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This statement has been criticized by some who insist that cutthroat competition, not transportation monopoly, was the reason for the enactment of the original act to regulate transportation. This assertion does not take into account the actual terms of the original act to regulate commerce of 1887. The main purpose of that act was the protection of the public against unjust discrimination, not the prohibition of competitive practices.
There was no prohibition whatsover against competition as such but against the discriminatory practices which characterized the type of competition existing at that time and which competition was entirely different than the type of competition prevailing today.
The transportation field could well be described as having severely limited competition 60 to 80 years ago when the present concepts of economic regulation were being devised. Except for a few waterways, railroads were the only means of intercity transportation for both freight and pasengers. As a result of the control of the total transportation market by a relatively few firms, discrimination became a major problem to the shippers of the country. The apparent cutthroat competition which sometimes characterized the supply of transportation in certain areas was one aspect of the discrimination between places and persons practiced by the transportation companies seeking control of the market. Pooling, rebates, and other typically monopolistic discriminations were other practices outlawed by the first Interstate Commerce Act.
Conditions were especially ripe for discrimination when prior to the advent of antitrust legislation industrial companies with monopolistie tendencies sought to strengthen their hold on the market by bargaining for preferential treatment with railroads who were themselves seeking market supremacy in transportation.
Certainly competitive conditions have changed during the intervening years and there can be little doubt that there are far too many carriers and individuals engaged, or which could engage, in transportation for any one of them to effect substantial control over many markets.
It is true that as time passed the Congress enlarged upon the economic powers of the ICC, particularly in the 1920 act which among other broad grants of authority vested complete authority over railroad rates in the ICC. In 1920, the railroads still largely held a monopoly in transportation; the extensive promotion of inland waterways was just getting underway, and trucking was in its infancy. As these latter forms grew in importance, the Congress brought them under regulation-regulation in the pattern of the 1920 act except for certain broad exemptions. Hence it is no misconception that the regulatory policy that was developed on the concept of monopoly in transportation today retains all the substantive restraints originally designed to curb abuses inherent to monopoly.
COMPETITIVE DEVELOPMENTS IN TRANSPORTATION
That transportation operates today in a general atmosphere of pervasive competition can be demonstrated.
Total transportation output has paralleled the general growth of our national economy, yet the distribution of traffic among the various means of transport has altered greatly in the past 25 years. According to ton-mile figures released by the ICC, railroads, which as recently as the prosperous period of the late 1920's carried three-fourths of all traffic, now carry only about one-half of the total. Inland waterways and petroleum pipelines have shown substantial increases, but the most spectacular rise during the past 15 years has been in intercity motor-freight transportation, including regulated, exempt, and private carriage. Trucks which in 1940 accounted for 10 percent of The total ton-mile traffic have increased their share to about 20 percent today.
The growth in capacity of the various transport agencies as traced through the years measures in some degree their respective abilities to compete and hence also indicates further evidence of pervasive competition. For example, about 1.5 million miles of surfaced highway were constructed between 1923 and 1954, and the completion of the great new highway program now before the Congress will further augment the competitive ability of motor carriers. The number of registered trucks has increased by approximately 6 million from 1929 to 1954. The average carried weight of tractor-trailer combinations on main rural roads has increased from 6.9 tons to 10.9 tons between 1936 and 1954.
The Government has appropriated in excess of $2.2 billion for new work construction of rivers and harbors projects through fiscal year 1955.
Pipelines have been improved so that larger diameters with greatly increased capacities are now in operation. The total miles of crude petroleum lines having a diameter of 10 inches or more increased from 15,040 miles in 1926 to 32,280 in 1952, or more than 100 percent, and account for almost all of the increase in total mileage of crude petroleum pipelines. The growth in products pipelines during the past 20 years has reached the point where they have to a large degree supplanted railroads as carriers of refined petroleum products. The mileage of all refined products pipelines increased from 1,400 miles in 1931 to 27,155 miles in 1952.
The close relationship between the initial improvement of basic way facilities and the subsequent growth of competitive potential is aptly illustrated in the inland waterway transportation industry. At the turn of the century inland waterway transportation was plagued by obsolete facilities. River courses through sites undergoing great new industrial expansion in coal and steel were relatively unimproved. Existing carriers were relying on outmoded steam packet boats which could not provide a satisfactory service in competition with land carriage. The improvement to the Ohio River, begun in 1910 and completed during the 1920's, made possible the utilization of large integrated tows for the carriage of bulk commodities. These tows in turn were made possible by technological developments in steam and diesel towboats, including the Kort nozzle. River improvement continued throughout the 1930's and 1940's and extended modern barge transportation to the lower Missouri River, the upper Mississippi River, the Illinois Waterway, the Tennessee River, the Gulf Intracoastal Waterway, to name a few.
Today inland waterway commerce is a progressive and vigorous industry with a growing capacity in modern tugboats and barges. The competitive potential of the inland waterways industry is therefore a fairly recent event and one that depended on news service concepts, technological innovation and improvements, and extensive engineering works on our rivers and harbors. The lack of these iniprovements was a major factor in the eclipse of river traffic during the late 19th and early 20th centuries.
The motor-trucking industry is a good example of a transport industry that has grown from infancy to relative maturity within our lifetime. Motor carriers now compete actively for almost all seg. ments of traffic except heavy ores, the bulk of the coal movement, crude petroleum, and certain other mineral products. Department of Agriculture data show the phenomenal progress of motor carriers in the marketing of agricultural products and the great lengths of haul in specific commodity movements. The overwhelming proportion of all livestock reaches market by truck; fruits and vegetables are trucked hundreds of miles to the great city markets; dairy and poultry products which require refrigeration are trucked in great quantities from the Middle West to either coast; and trucks move substantial amounts of grain in some sections of the country.
The competition of motortrucks has extended actively into all branches of manufacturing industry. A recent series of cases decided by the ICC traced the postwar growth of motor freight in the heavy steel business, and indicates the heavy participation of trucks into what was once almost exclusively a rail province. Case after case involving individual rates before the ICC document the active competition for manufacturers traffic between trucks and rails. ·
The heavy participation of motor trucks in the traffic of agricultural commodities and manufactured articles has put them ahead of railroads as revenue producers. In 1955 the total freight-operating revenues of class I railroads was $8.5 billion, which is just below their peak year, 1953, when freight operating revenues total nearly $9 billion. We have estimated that total "revenues" (revenues of regulated common and contract carriers plus cost of unregulated carriers) from trucking intercity freight during 1955 were $13.5 billion which is over 60 percent of the combined rail and motor freight revenues. We have been able to trace the great growth in total trucking revenues since 1940, a year in which the trucks earned only onethird of the combined' rail and truck revenues. The truck share dropped off drastically during the war but increased rapidly thereafter until 1950 when it equaled the rail-freight revenues and since then has forged ahead. A graph attached to my statement shows the dramatic extent to which trucking now has exceeded railroads in producing revenue. Our estimate of truck revenues includes all regulated, exempt
, and private intercity carriers, and is based on an assessment of truck ton-miles as shown by the ICC with representative tonMr. Harris
. Without objection, the graph may be inserted in the
mile earnings data.
record at this point.
(The graph is as follows:)
BILLIONS OF DOLLARS 15
BILLIONS OF DOLLARS
RAIL AND ESTIMATED MOTOR TRUCK INTERCITY FREIGHT REVENUES, 1940-55
Mr. RVTHSCHILD. The growth in regulated truck revenues to where How approximate rail revenues from manufactured goods signi
firber that the motortrucking industry has reached maturity. l'enerally known that the regulated segment of the trucking in
y obains practically all of its revenues from the carriage of manmurai goods. In 1910 the total revenues of class I, II, and III drop earriers were $768 million compared to $1.7 billion in rail rev
; for the carriage of manufactured goods in carloads, forwarder 5, and less-carload freight. By way of contrast, in 1954, the 2
wort agencies obtained equal amounts of revenues from the car
of manufactured goods; class I, II, and III motor carriers •. $1.1 billion in gross revenues and class I railroads obtained
?bllion in revenues from the carriage of manufactured-goods traf*. These figures are not estimates but are obtained from reports of ** marriers to the ICC.
Mass basic economic factors will tend to favor motor-freight transpation in the years ahead. The dispersal of population and indusal development into suburban areas and small cities, the improved ay ml of big business over inventories, and new assembly and produc
terliniques in manufacturing have been among the recent develop
- which have increased the service advantages of motor freight. lo ment years many plants have located on new highways and are
ng primarily on motor-freight service. There is little doubt **s trend will be accelerated by the proposed modernization of
literstate Highway System. At the same time, the increases in pision forecast for the next decade, and a continuance of a high
e level will result in increased demand for all transportation 5:7, of which motor carriers should gain a substantial share. With 2.".'!:mp developments tending to favor motor freight, it appears that "* motor carrier is in no danger of destruction from competitive
Tite Is short, the trucking industry as a whole now exceeds the railroads *!total expenditure for transportation service, even though in ton:' mail service is still considerably ahead of intercity total truck
r. Trucks are more than holding their own in the short hauls and in the high-valued agricultural and manufactured-goods traffic, 7 dit is only the predominance of railroads in the low-valued prod
of mines that enables them to exceed motortruck tonnage. No lararded person can seriously believe that the survival of an indus? with such a formidable competitive record would be placed in sibe by being freed, along with other carriers, to compete without
COMMON CARRIERS AND THE NATIONAL ECONOMY It is not generally recognized that common carriers as a whole have : natched in growth the progress of the national economy. The mwinbution of transportation companies to the national income has ja ned steadily during the past three decades. In 1929, for example, in prent of the national income was derived from transportation meraries, but that percentage has declined steadily until last year Trait reached 4.8 percent.
Has this decline been due to a lessened need for transportation