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proposals we received from common carrier barge lines were about 25 percent higher per ton than the lowest and best proposals from contract carriers. In the light of this, the barging contracts were made with contract carriers for 15-year periods.

It is our opinion that if the present exemption of such contract barge carriers from regulation by the Interstate Commerce Commission is removed, higher rates for barge coal transportation to our power stations will be established with a resulting higher cost of the electric power we furnish to the Atomic Energy Commission. As an illustration, our present cost for delivery of coal by river barge is about $6 million per year under the contracts with contract carriers. If the rates of these carriers are made subject to regulation, and our experience in negotiating with common carriers is of any significance, our present coal delivery cost would be increased about 25 percent or $1,500,000 per year and this cost, under the terms of the power agreement with AEC, would be added to the cost incurred by the Federal Government in operating the Portsmouth project.

If the present exemption of contract barge carriers from regulation is removed as contemplated by H. R. 6141, we would have to give serious consideration to acquiring our own barges for delivering coal to our power stations so as to obtain the most economical coal supply. Very truly yours,

HAL KAMMER, Vice President.

HOUSE OF REPRESENTATIVES,

Washington, D. C., May 3, 1956. Hon. J. PERCY PRIEST, Chairman, House Interstate and Foreign Commerce Committee,

Washington, D. O. DEAR MR. CHAIRMAN: Enclosed please find a letter which I have received from the general counsel of the California Railroad Association, Mr. Walter J. Little, regarding the recommendations contained in the President's Advisory Committee on Transport Policy and Organization.

I feel certain that you will want to bring Mr. Little's thoughtful letter to the attention of the members of the Interstate and Foreign Commerce Committee so that they may have the benefit of Mr. Little's thinking on this very important matter. Thank you for your cooperation in this matter. Sincerely,

JOHN F. SHELLEY,
Member of Congress.

CALIFORNIA RAILROAD ASSOCIATION,

Los Angeles, April 17, 1956. Hon. John F. SHELLEY,

House Office Building, Washington, D. C. DEAR CONGRESSMAN SHELLEY: The Congressional Record of March 22, 1956 (p. A2582), carries a reprint of a letter to Congressman Harlan Hagen, a copy of which you may have received, from Robert M. Underhill. Mr. Underhill is secretary-treasurer of the regents of the University of California, a public institution supported by public funds. It is not clear whether he writes in that capacity or only as a director of one of the largest trucking companies in the United States, a position he holds by virtue of the university being its seventh largest stockholder.

I question the propriety of Mr. Underhill involving the university in these controversial legislative matters.

Mr. Underhill faithfully repeats the views of the trucking industry as to two important issues pending before the Congress. I am not the representative of any public institution. I represent the privately owned and operated railroads. Herewith are our answers to Mr. Underhill's assertions.

He alleges that the President's Cabinet proposal relating to rate regulation would permit the railroads “to make rates without any control by the Interstate Commerce Commission.” The answer to this absurd assertion may be found in bold blackfaced type on page 8 of the report of the Presidential Advisory Committee on Transport Policy and Organization. This is what the report says:

*Recommendation : Limit regulatory authority of the Interstate Commerce Commission to determination of reasonable minimum or maximum rates with

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no changes in existing provisions making undue discriminations and preferences unlawful."

This is the recommendation from which Mr. Underhill so recklessly assumes railroads will be permitted to make rates "without any control by the Interstate Commerce Commission."

Mr. Underbill's next two paragraphs are classic examples of the non sequitar. He alleges that there are thousands of cities and towns not served by railroads and "absolutely dependent on truck service.” How may we ask are railroads to run truck lines out of business, as he alleges would be the case if the Cabinet proposals are followed, when according to his own words the railroads don't even serve the territory in question?

The answer, of course, is that again Mr. Underhill has not been fully advised of the facts. The myth that truck lines served small communities and the rail. roads do not can best be exposed by using the truck company of which he is a director as an example. That company operates between San Francisco and Chicago, and Los Angeles and Chicago by way of Salt Lake City, Denver, Kansas City, and St. Louis. It maintains 23 agencies en route. The railroads maintain 468 open stations at points on all of the routes of this competing highway common carrier.

The objective of the Cabinet proposal is to let competition determine the level of rates of common carriers. Presumably Mr. Underhill does not believe in the American principle of free competitive enterprise.

I will not take much of your time in answering the truck views on highway user taxation. These have been very well answered in the public mind by the views expressed before the Congress by the American Automobile Association.

The best answer to Mr. Underhill and the truckers is found in a paper presented at the 28th annual meeting of the California State Chamber of Commerce on December 1, 1955. This paper, Federal Highway Policy, by Richard M. Zettel, research economist, Institute of Transportation and Traffic Engineering, University of California, Berkeley, said in part:

“The National Government has never dealt directly in highway-user taxation There is a new and growing disposition merely to rename present Federal excises on motor fuels and other automotive produts, calling them user taxes and asking for their use on highways. Yet, the National Government's excises, now proposed to be called user taxes, were not conceived as compensation for highway use when enacted and have never been evaluated in terms of their distribution of the highway burden.

"Perhaps in this instance the National Government has something to learn from the States. For example, no State has found that fuel consumption standing alone is an adequate or fair base for spreading the highway burden among users. It seems hardly likely that the National Government should find it to be so. Thus, it is not surprising that proposals blossomed forth in Congress this year for special taxes on certain highway users to supplement the gasoline tax. I do not know whether the particular taxes or the rates considered this year were appropriate. But it seems clear that the National Government, faced with a new conception of highway finance, should evaluate the problems of burden distribution in new terms. It seems equally clear that this evaluation will suggest a distribution of the burden markedly different from that resulting from present excises. It is almost inconceivable that the problem can be solved satisfactorily simply by changing the titles of existing taxes. It is more likely that new taxes or selective differential rate increases will be called for."

Your earnest consideration of the problems that would face California, and the Nation, as a result of an undue public subsidy to the trucking industry will be much appreciated. Sincerely yours,

WALTER J. LITTLE Mr. WILLIAMS. Mr. Johnson, you may proceed.

STATEMENT OF GILBERT R. JOHNSON, COUNSEL, LAKE CARRIERS

ASSOCIATION, CLEVELAND, OHIO Mr. Johnson. Thank you, Mr. Chairman.

My name is Gilbert R. Johnson. I am a practicing lawyer of Cleveland, Ohio. My appearance here is as counsel for Lake Carriers' Association, which is an organization of vessel owners operating ships

a

on the Great Lakes under United States flag in the transportation of commodities in bulk. The transportation of commodities in bulk on the Great Lakes is a homogeneous mode of transportation. It is not in any appreciable degree commingled with any other mode of transportation.

I would like, if you please, Mr. Chairman, to have filed for the record my prepared statement; and if it meets with your pleasure, I would simply like to scan the statement as I go along, pointing out the subjects which are discussed.

Mr. WILLIAMS. You may proceed.

Mr. JOHNSON. In the first place, there is an introductory statement in which we point out that the position that we are taking here is not inconsistent with one of the recommendations of the President's Advisory Committee with respect to the free play of competition in the field of transportation.

Second is a description of the geography of the Great Lakes.

Next, on page 3, is a discussion of the navigation rights of the Great Lakes, pointing out that the Great Lakes are international waters, where the transportation is both domestic and international, and, of course, with the opening of the St. Lawrence seaway the international aspects are likely to be of greater significance than they have been heretofore.

On page 4 we discuss the nature of Great Lakes bulk transportation, and on page 5 there is a table compiled in 5-year periods, showing the

5 volume of that transportation; and, if you please, Mr. Chairman, you will note that it is a very substantial volume that is moved each season in these bulk commodities, namely, iron ore, limestone, coal, and grain.

On page 6 there is a discussion of the water carriers engaging in this bulk transportation, and we point out that in accordance with the general maritime laws those carriers are either contract or private carriers. The transportation of commodities in bulk does not lend itself to a common-carrier service, and the reasons for that are pointed out in the statement under the heading on page 8.

There is a very substantial economy, of course, which we discuss on page 10 of Great Lakes transportation. Briefly stated, it is about

mills per ton-mile, as compared with about 115/100 cents per tonmile by rail carrier.

Over the years the Congress has dealt with three different acts which have formed the basis in some manner or other of the economic regulations of water transportation, and in each one of those acts, namely, the Shipping Act of 1916, the Intercoastal Shipping Act of 1933, and the Transportation Act of 1940, contemplated the transportation of commodities in bulk on the Great Lakes, and there were 3 basic reasons for those exemptions: (1) that the transportation of those commodities is conducted by contract and private carriers, not common carriers; (2) that it is not competitive with common carriers either by land or water; and (3) that it is competitive with foreign carriers, the most important of which are Canadian carriers.

Mr. Chairman, our concern with H. R. 6141 and 6142 is the proposed redefinitions of the terms "common" and "contract carrier," and the repeal of the general bulk exemption. There is a specific contract carrier bulk exemption for the Great Lakes and at the time the Transportation Act was passed that exemption was considered highly adequate for the Great Lakes.

1920

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