and also the tremendous demands that would be made upon an organization that attempted to protect the area in the event the rails are freed from the present restraints of section 4.

I would like to cite you one extreme example of rate discrimination which existed in 1907 and which is outlined in the Reno Chamber of Commerce's statement to the Nevada Public Service Commission.

In 1907 the carload rate on structural steel from Chicago to San Francisco was 75 cents per hundred pounds, and from Chicago to Reno was $1.34 per hundred pounds. At that time the differential between Reno and San Francisco was 100 percent of the local rate from San Francisco to Reno-59 cents per hundred pounds. That 59-cent local rate also applied to points east of Reno as well. Consequently, the Reno jobbers could not meet competition from San Francisco to points east of Reno, to say nothing of points between Reno and San Francisco, because of the very obvious discrimination. Some relief from the 100-percent differential to the intermountain area was secured prior to 1918.

These adverse freight rates had an impact upon the growth and development of the entire mountain area. Prior to 1910 Spokane had made a substantial growth, primarily because of the exploitation of its agricultural, mining, and lumbering resources. The population attained at that time apparently was a maximum number that could be supported by a raw materials economy, since the population of the decade 1910-20 increased only slightly. Because of discriminatory long-short haul freight rates, and they were in effect at that time, commercial and industrial development were retarded. Protection was granted that area, however, by the March 15, 1918, decision of the Interstate Commerce Commission granting terminal rates to the intermountain territory and by the adoption of the reasonably compensatory amendment to the fourth section of the act in 1920. With this protection, the area again started to develop commercially and industrially, and the population of Spokane has grown from 104,430 in 1920 to an estimated 186,000 today.

The fourth section of the act as amended has been attacked on various occasions and, as I mentioned previously, a major effort was made to amend it by the Pettengill bill which was before Congress in 1937 and 1938. This bill was defeated and equality of rates for the intermountain area was protected. It is interesting to note that the arguments that were advanced by proponents of the Pettengill bill are the same arguments that have been advanced by the present proponents of revision. They are based upon the need of more flexibility in rate making by the rails so that they can escape bankruptcy and remain in private ownership. They were advanced in 1937 so that the carriers could meet waterborne competition or market competition. Today they are advanced so that the rails can meet motor-carrier competition.

We do not believe that the arguments that the proponents of revision have been advocating were valid in 1937, and we do not believe that they are valid today. We contend that the rails have ample flexibility in securing relief under section 4, in the relief clause of the act; that the general public and the national interest demand that the burden of proof be on the rails to support any reduction in longhaul rates, and that the present form of petitioning be retained. We

do not believe that the rails and shippers have been seriously handicapped because of the comparatively few negative decisions rendered by the ICC and the length of time required by the ICC to make its decisions.

Neither do we believe that truck and barge competition throughout the Rocky Mountain West is sufficient to determine basic freight-rate structure. The rail carriers are still the dominant factors in determining rates for the area. They, rather than the trucks, set the rates.

I wish to call to your attention the loss of protection presently provided that would result from the enactment of the section 4 clause of H. R. 6141. The fourth section of the act presently provides that no common carrier shall charge more for a short-haul than for a long-haul. It states:

It shall be unlawful for any common carrier subject to this part or part III to charge or receive any greater compensation in the aggregate for the transportation of passengers, or of like kind of property, for a shorter than for a longer distance over the same line or route in the same direction, the shorter being included within the longer distance, or to charge any greater compensation as a through rate than the aggregate of the intermediate rates subject to the provisions of this part or part III, but this shall not be construed as authorizing any common carrier within the terms of this part or part III to charge or receive as great compensation for a shorter as for a longer distance: Provided, That upon application to the Commission such common carrier may in special cases, after investigation, be authorized by the Commission to charge less for longer than for shorter distances for the transportation of passengers or property; and the Commission may from time to time prescribe the extent to which such designated common carrier may be relieved from the operation of this section, but in exercising the authority conferred upon it in this proviso the Commission shall not permit the establishment of any charge to or from the more distant point that is not reasonably compensatory for the service performed; and no such authorization shall be granted on account of merely potential water competition not actually in existence: And provided further, That tariffs proposing rates subject to the provisions of this paragraph may be filed when application is made to the Commission under the provisions hereof, and in the event such application is approved, the Commission shall permit such tariffs to become effective upon one day's notice.

H. R. 6141 proposes to amend section 4 as follows:

(1) It shall be unlawful for any common carrier subject to this part or part III to charge or receive any greater compensation in the aggregate for the transportation of passengers, or of like kind of property, for a shorter than for a longer distance over the same line or route in the same direction, the shorter being included within the longer distance, but this shall not be construed as authorizing any common carrier within the terms of this part of part III to charge or receive as great compensation for a shorter as for a longer distance: Provided, however, That such common carrier may charge less for longer than for shorter distances for the transportation of passengers or property if the charge established to or from the more distant point (a) is necessary to meet actual competition of another carrier or carriers, and (b) is not less than a just and reasonable minimum charge.

The proposed amendment eliminates the reasonably compensatory clause and also shifts the burden of proof from the carriers to the users. In the opinion of the residents of the intermountain area it does not provide adequate protection and would lead to discrimination prejudicial to interior points.

Advocates of amendment contend that section 3 of the act provides adequate protection to shippers, industries, and regions. It didn't provide this protection in 1910 or 1917, and it will not provide it today. This is the section that reads:

It shall be unlawful for any common carrier subject to the provisions of this part to make, give, or cause any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, association, locality, port, port district, gateway, transit point, region, etc. in any respect whatsoever; or to subject any particular person, company, firm, corporation, association, locality, port, port district, region, district, etc. or any particular description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever.

We of the intermountain area ask what definition the Interstate Commerce Commission would put on the phrase "any undue or unreasonable preference or advantage, or any undue or unreasonable prejudice or disadvantage," in the event Congress amends section 4 as proposed in H. R. 6141?

The fallacy of dependence upon section 3 is well expressed by Mr. Lee J. Quasey, commerce counsel of the National Livestock Producers Association of Chicago, in his dissenting remarks to the repeal of section 4 on pages 126 and 127 of Sound Transportation for the National Welfare, the report by the policy administration board of the Transportation Association of America:

I cannot agree with the proposal to repeal the long- and short-haul clause (sec. 4) of the Interstate Commerce Act.

The fourth section, in its present form, gives the shippers a protection not afforded by other sections of the act. A lower rate to a more distant point than to an intermediate point via the same route is prima facie unjust, unreasonable, unduly preferential, and unjustly discriminatory.

While Congress permitted the Commission to authorize departures from the long- and short-haul clause, it nevertheless placed the burden of justifying such departures on the carriers-a requirement to be met before the rates go into effect and not after.

This is very important to the shippers, to the carriers, and to the public interest in general.

If section 4 were repealed, the public interest would not be protected, as a practical matter, under the other sections of the act.

There are large numbers of tariffs currently filed with the Commission by the many common carriers from day to day throughout the year. If the carriers were not required to justify the proposed rates, which were lower to a more distant point than to intermediate points, before they were allowed to go into effect, many such departures would go into effect unnoticed by numerous interested shippers. This would be due to the great difficulty of the shipping public to find out about such proposals in time to request the Commission to suspend such rates. Once the rates became effective, they could only be brought in issue when attacked in a complaint to the Commission. The burden of proof in that event would be on the complaining shipper and not on the carrier that initiated the rates.

I am in favor of eliminating any regulation that may be dispensed with so long as the public interest is not put in jeopardy, as I believe would be the case if the fourth section were repealed.

The long- and short-haul clause has an extensive history and it gives a protection that is not afforded under any of the other provisions of the Interstate Commerce Act. It expresses a most primary principle of equality. It is fundamental in the determination of the just, reasonable, and nondiscriminatory rates. Therefore, it should not only be retained but extended to all types of common carriers.

One of the most comprehensive and clear statements on the importance of the fourth section is contained in Railroad Commission of Nevada v. Southern Pacific Company (21 I. C. C. 329), where-at page 338-the Commission, in commenting on the then new section 4, said in part:

"This provision is not a distinct and separable part of the act; it is but one declaration or pronouncement as to what Congress regards as inimical to public policy. Instead of allowing this kind of discrimination to remain in obscurity as others are, the law separates and distinguishes it by naming it. To charge more for the shorter haul over the same line shall be presumptive

evidence of unjust discrimination, and the burden is cast upon the carrier justifying a condition which is prima facie unlawful and unjust."

Mr. Quasey's statement points out both the inconsistency of measuring a lesser rate for a longer haul by the yardstick of section 3"that there shall be no undue or unreasonable preference or advantage, or that there shall be no undue or unreasonable prejudice or disadvantage," and the need of the positive protection of section 4.

We in the Intermountain area do not have traffic associations adequate to analyze, and contest thousands, or even hundreds, of discriminatory rates. If that figure startles you, recall the number of applications for relief that are being filed now. Without the protection of section 4, it is inevitable that number would be expanded many times. Neither do our trade associations and small industries have counsel adequate to provide such protection. Our situation is well explained by Mr. C. O. Bergan, former manager of our Spokane Merchants' Association, which handles freight rates and freight problems for its members. Mr. Bergan states:

Under section 4 of the Interstate Commerce Act now in effect, it is specifically provided that a carrier, or carriers, must first file an application with the Interstate Commerce Commission for relief from provisions of this section of the act, which application must then be investigated by the ICC to determine if such proposed relief does not result in violations of any other section of the Interstate Commerce Act, such as section 3 above explained. Customarily such applications are set down for a public hearing, affording shippers or localities an opportunity to be heard prior to decision by the Commission.

Contrast this with the conditions that would prevail, assuming section 4 was eliminated from the act. Carriers would then have a free hand to make any changes in the rates; i. e., establish a lower rate for the longer haul than for the shorter haul; and could put such rates into effect merely by making the necessary tariff publications on the usual 30-day statute notice, and such rates, in the absence of a suspension, would go into effect without any investigation or opportunity for a shipper or locality adversely affected to have a hearing.

The contention may be made that provisions of section 15, paragraph 7, authorizing the ICC to suspend rates pending an investigation, would afford a remedy. This, it will be noticed by a reading of the law, is only a permissive authority of the Commission. Assuming such a rate, or group of rates, violative of section 4 were to be published and were not suspended by the ICC, the burden of proof would then rest on the shipper or the locality, and the discriminatory rate structure would continue during the period of investigation as the result of a formal complaint being lodged against the prejudicial rate structure. And, experience has shown that it takes from a year and a half to 2 years from the time a complaint is filed until a decision can be obtained.

The foregoing clearly illustrates that the Intermountain country has a protection under the existing law which would not be available in the event of an elimination of section 4.

I urge you to give full consideration to the intense feeling, the sound arguments, and the strong support for section 4 of the ICC Act throughout the entire Intermountain area. You should be aware of the magnitude of this Intermountain area I am referring to. It extends from the Mexican to the Canadian borders, for a distance of 800 miles east to west-a tremendous portion of the United States, whose development and prosperity influence greatly the welfare and prosperity of our Nation. The area suffered under adverse long and short haul rates until 1920. Our citizens learned firsthand the costly penalty of discriminatory freight rates. That experience cannot be readily forgotten.

Discriminatory rates penalize the shippers, and unjustly to the costs to consumers, handicap operations of wholesalers and jobbers, and throttle new industrial development of an entire region.

We cannot believe it is the desire of Congress, or that it be in the national good, for our citizens to pay more for manufactured and processed commodities than is paid by citizens of other areas farther removed from the source of supply, when the commodities are moved all-rail; or, for our wholesalers and jobbers to be penalized in competing in natural market areas, because of discriminatory long-haul freight rates; or, for our growers and shippers to be subjected to higher rates on the outward movement of their commodities, to offset decreased revenues by the carriers, resulting from a reduction in other rates to terminal markets; or, for the hobbling of our present and future industrial development, by established industrial competition given an unnatural advantage of discriminatory freight rates.

On behalf of the entire Intermountain area, I respectfully petition Congress to continue the fourth section of the Interstate Commerce Commission Act as it is presently written.

I may say that the Spokane Chamber of Commerce from 1900 to 1920 fought the short- and long-haul battle and did its best to get the strengthening amendments in section 4. Since that time it has always fought vigorously to retain the protective clauses of section 4.

In connection with that, it was very active in the Intermountain Rate Association, an association of the Rocky Mountain area, including most of the Rocky Mountain States. At that time my predecessor, Mr. James Fort, was the secretary of that association. They fought the Pettengill battle of 1937 and 1938, and when that bill was defeated they thought the fourth section was safe. So, about 1940, the Intermountain Rate Association was put on the shelf.

In 1952, when this Transportation Association of America picked up the recommendations, or started to pick up the recommendations in the reverse of section 4, and the transportation committee of the United States Chamber of Commerce did the same thing, we reorganized the Intermountain Rate Association, and at that time we took our position back before those two associations and they referred it back to their own committees; that is, the matter of the revision of section 4, and we have heard nothing of it of great consequence until the recommendation came out this last year.

Now, my statement is simply this, that we in Spokane, at least the Spokane Chamber of Commerce believe that the threat of any revision of the fourth section is as great and the repercussions would be as great as it was in that decade from 1910 to 1920, and we are extremely concerned. We are very hopeful that no revision will be made of section 4 of the act.

Mr. HARRIS. With reference to the long- and short-haul provisionyou are speaking with reference to that?

Mr. MARKHAM. I am authorized to speak for the Intermountain Association and the towns they represent to the same effect.

Mr. HARRIS. Thank you very much, Mr. Markham.

Mr. MARKHAM. I appreciate the opportunity, sir.

Mr. HARRIS. I appreciate your bringing to our attention the background of this thing. As to this section, I do not believe I have had that called to my attention heretofore. In fact, the Pettengill bill referred to is new to me. I did not know about that fight at that time. For that reason, I am glad to have had this background of the situation.