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Additional information submitted for the record by-Continued

Page Freight Forwarders Institute:

Additional freight-forwarding rights authorized subsequent to
May 16, 1942, by States.-

1191 Proposed changes in section 409..

1157 Questions considered by Interstate Commerce Commission in

docket 31375, movement of highway trailers by rail, with sum-
mary of answers thereto.--

1161 Summary of additional operating rights by States, table.

1195 Hale, Hon. Robert: National Transportation Policy and the New Eng

land Economy, report of New England Governors' Committee on
Public Transportation..

857 Ingram Barge Co., statement of R. E. Bridges, vice president-

1129 Intercoastal Steamship Freight Association, statement of Harry S. Brown, chairman.

1038 Kansas City (Mo.) Board of Trade, statement of Walter R. Scott, executive vice president--

596 Locke, Bryan D.: Statement of carload rates, 30,000 minimum,

freight, all kinds, New York to Fort Worth and Dallas, and freight
forwarder and Dal-Worth Shippers Association first-class rates
from June 30, 1946, to March 6, 1956, table----

1116 Memphis Freight Bureau: Letter from C. A. Mitchell, commissioner

1262 Statement of C. A. Mitchell, commissioner-

1243, Metcalf, Hon. Lee, letter from, transmitting membership bulletin of Montana Citizens Freight Rate Association, May 1956_-

824 Mississippi Valley Association, statement of Marvin B. Marsh, president.--

769 Movers Conference of America : Members of

922 Operating ratio (percent), table--

919 Supplementary statement of James F. Rowan..

924 National Association of Mutual Savings Banks, letter from Harry E.

Proctor, transmitting statement of R. Stuart Rauch, Jr., president,
Philadelphia Savings Fund Society.

1126 National Committee of Shippers and Receivers : Summary of hear

ings before Senate Committee on Interstate and Foreign Commerce,
March and April 1952.-

1029 National Industrial Traffic League:

Letter from William H. Ott, chairman, legislative committee --- 941
Proposed amendments to H. R. 6141.

945 Statement of William H. Ott, Jr., chairman, legislative committee,

before Senate Committee on Interstate and Foreign Commerce - 946 New York Life Insurance Co., statement of H. Everett Woodruff, vice president, in charge of investment department-

1125) North Atlantic Ports Conference, letter from A. C. Welsh, chairman pro tempore, law and legislative committee.

996 North Dakota Public Service Commission, letter from John M. Agrey, director of traffic transmitting statement

788 Ohio Valley Electric Corp., letter from Hal Kammer, vice president--- 1132 Order of Railway Conductors and Brakemen, statement of R. O. Hughes, president.

761 Pacific American Steamship Association, letter from Ralph B. Dewey, vice president.

1001 Pennsylvania Railroad : Comparative tonnages of merchandise freight, United States, 1953, table--

1202 Phoenix (Ariz.) Chamber of Commerce, letter from Lewis E. Haas, general manager--

742 Shelley, Hon. John F., letter, from.

1133 Traffic Managers Conference of Southern California, letter from L. C. Wolfe, executive secretary

1002 Union Electric Co., statement of Dudley Sanford, executive vice president.

786 United States Wholesale Grocers' Association, Inc., letter from R. H. Kowe, vice president and secretary

788 Virginia State Ports Authority, letter from D. H. Clark, executive director

997

TRANSPORTATION POLICY

WEDNESDAY, MAY 9, 1956

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON TRANSPORTATION AND
COMMUNICATIONS OF THE COMMITTEE ON
INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The subcommittee met, pursuant to adjournment, at 2 p. m., in room 1334, New House Office Building, Hon. Oren Harris (chairman of the subcommittee) presiding.

Mr. HARRIS. The committee will be in order. Before we start with the truckers associations in the hearings this afternoon, we have Mr. John F. Floberg, who would like to take just a moment to introduce a statement by Mr. Walter R. Scott. STATEMENT OF JOHN F. FLOBERG, ESQ., WASHINGTON, D. C., APPEARING IN BEHALF OF WALTER R. SCOTT, VICE PRESIDENT, THE BOARD OF TRADE OF KANSAS CITY, MO.

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Mr. FLOBERG. Mr. Chairman, and members of the committee, my name is John F. Floberg, a partner in the firm of Kirkland, Fleming, Green, Martin & Ellis. We are counsel for the Board of Trade of the City of Chicago.

On behalf of the grain exchanges of the United States, including the Board of Trade of the City of Chicago, Chicago, Ill., the Corn Exchange of Buffalo, N. Y., the Duluth Board of Trade, Duluth, Minn., the Fort Worth Grain and Cotton Exchange, Fort Worth, Tex., the Milwaukee Grain Exchange, Milwaukee, Wis., the Minneapolis Grain Exchange, Minneapolis, Minn., the Minneapolis Traffic Association, Minneapolis, Minn., the Omaha Grain Exchange, Omaha, Nebr., the Peoria Board of Trade, Peoria, Ill., the St. Joseph Grain Exchange, St. Joseph, Mo., and the Salina Board of Trade, Salina, Kans., I would like to submit for the record, with your permission, Mr. Chairman, the statement of Walter R. Scott in support of H. R. 525, a bill now before your committee in connection with this general subject.

Mr. Harris. We will be very glad to have Mr. Scott's statement. I believe that refers to section 22.

Mr. FLOBERG. Yes, sir. It is the bill to repeal section 22 of the Interstate Commerce Act. Mr. HARRIS. Is that the Hinshaw bill? Mr. FLOBERG. Yes, sir. He is the sponsor of that bill. Mr. Harris. The associations that you represent, I believe, are in support of this bill which repeals section 22?

Mr. FLOBERG. Yes, sir. All the grain exchanges support the repeal of that section. The grain traders in general feel that it has operated seriously to their detriment and to their prejudice.

Mr. HARRIS. It was the Interstate Commerce Commission, I believe, that made an alternate proposal. Have you had an opportunity to consider that?

Mr. FLOBERG. No, sir; I have not done so.

Mr. HARRIS. It is included in the hearings, and if you will avail yourself of that information and give it some thought to see if you can give us any further suggestions, or views, we will be glad to have them.

Mr. FLOBERG. Yes, sir; I shall do that.

Mr. Harris. Thank you very much, Mr. Floberg. We are very glad to have Mr. Scott's statement.

(Statement referred to follows :)

STATEMENT OF WALTER R. SCOTT

My name is Walter R. Scott of Kansas City, Mo. I am executive vice president of the Board of Trade of Kansas City, Mo.., which is the grain exchange of Kansas City, Mo.-Kans., with a membership representing some 60 firms operating in the Kansas City, Mo.-Kans., terminal district and engaged in the businesses of merchandising grain, exporting grain, flour milling, feed muanufacturing, and grain processing.

I am authorized to speak here for the following interests : Grain exchanges

Board of Trade of the City of Chicago, Chicago, Ill. ; Corn Exchange of Buffalo, N. Y.; Duluth Board of Trade, Duluth, Minn.; Fort Worth Grain & Cotton Exchange, Fort Worth, Tex.; Milwaukee Grain Exchange, Milwaukee, Wis. ; Minneapolis Grain Exchange, Minneapolis, Minn. ; Minneapolis Traffic Association, Minneapolis, Minn.; Omaha Grain Exchange, Omaha, Nebr.; Peoria Board of Trade, Peoria, Ill. ; The St. Joseph Grain Exchange, St. Joseph, Mo.; and Salina Board of Trade, Salina, Kans.

The foregoing organizations are the governing bodies of the grain exchanges at the respective cities named, and the membership of said exchanges consists of grain merchants, grain exporters, flour millers, feed manufacturers, and grain processors, operating in the respective cities, Other organizations

Southwestern Industrial Traffic League, an organization comprising shipping interests located in the Southwestern States; and Texas Industrial Traffic League, whose members are shipping interests in the State of Texas.

Both organizations comprise in their membership grain merchants, grain exporters, flour millers, and feed manufacturers located in many cities in their rsepective jurisdictions. Individual concerns

The following corporations with principal offices in the respective cities named: Continental Grain Co., New York, N. Y.; Cargill, Inc., Minneapolis, Minn.; General Mills, Inc., Minneapolis, Minn. ; Pillsbury Mills, Inc., Minneapolis, Minn.; Colorado Milling & Elevator Co., Denver, Colo.; Standard Milling Co., Kansas City, Mo. ; and the Early & Daniel Co., Cincinnati, Ohio.

These several concerns are among the largest of their kinds in the country. They are engaged either in the business of merchandising and exporting grain or in the manufacture of flour from wheat or in both such activities. Position of these parties

The parties named, who collectively are representative of the grain trade of the country, respectfully represent to the committee that H. R. 525 should be approved and passed, with possible amendment as suggested below.

H. R. 525

This measure proposes to amend section 22 of the Interstate Commerce Act, nited States Code, 1946 edition, title 49, section 22, as indicated below: The first clause of said section 22 is as follows:

“That nothing in this part shall prevent the carriage, storage, or handling of property free or at reduced rates (for the United States, State, or municipal governments, or] for charitable purposes, or to or from fairs and expositions for exhibition thereat, or the free carriage of destitute and homeless persons transported by charitable societies, and the necessary agents employed in such transportation, (or the transportation of persons for the United States Government free or at reduced rates,) or the issuance of mileage, excursion, or commutation passenger tickets ;"

H. R. 525 proposes to amend this section by striking out the language enclosed in brackets. The effect of the amendment would be to eliminate the provision of the law which permits railroads to carry persons or property for the United States Government free of charge or at reduced rates.

HISTORY OF SECTION 22

Section 22 of the Interstate Commerce Act was a part of the original act in substantially its present form (Feb. 4, 1887, ch. 104, sec. 22, Stat. 387). The purpose of this section was to exempt the traffic of the United States Govern. ment from the other provisions of the act which apply to shippers in general.

In respect to furnishing transportation, a railroad ordinarily bears to the Government the same relation that it does to a private individual using its facilities, St. Louis, B. & M. Ry. Co. v. United States (268 U. S. 169), and the object of this clause was to sanction discrimination in favor of the Government as against other shippers, Interstate Commerce Commission v. Baltimorc ct Ohio R. CO. (145 U. S. 263).

At the time of the enactment of the original Interstate Commerce Act property and persons transported for the Un States Government comprised but a small part of the traffic of the railroads, and the railroads had a virtual monopoly of inland transportation. Over recent years these conditions have radically changed in that the activities of the Government have greatly increased, both in matters of national security and domestic economy, and the tremendous growth of transportation of freight and passengers by highway and river barge has materially affected the transportation situation.

What was originally a harmless discrimination has become an intolerable injustice as the Government entered one business field after another in competition with its citizens. The Government is now said to be the largest shipper in the world. Among other things, it is the largest grain merchant and grain shipper in the country and is in competition with the grain trade, who protest against the extraordinary business advantage resulting from reduced rates under section 22.

THE UNITED STATES GOVERNMENT IS A COMPETITOR OF THE GRAIN TRADE The interest of the grain trade in this matter is best understood by describing a recent experience, as follows:

On or about June 21, 1954, knowledge of a section 22 quotation providing substantially reduced rates for the transportation of wheat available to Commodity Credit Corporation only spread rapidly throughout the grain trade of the country. No notice had been given by either the railroads or the Government of an intention to establish this quotation, and the effect of the information was as a bombshell because of its vital bearing upon the welfare of the trade and the threat of future similar developments. It was instantly realized that section 22 quotations held latent power to destroy the trade completely.

The quotation was further disturbing because it was found to be dated June 18, 1954, and was made retroactive to May 25, 1954, and so it was apparent that such rates can be negotiated in secrecy and actually made effective and placed in operation long before a private grain dealer would know what was going on

This particular quotation provided a complete set of substantially reduced rates on grain from origins throughout the States of Oklahoma and Texas to the Texas gulf ports on traffic intended for export. Oklahoma and Texas are large and important wheat-producing States and by reason of their location normally supply the largest proportion of wheat exported through the Texas gulf ports; and, while the volume of this export trade varies froin year to year, in some

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