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There have been a few cases before when, despite the present law, the Commission has felt compelled to pay heed to the unanimous insistence that relief be afforded without any circuity limitations. One of these was the Western Grain case involving most all of the freight rates on grain from western grain-producing points to everywhere. The grain shippers, the millers, the grain markets, the Department of Agriculture, and everyone else agreed the unlimited fourth-section relief which was granted on a temporary basis should be preserved and that they should
not have saddled on them a system of routing which would enormously multiply the size of the tariffs.
As illustrative of the concern of those involved, they pointed to an eastern grain tariff involving only 22 origins, on which relief had been granted subject to circuity limitations. This tariff consisted of 660 pages and 477 of them, or 72.7 percent, were devoted to routing which had been published to satisfy a fourth-section circuity order. In the western grain tariffs, the rates from 30,855 origins required only 2,698 tariff pages, of which only 527 are devoted to routing. Put it another way: in the eastern tariff, each origin required 21.6 pages of routing because of a fourth-section order; if the same proportions were observed in the west, it would require 66,638 pages just to show the routing.
We attribute this superior showing to the fact the western grain tariffs have no fourth-section circuity limitations running against the application of the rates.
Our files are replete with instances of tremendous enlargements of simple tariffs because of these fourth-section orders.
It is almost unheard of for a shipper to ask for the opening of numerous additional routes.
Shippers are not looking for wide-open wasteful transportation routes. On the contrary, they want their freight handled over direct and efficient and fast-moving routes. Sometimes, however, the very shortest routes are not the best from the standpoint of service or economical operation. We want to get merchandise to our customers, not just give it a joyride. We would have been indifferent to these routing restrictions except for the fact that in the last few years it has become almost an intolerable burden to use tariffs which are like Chinese puzzles as the result of these Rube Goldberg routing limitations.
Time and time again, in trying to explain the purpose of this legislation, we have been asked: “Well, why do you need more routes than you have now! You have hundreds of them; you said yourself you had millions.” It isn't that we want more routes; we want fewer pages in the tariffs. The imposition of restrictive routings is no hardship on us if we could have it without all of this complex tariff publication ; but you cannot pick up a freight tariff as you can a telephone directory and get a number out of it and know that that't the rate and have it automatically routed for you. Again I say, the shippers are not asking for more routes and are not asking for more circuity in the operation of rates. What we want is the elimination of a provision in the present law which forces the railroads (under orders from the Interstate Commerce Commission) to print a lot of complicated, unrealistic, fantastic, gobbledygook. Our own rate clerks (and they are expensive people to employ) are terribly slowed down puzzling out
the intricacies of these massive doses of bunk to figure out how they can move freight over the rails.
The mathematical circuity limitations, when applied to a practical problem, do not achieve the purpose for which they ostensibly applied. Instead, they produce some weird results. Let's see what a 50-percent limitation did to lumber routes from the Southwest to Chicago. The rates were made on a grouping basis. Relatively large groups were employed and all competitive origins in the same group were given identical rates.
The Rock Island single route from Eldorado, Ark., to ChicagoMr. HINSHAW. What is Eldorado?
Mr. STALEY. It is a lumber town. There is some oil down there, too.
Mr. HINSHAW. Also a Congressman is from down there.
Mr. HINSHAW. It seems to me that is the hometown of our distinguished chairman.
Mr. STALEY. It is a very nice town.
Mr. STALEY. The Rock Island single-line route from Eldorado to Chicago is 153 percent of the short tariff route and was therefore barred from handling lumber at the normal rate of 391/2 cents. From Eldorado the Rock Island had to charge 55 cents. But, this railroad's route from Eunice, La., to Chicago, 203 miles longer-by way of Eldorado-does not exceed the magic formula and the Rock Island could handle lumber from Eunice right through Eldorado to Chicago at the same 391/2 cent blanket rate.
Incidentally, that was the rate several years ago. It is somewhat higher now. From Eldorado to Chicago the Rock Island had to charge 55 cents, but this railroad's route from Eunice, La., to Chicago, 203 miles longer, and by way of and through Eldorado does not exceed the magic formula and the Rock Island could handle lumber from Eunice right through Eldorado to Chicago at the same 391/2 cent blanket rate.
Before the imposition of circuity limitation, the same rate applied from both competitive points, but when the mathematical circuity limit was imposed the Rock Island was denied relief from Eldorado and granted relief from Eunice-a point 203 miles more distant-a real, meaningful, harmful fourth section departure was created. It doesn't make sense.
Mr. HARRIS. What do you mean by 203 miles more distant?
Mr. STALEY. Eunice is 203 miles south of Eldorado on the Rock Island We had a 391/2-cent rate from southwestern pine blanket, which is southern Arkansas south of Arkansas River, and Louisiana and east Texas, a blanket rate to Chicago. Because of a mathematical circuity limitation you were denied relief for the Rock Island Railroad to handle that business from Eldorado to Chicago but they could take it from Eunice, a point 203 miles farther, and carry it on into Chicago. It doesn't make sense.
This thing was brought to the attention of the Commission. Here again I don't want to be critical. They pontificated and said, "We have been given or we are gifted with great discretion in the administration of the act in the public welfare." I want to say I have heard
of people being made an officer and a gentleman by Act of Congress but I think that discretion is a gift of Almighty God and they didn't show much discretion in a case of that kind.
It is commonplace to find where the Commission has imposed a 50-percent circuity limitation on a rate between 2 given points, we will say of 50 cents, while on another day in connection with another rate between the identical points on a commodity that may load even heavier per car with a rate of 75 cents per 100 pounds, they will impose a 3343 percent limitation.
Mr. Flyyt. Do you mean that the limitation varies from day to day or week to week?
Mr. STALEY. Hour to hour.
The idea of the mathematical circuity, a wholly theoretical approach, limitation is to insure that the traffic will at least pay the cost of carriage, but when applied to realities all we get is a bucket of clabbered nonsense.
To say this fourth section business delays the needed adjustment of rates is an understatement. I'd like to give you an example from my own experience, one of many; collectively the members of our league could recite hundreds of examples equally as bad or worse.
Our company produces canned dog food. In 1954 a study revealed an urgent competitive necessity for a readjustment of freight rates to the
Southeast from Joplin, Mo., where one of our plants is located, as well as from a few other western manufacturing points. Jointly, with the other manufacturers in the area, we determined what changes were needed, and put the proposition up to the carriers in mid-1954. After proper consideration the rates were approved early in December.
Then began the task of preparing elaborate information needed to support a fourth section application, so that all of the normal routes, including some which are more or less circuitous, could participate in the rates. It took from the 1st of December to the 1st of June to compile this information and our rates did not become effective until July 5, 1955. In other words, we took a beating for 7 months before the carriers could even ask the Interstate Commerce Commission for permission to establish the rates which all the producers and carriers had agreed were proper.
All of the producers supported the application for fourth section relief, emphasizing the facts that the rates applied from all the producing points in the territory, that canned dog food is sold on a delivered basis and that the producers who pay the freight, who are the only ones interested in the freight charges, has no objection to the maintenance of higher rates to intermediate points on the longer routes. The rates became effective July 5 under temporary fourth section relief.
Fourth section order 18066 finally came forth and gave the carriers permanent relief to operate the rates. The chief need for relief was to permit longer haul carriers to meet the rates of the shorter routes.
The order says the maximum length of route over which the rates may be applied shall be the distance by which a rate equal to 13313 percent of the first-class, column-100, rate prescribed in another proceeding, from and to the same points can be applied. Please don't ask me to explain it; I don't understand it either.
The order was to become effective October 5, 1955, but it involves such a complicated publication that the railroads sought and obtained
against the other. There is a tremendous number of operating routes between each gateway. It literally came out at the number that I quoted.
I don't know all of the routes, but just take, for example, from Dallas to Kansas City and St. Louis. You have the route of the Frisco, the Katy, the Rock Island, the Santa Fe, you have the routes of the T. & P., C., O. & G., Missouri Pacific, the routes of the Cottonbelt, KSC-I could name 50 of them.
Then from Kansas City to St. Louis you have the Missouri Pacific, Rock Island, Wabash, and the G., M. & O., and the C., B & Q., Katy, and the Frisco. Multiply one against the other, and you have a tremendous opportunity to make routes.
Mr. HINSHAW. For the benefit of our distinguished and erudite friend, I think you should say that it is the theory of permutations and combinations applied to route segments that results in that figure. Mr. STALEY. That is very clear.
Mr. HARRIS. You are not going to name all 4 million of those, are you?
Mr. STALEY. I would like to make this point, Mr. Hale. Those are authorized routes and there are many other junctions through which rates could be applied which are not authorized. For example
Mr. HALE. I want to be quite serious. If the Ford Co. wants to ship an automobile from Detroit to Dallas, they must know pretty accurately from experience, if not otherwise, how much it is going to cost, don't they!
Mr. STALEY. Yes, sir; and they have a very large movement of automobile parts from Detroit to Dallas. They have an assembly plant at Dallas. They channelize that business and they use perhaps 5 or 6 routes for the movement of those automobile parts. Mr. HALE. Do they use 5 or 6 routes at 5 or 6 different rates ? Mr. STALEY. No, the rates are all the same.
Mr. Hale. What difference does it make how many routes there are if the rates are all the same?
Mr. STALEY. It doesn't make any difference except that when you get one of these silly fourth section orders that you have to translate into a tariff publication and then you have to spell out one by one each of these individuals routes. Then instead of having your rates published on half a page it takes 60 or 80 or 100 pages to publish your rates and your routes. The fourth section order requires you to do this. The rates are all the same.
I have a case here. From Houston, Tex. to Travelers Rest, S. C., we went to work and checked out 76,000 routes or combinations. So many routes up to Memphis, so many to New Orleans, so many to Baton Rouge, so many beyond to other gateways. It is just astronomical. This is a big complex system of railroads.
Mr. Hale. I don't know whether the Ford Motor Co. ships any cars by rail to Dallas.
Mr. STALEY. I can answer that. They do.
Mr. HALE. I would suppose that the Ford factory would send a car down to the freight station of some railroad and the railroad would do the routing and send the Ford Motor Co. a bill. Isn't that the way it would work?
Mr. Staley. The Ford Motor Co. doesn't send any carload of freight to a railroad company without saying what route they want they became effective, all because of the arduous task of getting together the synthetic information required for filing a fourth section application.
This isn't criticism of the Commission. They sincerely feel that they must do these things to comply with the statute written on the books.
Now, at long last, the Interstate Commerce Commission has come to you and, in effect, said, “Please, we don't think this is a good rule. Our experience has shown the provisions of the present law are not in the public interest. It is no good imposing all these restrictions, and practical experience has demonstrated the present provision of the laws as they are now being interpreted and applied work a tremendous hardship on the railroads of the country, and also on the shippers without any resulting benefit to anyone. That is what the Commission has said to you. When
consider the time and clerical effort required to compile hundreds of pages of additional tariff matter which nobody wants, which only serves to gum up the books, and when you add to that the cost of printing and publication, reprinting and republication every time these tariffs are reissued, the burden in terms of dollars becomes a very great one indeed. These manufacturing and printing costs are only part of the story; the additional time it takes rate clerks to ferret out the available routes and to see if the particular one we want to use is authorized constitutes a continuous burden on us.
I am speaking for all of the shippers of the country.
Responsible railroad people have said to me no single measure that can be passed by this Congress will give more relief, valuable in terms of dollars and cents, than this law. We speak with practically the unanimous support of the shippers of this country. We want the railroads to be taken out of their straitjackets so that our freight tariffs won't be messed up. We are very conscious of the fact we have to pay—through higher rates—the bills for this excessive compilation and printing costs, and then go to the expense of trying to decipher the product.
We believe this particular piece of legislation is just about as completely noncontroversial as anything you are going to find in the various transportation bills that are before the Congress. Nothing could be so universally popular except a tax reduction, and that isn't the
province of this committee.
While we are on this subject, any questions the members might have would be appropriate.
Mr. HALE. I was struck by the statement on page 6 that there are 4,717,664 authorized routes between Dallas, Tex., and Detroit, Mich.
How did you compute that?
Mr. Staley. Mr. Hale, that is a good question. I have here a map which shows the junction points of practically all railroads in the United States. We made that computation by counting the routes from Dallas to Memphis, say, Memphis to Louisville, Louisville to Detroit. We multiplied 'one against another. From Dallas to St. Louis, St. Louis to Chicago, Chicago to Detroit. We multiplied one