies the truth and we ought to get at it.

Mr. HINSHAW. Why keep section 22 in the bill if it permits anything?

Mr. HYDE. What is that?

Mr. HINSHAW. Other than straight equality.

Mr. HYDE. If I may ask Mr. Smull to answer that?

Mr. SMULL. The advantages of section 22 are in the speed of action and in the economy. I do not refer to rate economy.

Mr. HINSHAW. I am sure we can provide for speed of action, and so forth, without making differentials in rates.

Mr. SMULL. The experience of the past has been limited funds to the point where you cannot employ personnel.

Mr. HINSHAW. The experience of the past has been under section 22. Mr. SMULL. Well, I have no experience without section 22, but our pleas have been for more money so that we can get ourselves current on these items to prepare us in the event section 22, for instance, might be eliminated. It is a voice in the wilderness.

Mr. HINSHAW. I am delighted to hear Mr. Hyde say what he has because he is voicing the very concept of the matter that I have, and I trust that we can work out a proper solution to it under his consent.

Mr. HYDE. I will just finish the statement and I will be glad to answer any questions.

Accordingly, GSA has earnestly sought to find any instances where such rates exist: that is to say, noncompensatory rates. Mr. HINSHAW. Just a moment.

Well, go ahead. The chairman says to let you finish.
Mr. HYDE. None have been found.

In addition, a number of studies have been made of the earnings of section 22 rates compared with those of commercial rates. Every such study which has been made shows that the section 22 rates on the whole provide greater earnings to the carriers than comparable commercial

rates.

If that is true, I say it ought to be stopped or the converse ought to be stopped.

The following are among the studies which have been made:

1. By ICC, covering Mountain-Pacific territory, for year 1952. Exhibit 1, in dockets 30416 and 30660.

2. By DOD, for 1950 terminations, pages 80-94, hearings April 26 and 29, 1954, on S. 906 by subcommittee of Committee on Interstate and Foreign Commerce, United States Senate.

3. By GSA, for 1952, exhibit 3, ex parte No. 192.

4. By ICC staff, 1950 and 1952, August 1955, Monthly Comment, Bureau of Transport Economics and Statistics, ICC.

5. By ICC staff, 1953, September 1955, Monthly Comment, Bureau of Transport Economics and Statistics, ICC.

6. By ICC staff, 1954, December 1955 Monthly Comment, Bureau of Transport Economics and Statistics, ICC.

The last of these studies listed, covering the year 1954, indicates the rate level of section 22 rates to be 13 percent above comparable commodity rates. The latter study also contains a discussion pointing out that the two types of traffic are not identical and do not imply that the rates are improper because of the higher level.

Now, I know the chairman knows, and I hope the committee will realize, if they do not they will before we get through, that we do not

say we have all the answers to the solution of the many problems that are constantly arising in the field of transportation or in the field of public utilities.

But, with reference to transportation, there are numerous problems. We have within the past 18 months witnessed a tremendous increase in the cost of overseas shipments because of the barter program and the ICA program.

We move, as you know, to our stockpile, hundreds of millions of dollars in strategic and critical materials which are essential for the protection of this country. These problems are powerful, they are overwhelming, they have presented many problems to our agency.

It is our experience as a shipper, based upon the operation of section 22, which we do not say is perfect, and certainly if misused would be wholly unwise, and that we are not doing. But it is our experience down there that without some such provision in the law, it would require the employment of a great many more people in our agency and would, of course, entail reparations before the Commission at a later date.

Now, we are subject to the will of Congress and we are certainly going to abide by the judgment of the Congress. We try desperately, and we think we are following the national transportation policy, as announced back in 1940. We reiterate that under no circumstances do we believe in an abuse of the provisions of section 22. We believe a proper use of the principle of section 22 is fair to industry and Government.

That is our position, Mr. Chairman.

Mr. HARRIS. Thank you very much, Mr. Hyde. I do not have to indicate to you that Mr. Hinshaw wants to ask you some questions..,,, Mr. HYDE Yes.

Mr. HARRIS. We will recognize Mr. Hinshaw.

Mr. HINSHAW. Thank you.

As I said before in the statement you made which is not in the printed statement, I am in entire accord with you, but you come to the statement on page 7 in your printed statement, and it reads as follows:

There seems to be a widespread impression that because such rates are reduced, they are unprofitable or below out-of-pocket costs.

Now, let me ask you if such rates are reduced below the rates that would be for comparable shipments under commercial tariffs, would you be for getting them lower yet?

Mr. HYDE. No, sir; I certainly would not, and I think I have indicated that.

Mr. HINSHAW. Then you could have no objection to the repeal of section 22.

Mr. HYDE. Well, I repeat what I said a moment ago, that without section 22, unless the Congress gives us the money with which to employ men, the same as industry has in their shops over the country, and it requires some good students and technicians and lawyers, even better country lawyers than I am, to undertake to protect the rights of the shippers in knowledge of the tariffs.

We do not have the manpower with which to do it. We are without the manpower. It would require the employment of a great many more people in our shop.

78456-56-pt. 1-22

Mr. HINSHAW. Of course, I am not aware of how many people you employ under section 22 now, but they would certainly be out of work and you would have to give them work in this other shop, but that is a matter of administration with which I am not familiar.

It might be so, but in that respect you would be no different than any commercial shipper, certainly.

Mr. HYDE. I have no desire to be different from any commercial shipper that ships on a comparable basis with us.

Mr. HINSHAW. Mr. Hyde, are you talking about the shipments made for GSA, or are you talking about all of the shipments being made for the Government?

Mr. HYDE. I am not talking about that which exists over in the Department of Defense because I am not familiar with the items over there, which are somewhat different from ours.

Mr. HINSHAW. What sort of security movements do you have to deal with, and do they constitute any considerable volume of your traffic? Mr. HYDE. Well, of course, we do have 77 strategic and critical materials that we are hauling into this country and they have to be hauled to the stockpiles.

Mr. HINSHAW. That is not a security matter, is it?

Mr. HYDE. Oh, no; no security, Mr. Congressman; that is negligible. Mr. HINSHAW. That is what I thought.

Mr. HYDE. Yes.

Mr. HINSHAW. So security matters are not involved in GSA particularly?

Mr. HYDE. Not particularly involved.

Mr. HINSHAW. It might be one-tenth of 1 percent or some such matter?

Mr. HYDE. If it is that much, I will say it is high. It is very little. Mr. HINSHAW. For the most part, I believe, your transportation is covered by the published tariffs; is it not?

Mr. HYDE. Yes, sir.

Mr. HINSHAW. What is the objection to following the published tariffs?

Mr. HYDE. The point is that the published tariff does not cover large shipments such as we have.

Mr. HINSHAW. What do you mean, "large shipments"?

Mr. HYDE. Suppose we have 350,000 tons of bauxite coming in or we have, let us take coins, for instance.

Mr. HINSHAW. You mean to say that you ship more bauxite than the Aluminum Corp. does?

Mr. HYDE. Yes; I believe we do.

Mr. HINSHAW. Certainly it is not much more than comparable, is it? Mr. HYDE. I would not know of the exact amount but we do furnish, of course, and we are stockpiling, and we release to industry, too, you know.

Mr. HINSHAW. And then there is a Reynolds Metals Co.

Mr. HYDE. Yes, sir; and Kaiser.

Mr. HINSHAW. And bauxite comes under a published tariff, I believe.

Mr. HYDE. Yes, but there are different destinations.

Mr. HINSHAW. It does not take long to fix that up. I cannot see myself where the published tariffs cannot be used by you. That is a constant movement. You do not ship 5 pounds here, 5 pounds there,

and 5 pounds somewhere else. It is in a constant direction, is it not, and it is 350,000 tons set down as much in one place as it can be and as much in another place as remains; is that not right?

Mr. SMULL. If I may answer?

The Government, not operating in a competitive market as in the case of the Aluminum Company of America, our destinations will not remain constant. We are not competing. Therefore, the rates which are established are not so arranged as to take care of the situation as it exists with respect to Government movements. Therefore, you would have class rates in many instances which would be exceedingly high for the movements that we might have.

Now, if you did establish a rate in a tariff, which could be done if time permitted, which it does not in most cases, once the traffic had moved that published rate would be a waste of paper because the rate may not be used again.

Our destinations change and our shipments change.

Mr. HINSHAW. Well, I think that you are under some misapprehension of the facts in the case if you think that a tariff could not be filed with the Interstate Commerce Commission and hold unless challenged, and who is going to challenge it?

Mr. SMULL. I do not contend that a tariff could not be filed. I contend in most cases

Mr. HINSHAW. I do not see what difference it is from any ordinary shipper of bauxite.

Mr. SMULL. It is the speed of action.

Mr. HINSHAW. You do not require any more speed of action than any other person does in peacetime, certainly.

What do you mean, "speed of action"?

Mr. SMULL. Well, it might appear that the Government movements are planned ahead as commercial movements are, but that is not an actual fact.

Mr. HINSHAW. Then something is wrong with the planners in the Government. That certainly ought to be planned that far in advance.

Mr. SMULL. I will not take issue with that statement but I do say, as an existing condition, we are mighty fortunate to have a month lead time on these movements, and that is not sufficient time to get your rates published in the tariff.

So our tariff would move at the existing class rates and we would have to go after reparations.

Mr. HINSHAW. Do I understand correctly, it is possible I am incorrect, quite possible, that you could file or your carrier could file a tariff for that movement with the Interstate Commerce Commission, and if that tariff remains unchallenged for 30 days, then it is in effect?

Mr. SMULL. That is right.

Mr. HINSHAW. Is that right?

Mr. SMULL. That is true.

Mr. HINSHAW. What difference does that make to you?

Mr. SMULL. I might answer by saying that we do not ask the carriers to give us a section 22 quotation. It is their choice. We ask for a rate adjustment.

Mr. HINSHAW. Now you are getting into something else.