of the statute, but it is being conducted by a motor carrier without benefit of a forwarder permit.

And how does the motor carrier go about "dividing" the applicable through motor carrier rate with the railroad? The answer is found at page 253 of the decision from which I have just quoted:

The Great Western would receive as its division of the proposed joint rates, on traffic interchanged at Chicago and St. Paul, $42.50 for each loaded trailer, or $85 for each car carrying two loaded trailers.

It is interesting to note how this "division" was arrived at. The Commission reported, in its decision, that:

The division of $42.50 is based, according to respondents, on the approximate cost to the motor carrier of moving the trailers over the highway of 10 cents per trailer-mile for the highway distance of 425 miles between those cities * *

We think it puts a considerable strain on logic and defies legal precedent to call that type of a charge a "division." But whatever it is, the motor carrier is acting exactly as a freight forwarder would act in tendering such freight to the railroad, and the forwarder surely is entitled to as favorable a charge. And the cry of "invasion" comes with ill grace from the motor carriers who are themselves the "invaders."

These cases from which I have been quoting, and which were relied upon by the Commission as precedents in deciding the recent Piggyback case, reflect practices in the isolated instances of piggybacking that existed prior to the current boom. From all that appears of record, present arrangements between railroads and motor carriers for joint piggyback operations are based on the same so-called "substituted service" plan, whereby the motor carrier is the originating and delivering carrier and simply substitutes a rail for a motor haul for a part of the journey.

The facts as I have briefly outlined them show conclusively that there is both a practical need and an economic necessity for this bill, and that its prompt enactment is the only means of removing discrimination and equalizing opportunity among carriers. It can be demonstrated also that the bill conforms with sound legal principles and regulatory policies.

First of all, the bill is amply supported by precedent. Freight forwarders and motor carriers have coordinated their services on the basis of contracts or joint rates for more than 30 years since the motor carrier industry was in its infancy. Present section 409, which the bill amends, is the product of evolution and experience.

At the time when motor carriers were regulated in 1935, forwarders and motor carriers had an extensive system of joint service based on contracts between units of the two industries. After enactment of motor carrier regulation the contracts were converted to joint rate and divisional arrangements, which the law seemingly authorized. The ICC held that such joint rates between forwarders and motor carriers were not authorized by the Motor Carrier Act. In this it was sustained by the courts. (Acme Fast Freight, Inc., et al. v. U. S., et al., 30 F. supp. 968; aff'd 309 U. S. 638).

The joint forwarder-motor rates were nevertheless maintained, by reason of various suspensions of the Commission's orders, until forwarders were regulated in 1942. The original Forwarder Act (pt. IV of Interstate Commerce Act) authorized continuance of the joint rates

for a temporary period, which was extended from time to time. When other methods proved inadequate as a basis for maintaining the joint service, section 409, authorizing contracts, was enacted in 1950.

Freight forwarders have not made contracts for the movement of their freight in rail service, at least in modern times, and part IV does not authorize such arrangements. Instead forwarders have utilized the published carload rates of the railroads. Over the years the railroads have developed mixed carload rates that would accommodate the type of freight and the mixtures of commodities that freight forwarders normally tender for consolidated rail movement. The "spread" between such carload rates and the 1. c. 1., rates charged by the forwarders has provided the forwarders' operating margin.

The incidental shipper relationship which forwarders sometimes assume in dealing with some of the carriers which they utilize has caused a good deal of confusion in the past regarding the status of freight forwarders. Much of the confusion has been inspired by those who opposed the granting of some right or privilege to freight forwarders so as to equalize their situation with that of other regulated common carriers. Despite the clear legal precedent for the present bill all of those who oppose its enactment, including carrier as well as shipper interests, revive the old argument that the status of freight forwarders is inconsistent with giving them rights to make contracts with railroads for piggyback service.

Long before forwarders were regulated, the Interstate Commerce Commission, in a formal proceeding, very clearly distinguished between the common carrier status of forwarders and the incidental relationship which they sometimes assume in dealing with other carriers. In the Charles Bleich Common Carrier Application case, 27 M. C. C. 9, 15-16, the Commission said:

Its (the forwarder's) primary characteristic is that of a carrier and only as an incident to its common carrier obligation does it assume the apparent status of a shipper, much the same as any common carrier by motor vehicle, which accepts a piece of freight for delivery beyond its terminus and forwards the same over the line of a connecting service carrier, thereby becomes a shipper as to that particular transaction. ***

Still the argument has been revived again and again before committees of Congress, and each time it has been repudiated. In 1950 Congress undertook to put an end to such contentions once and for all, by amending the definition of a freight forwarder so as specifically to describe forwarders as common carriers. In reporting that amendment to the House of Representatives, the Committee on Interstate and Foreign Commerce said:

This [amendment to definition] will remove any anomaly and confusion regarding the status of freight forwarders and make clear that they have the status of common carriers (H. Rept. 2489, 81 Cong., to accompany H. R. 5967).

Of the so-called dual status argument the House committee said, in the report above identified:

Even those who oppose the bill, for the most part, concede that freight forwarders are common carriers in their relations with the public. The opponents argue, however, that freight forwarders occupy a dual role and that when they deal with other carriers they are shippers only and should be treated as such. The term "common carrier" was used at common law, and has been adopted by statute, to describe the activities and responsibilities to the public. The

nature of those obligations and responsibilities, rather than methods of dealing between common carriers, is the test normally applied in determining status as a common carrier (p. 7).

It has been suggested that it is not a discrimination as between types of common carriers to permit motor carriers to use rail piggyback at divisional or contract charges, and to withhold such right from forwarders, because motor carriers own and operate physical equipment and forwarders do not. That is a particularly weak and discredited argument to apply in this instance because some of the most widely advertised plans for piggybacking today contemplates the leasing of equipment both by motor carriers and railroads.

And, at that point, I would like to say there is no legal or practical reason why the railroads could not own or lease the trailers which they might tender to the shippers in piggyback service.

Furthermore, that the ownership of equipment is not an essential ingredient of common carriage is so well established as to require no argument. As the House Interstate Commerce Committee said, in reporting the 1950 legislation:

The contention sometimes made that freight forwarders may not be treated as common carriers because they do not own or operate the facilities of transportation which they use is answered both by the analogy to the express agency and by numerous decisions of the courts. (The report-No. 2489-cite many such decisions.)

Another argument rooted in false theory about the status of freight forwarders is that it discriminates against shippers to permit freight forwarders to deal with the carriers which they utilize on any basis not available to all shippers. This argument is premised on two erroneous assumptions: That forwarders are, in fact, shippers in their relations to other carriers, and that forwarders are competitive with shippers. And though the argument is purportedly made in behalf of shippers it will be found, on closer examination, that it is made for or in behalf of those who conduct or use private consolidation operations. These persons seek to identify their consolidating operations with those of freight forwarders serving the public in the hope that they will be able to secure for themselves any advantages that may be made available to forwarders. There is a competitive angle involved, but the real competition is not between such persons and common carrier forwarders but is between such persons and others who, like themselves, are engaged primarily in the manufacture and/or buying and selling of goods. They seek to gain the greatest possible advantage in that competition over those who do not or cannot participate in similar consolidation operations.

The same theory about discrimination was advanced in opposition to the bill authorizing forwarders to make contracts with motor carriers, and it was answered emphatically by the committees of Congress dealing with the legislation.

Perhaps the clearest and most detailed answer was spelled out in the report of the Senate committee which accompanied that legislation in 1950, wherein it was said:

The Congress clearly recognized the distinction between these arrangements between forwarders and motor carriers, and rates to the shipping public, when the present section 409 was enacted in 1946. In the report of this committee on that legislation the statement was made:

"There is no foundation for the argument that the payment of compensation to motor carriers by freight forwarders for services rendered in connection with freight-forwarder shipments on a basis different from that paid by shippers constitutes discrimination." (P. 4, Rept. No. 935, 79th Cong.)

Despite this clear statement of the intent of the present law, the argument that arrangements between forwarders and motor carriers will result in discriminations against shippers is still advanced. The premise of the argument is wrong, because it can only rest on the assumption that a freight forwarder is a shipper, and in a competitive relationship with shippers. That is a basically wrong assumption, and the bill will make clear that the law regulates freight forwarders as common carriers (Rept. No. 1285, 81st Cong., 2d sess., pp. 10-11). Certain other opposition arguments, though vigorously pressed, hardly warrant a reply. They take the form of attacks on the forwarding industry. For example, forwarders have been charged with providing selective or limited service. It is also charged that the industry makes excessive profits or an unduly high return on investment. Freight forwarders are willing to let the record speak for itself on these points. Geographically freight forwarders offer an extremely wide service, and trafficwise their service is as comprehensive as that furnished by motor carriers. Rate restrictions, based on inescapable costs of operations, which are found in forwarder tariffs are also to be found in motor carrier tariffs. The excessive profits charge is completely rebutted by the facts. By the criterion used for ratemaking purposes, both in the forwarder and the motor carrier industry-the operating ratio-freight forwarders are among the poorest of the common carriers. Their operating ratio consistently is between 97 percent and 100 percent and averages better than 98 percent. The operating ratio of the motor carriers is, on the average, much lower, or more favorable, than that of the forwarders.

Now I would like to direct your attention to the position and recommendations of the Interstate Commerce Commission with regard to corresponding Senate bill S. 3366. I assume that the Commission has made or will make the same suggestions to your subcommittee. I have already referred to the fact that the Commission has made those suggestions to your subcommittee. Because of what we regard as the extraordinary character of some of the Commission's recommendations I hope you will bear with me while I examine them rather carefully. In an initial report the Commission endorsed the piggyback bill with apparent enthusiasm, but in a supplemental report filed shortly thereafter with the Senate committee it made what we suggest is a counterproposal for new legislation that is neither germane nor justified.

The initial report, dated April 6, 1956, pointed out that forwarders are competitive with motor carriers; that from the beginning forwarders have made contractual arrangements with motor carriers; that motor carriers and railroads are presently engaging in piggyback service under what is sometimes called joint rate arrangements; that if not authorized to make contracts with railroads for piggyback the forwarders will not be able to serve their patrons on a competitive basis with motor carriers; and that functions of forwarders

are substantially the same as those engaged in by motor carriers which participate in joint rates and divisional arrangements with railroads respecting their trailer-on-flat-car services.