Interstate Commerce Commission, that restrict railroads severely in their use of other forms of transportation, particularly motor carrier transportation over the highways. They fail to deal with the manifestly unfair and highly discriminatory Federal excise taxes upon amounts paid for the transportation of persons and property, which place common carriers at a great disadvantage in their competition. with private carriers.

I point out these matters merely to show that, comprehensive as the Advisory Committee's report and the pending bills are, there are many aspects of Federal transportation policy not now before you which should in due course also have your careful attention and consideration. Those matters that are dealt with in the report and bills may be said to fall into two principal categories. One group of recommendations has to do with increased reliance on competitive forces in transportation pricing. It was with these recommendations, generally, that Mr. Langdon dealt; and I shall not repeat what he has already said as to the position of the railroads with respect to them except to say again that the railroads agree with the Advisory Committee that

Increased reliance on competitive forces in ratemaking constitutes the cornerstone of a modernized regulatory program.

I mention that at this point, Mr. Chairman, because while I shall deal with other matters, I did not want it overlooked by the committee that that is what we regard as the basic recommendation of the Cabinet Committee's report.

The railroad industry regards the proposals having to do with greater freedom in competitive ratemaking between carriers of different modes as being of greater immediate importance than other recommendations advanced by the Advisory Committee, and regards as the most important of the several proposals advanced in that connection the one recommending modification of the authority of the Interstate Commerce Commission over minimum rates. This proposal is to be found in section 8 of H. R. 6141 as a proposed new section 15a (1) of the Interstate Commerce Act which would provide, in effect, that a regulated carrier of one form is not to be prevented from making a competitive rate which is compensatory and nondiscriminatory merely because of the effect of the rate on another form of transportation.

When I have referred in that paragraph to section 15a (1), I am referring to H. R. 6141. You will recall that Mr. Langdon suggested that a similar provision be put in as section 15a (3).

By placing principal emphasis at this time upon removal of undue restraints on competitive rates between the different forms of transportation, the railroads do not intend to minimize the importance of other recommendations of the Advisory Committee designed, to use the language of the report, "to assure the maintenance of a modernized and financially strong system of common carrier transportation." One of the fundamental premises from which the Advisory Committee proceeded is that:

the restoration and maintenance of a progressive and financially strong system of common-carrier transportation is of paramount importance to the public interest.

I need not say that when I speak of common-carrier transportation, I am distinguishing that form of transportation from private and exempt transportation and from contract transportation.

The report observes that:

Historically, common-carrier service has been recognized as the hard core of our transportation system. Yet, in recent years there have been a number of developments that have mitigated against the maintenance of a financially strong system of common-carrier transportation.

and finds that:

Among such developments are the rapid growth of privately operated fleets of trucks, the relatively less reglated status of contract carrier service, and statutory exemption of the transportation by water of commodities in bulk from the regulatory controls imposed on common carriers. These developments have had the effect of diverting profitable sources of traffic from the common carriers. To this must be added the large deficits resulting from the enforced maintenance of unprofitable services.

It is the recommendations contained in the report and the provisions included in H. R. 6141 with respect to these matters-private carriage, contract carriers, the bulk commodity exemption and service deficitsthat I shall undertake to discuss.

PRIVATE, EXEMPT, AND CONTRACT CARRIAGE

The vital importance to the nation of a strong and adequate system of common-carrier transportation is summarized by the Advisory Committee in this way:

No economy that is based fundamentally on mass production and distribution of products throughout a continental market can continue to prosper without a transportation system that is dynamic, efficient, and capable of delivering goods and people with safety, expedition, with a high degree of dependability, and at the lowest cost in the expenditure of manpower and scarce resources. Historically, these requirements have been met most satisfactorily by common carriers, who by statute are charged with the heavy obligation to serve all individuals and shippers alike to the extent of their physical capacities, on known schedules at published rates, and without discriminations. The availability of this type of stable and dependable service is of equal importance in the day-to-day business operations, production and market planning of large and small businesses alike. Moreover, in a broader sense, the availability of this type of transportation system is essential to the orderly and healthful operation of a peacetime economy and is indispensable to the national security in time of war.

All of that reference is to common-carrier transportation. The fact is, however, that our system of common-carrier transportation is increasingly threatened by the inroads of private transportation and of for-hire transportation exempt in whole or in part from the economic regulation to which common carriers are subjected. The extent of this problem is indicated and highlighted by the growth and present magnitude of private, exempt, and contract carriage. Available statistical information as to unregulated private and exempt transportation (and only partially regulated contract carriage) shows a trend of growth and a scale of operations which, if continued, will seriously impair the ability of railroads and other regulated common carriers to serve the public.

While all interstate railroad traffic (except certain Government traffic) is subject to regulation by the Interstate Commerce Commis

sion, far the greater part of highway and inland waterway traffic is entirely free of such regulation. This is because a large part of transportation by highway and inland waterway is private carriage, and another large part is for-hire transportation of kinds expressly exempted from regulation by the Interstate Commerce Act.

Data published by the Interstate Commerce Commission show in terms of ton-miles the distribution of intercity highway freight traffic between motor carriers that are subject to regulation by the Commission and those that are not subject to such regulation. Other data published from time to time by the Commission and the Army Engineers show the extent of regulation of domestic waterway tonnage. Such data for 1954-the latest year for which they are available-indicate that only 32.3 percent of the total intercity highway traffic was handled by carriers subject to regulation by the Commission while 67.7 percent of the total was handled by carriers not subject to such regulation; and that only 11 percent of the waterway tonnage on the Mississippi River and related waterways was subject to regulation under the Interstate Commerce Act while 89 percent of that traffic was free of such regulation.

Thus, less than one-third of the highway ton-miles and only about one-tenth of the tonnage on rivers and canals is regulated by the Interstate Commerce Commission. Furthermore, it should be pointed out that in these statistics contract carriage is included with common carriage as "regulated" transportation. In the case of highway transport contract carriage accounted, in 1954, for 3.1 percent of the total intercity traffic. As I shall explain later, contract carriers by highway and water are regulated to a much lesser degree than railroads and other common carriers.

The significance of these figures, and their relation to the "maintenance of a progressive and financially strong system of commoncarrier transportation," becomes apparent when it is realized that a large and increasing part of the Nation's total traffic is moving by highway and inland waterway carriers, which are for the most part unregulated, while the share of the railroads the principal common carriers is steadily declining.

It might be of interest to you in this connection if I should present at this stage of my testimony concrete figures showing the amount of freight traffic handled by each of the several modes of transportation during recent years and showing the trend of the distribution of traffic among the different modes. Such figures are set forth in two tables identified as table I and table II. I ask that these tables be incorporated into the record at this point.

Mr. HARRIS. Those will be included in the record.

(The tables are as follows:)

TABLE I.-Estimated ton-mile distribution of intercity freight traffic, public and private, in the United States, by kinds of transport agency, 1939-551

1 Excludes coastwise and intercoastal traffic.

2 Steam and electric railroads, including mail and express.

Highway ton-miles include movements between cities and between rural areas and urban areas; ruralto-rural movements, city deliveries and city movements to contiguous suburbs are omitted.

4 United States domestic traffic only.

Excludes 6.4 billion ton-miles in 1953 and 13.1 billion ton-miles in 1954 reported for Atlantic and Gulf Coast rivers not previously covered to maintain comparability with years prior to 1953.

• Preliminary.

Estimated by Association of American Railroads on basis of presently available information for each kind of transportation.

Sources: Interstate Commerce Commission, Bureau of Transport Economics and Statistics, Statement No. 544, March 1954; 68th and 69th ICC Annual Reports.

Waterways traffic data are from annual reports of the Chief of Engineers, Department of the Army. Data for 1953 and 1954 are from Corps of Engineers, Waterborne Commerce of the United States, pt. 5.

TABLE II.-Estimated percentage distribution of intercity freight ton-miles, public and private, in the United States, by kinds of transport agency, 1939-55

Estimated by Association of American Railroads on basis of presently available information for each kind of transportation.

Mr. FORT. Table 1 shows in terms of ton-miles the estimated distribution of total intercity freight traffic in this country in each of the years 1939-55. The sources of the figures are indicated in footnotes appearing at the bottom of the table and are, for the most part, publications of the Interstate Commerce Commission and the Chief of Engineers, Department of the Army.

Table II is derived from table 1. It shows the percentage of total traffic carried by each form of transport for each year. I think for a quick glance it is a more significant table than table 1. You will see that during the postwar period, the railroads' share of the total traffic has shown a decrease in every year, falling from 67.3 percent in 1946 to 50 percent in 1955. During the same period the motortruck share of the total traffic has shown a steady and marked increase, rising from 9.1 percent in 1946 to 19.5 percent in 1955. Likewise the share of water carriers on rivers and canals has shown an increase in every year of the 10-year period, moving from 3.1 percent in 1946 to 6.8 percent in 1955.

In other words, the percentage of the trucks has doubled during that period. That is also true of the percentage of the inland water carriers.

Thus the railroads, common-carrier backbone of the national transportation system, are losing in the competitive race for traffic to forms of transportation that are made up predominantly of unregulated private and exempt carriers and that include, in addition, substantial elements of contract carriage that is only partially regulated.

The point I am trying to make, Mr. Chairman, is merely this: I am trying to show you the inroads that private carriage and unregulated carriage are making on common carriage, and one strong indication is that the business of those modes of transportation which include a large percentage of private and unregulated carriage have gained steadily over this period of time in their share of the total traffic, while the railroads which are the primary common carrier have lost.

I used figures very much like this last year for another purpose, but I am trying to show here the inroads of the private and the exempt carriers.

PRIVATE CARRIAGE

Much for-hire transportation is performed under the guise of private carriage and in that way escapes economic regulation. The report of the Presidential Advisory Committee recognizes that—

A primary problem in transportation at present concerns the infringement of private carriers upon the field of common carriage and the need for remedial action in the form of more effective regulation of private carriers or enactment of legislation to delineate more adequately the proper place and status of such carriers.

and that

The problem is created by those practices of private carriers which undermine the common carrier transportation system which must bear the main burden of the Nation's transportation requirements in peace and war.

The problem to which the Advisory Committee refers is not created by what may be called bona fide private carriage. The report makes it quite clear that