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or count. For the purposes of this subsection two or more vessels while navi. gated as a unit shall be considered to be a single vessel. This subsection sball. not apply to transportation subject, at the time this part takes effect, to the provisions of the Intercoastal Shipping Act, 1933, as amended.”
H. R. 6141 and H. R. 6142 would repeal paragraph (b), the general bulk commodity exemption, but would leave in effect paragraph (c), the Great Lakes exemption. Thus the bills recognize, as did the Congress in enacting the Shipping Act of 1916, the Intercoastal Shipping Act of 1933 and the Transportation Act of 1940, that the competitive forces affecting Great Lakes bulk commodity transportation do not call for an adjustment through the extension of regulatory programs and policies to such transportation. Indeed, it appears to be the primary purpose of these bills to equalize the opportunity for regulated land and water carriers through the equality of regulation among competitors. Whatever may be the merits of such a proposal, the fact remains that, inasmuch as the carriage of bulk commodities on the Great Lakes is not competitive with common carriers either by land or by water, there is no need for bringing Great Lakes bulk transportation under statutory economic regulation.
However, because the present exemption pertaining to the transportation of commodities in bulk on the Great Lakes is limited to "contract carriers," this exemption might be of little effect and purpose should the general commodity exemption be repealed. As indicated previously, the Congress, in earlier enactments, always regarded the Great Lakes vessel operator as a contract carrier in terms of the general maritime law. By redefining the term “contract carrier by water” and, in effect, abandoning the general maritime law in favor of a much more restricted relationship, these bills would take the Great Lakes vessel operator out of his natural role as a contract carrier. Disregarding the intent of the Congress as expressed in the Shipping Act of 1916, the Intercoastal Ship ping Act of 1933 and the Transportation Act of 1940, these bills would, by legislative fiat, impose upon Great Lakes contract carriers all of the regulatory provisions applicable to common carriers under the act. While the Congress may well have the constitutional power under the commerce clause to impose upon contract carriers requirements and restrictions applicable to common carriers, such treatment of contract carriers would be, to say the least, unreasonable and arbitrary. Wolff v. Industrial Court (262 U. S. 522); Michigan Commission v. Duke (266 U. S. 570).
Even if the present definition of "contract carrier by water" is retained, there is considerable doubt, in view of the recent decision in Contract Steel Carriers, Inc., v. United States, supra, that the Commission would continue to construe that term in accordance with the general maritime law. Consequently, if the general bulk commodity exemption is repealed, the present Great Lakes exeniption would be an exemption in name only. Many Great Lakes vessel operators, whom Congress heretofore has always regarded as contract carriers, would probably be held to be common carriers and thus subjected to regulation.
Such a result would not be in the best interests of the Nation and would contravene the express intent of Congress. It would seem that, if the general bulk commodity exemption contained in paragraph (b) of section 303 is repealed, the Great Lakes bulk exemption contained in paragraph (c) should be modified so as to make it clear that the exemption is to apply to all water carriers engaged in the transportation of commodities in bulk on the Great Lakes. This could be accomplished by deleting the word "contract" so that the exemption would apply to all Great Lakes carriers by water engaged in the transportation of commodities in bulk.
CONCLUSION The transportation of commodities in bulk on the Great Lakes is conducted by contract and private carriers. It is a homogeneous mode of transportation and is not competitive with common carriers either by land or water. It is, however, highly competitive among the bulk carriers themselves and between them and foreign carriers. By excluding such transportation from statutory economic regulation, the Congress has already accomplished for the Great Lakes one of the stated objectives of the Presidential Advisory Committee. The forces of free competition and no other regulate this segment of the Nations transportation.
In the event the general bulk exemption contained in paragraph (b) of section 303 were repealed without adequate modification of the Great Lakes bulk exemption contained in paragraph (c), inequalities would occur in the transportation of bulk commodities on the Great Lakes in that: (1) At the present
time neither United States nor foreign carriers, especially Canadian, which compete in international trade on the Great Lakes, are regulated. They obtain their cargoes on a free competitive basis. Statutory economic regulation is not contemplated for such foreign carriers so that, if United States carriers were so regulated, foreign carriers would be free and United States carriers controlled. (2) Some carriers would qualify as “contract carriers” and so would be exempt. Thus, for the first time there would be disparity among bulk carriers on the Great Lakes in that, of the water carriers who would be in competition with each other, some would be regulated and some would not.
Repeal of the general bulk exemption would clearly imperil the policy established by the Congress in the transportation of bulk commodities on the Great Lakes. Standing alone in its present form, the Great Lakes exemption would not serve to etfectuate established congressional policy. The redefinitions of the terms “common carrier by water” and “contract carrier by water," as recommended by the Presidential Advisory Committee and as proposed by these bills, would, in all probability, bring under the provisions of part III most Great Lakes vessel owners whose business is exclusively the transportation of commodities in bulk for others.
In order to preserve established congressional policy, it is proposed, therefore, that the Great Lakes exemption be amended by deletion of the word "contract" so that such exemption would "apply to transportation by a carrier by water of commodities in bulk in a nonoceangoing vessel on a normal voyage during which (1) the cargo space of such vessel is used for the carrying of not more than three such commodities, and (2) such vessel passes within or through waters which are made international for navigation purposes by any treaty to which the United States is a party."
Mr. WILLIAMS. Are there any questions?
Accordingly, the committee will adjourn until 10 o'clock in the morning.
(Whereupon, at 4:40 p. m., the hearing was recessed until 10 a. m., Wednesday, June 6, 1956.)
WEDNESDAY, JUNE 6, 1956
HOUSE OF REPRESENTATIVES,
Washington, D. C. The subcommittee met at 10 a. m., pursuant to adjournment, in room 1334 New House Office Building, Hon. Oren Harris (chairman of the subcommittee) presiding.
Mr. HARRIS. The committee will come to order.
We have a number of witnesses today who will testify on H. R. 6141 and various other bills on the subject.
The first witness this morning will be Mr. Giles Morrow, president, Freight Forwarders Institute, 610 Perpetual Building, Washington, D. C.
Mr. Morrow, we will be glad to have your testimony. STATEMENT OF GILES MORROW, PRESIDENT AND GENERAL
COUNSEL, FREIGHT FORWARDERS INSTITUTE, WASHINGTON, D. C.
Mr. MORROW. Mr. Chairman and members of the subcommittee, my prepared statement is necessarily rather lengthy because of the ground I have to cover and the fact that I will be the sole witness for the Freight Forwarders Institute. This is in effect, therefore, a consolidated statement covering a number of bills. I can shorten it a little if I may have permission from time to time to just skip over a paragraph or so and have the entire statement copied in the record.
Mr. HARRIS. You may have permission to put your entire statement in the record, Mr. Morrow, and give such brief explanations as you think are most appropriate and emphasize any points you wish to make in your presentation.
Mr. MORROW. I have been sufficiently identified by the chairman.
The Institute is the national organization composed of and representing freight forwarders subject to regulation under part IV of the Interstate Commerce Act.
During the course of the hearings held by your subcommittee last September on the Report of the Presidential Advisory Committee on Transport Policy and Organization I presented testimony in behalf of the institute. My statement appears at pages 186-206, inclusive, of the printed report of those hearings. To avoid repetition, I will make reference from time to time to that testimony.
I included in my September testimony certain background facts which I will not now repeat. It is sufficient to point out that freight
forwarders were regulated in 1942 by the addition of part IV to the Interstate Commerce Act, and that such regulation follows, in most basic respects, the pattern established by parts I, II, and III of the act for rail, motor, and water carriers.
To bring the record up to date, since my previous appearance the Interstate Commerce Commission has issued its statement Q-950 showing the statistics of operations of the 60 class A freight forwarders for the full year 1955. Such forwarders had gross revenues from transportation in 1955 of approximately $402 million. A little more than three-fourths of this amount, or $303 million, was paid by the forwarders to the underlying rail, motor, and water carriers which they utilized in the provision of their service. In 1955 the 60 large forwarders handled in their service 4.7 million tons of freight, consisting of more than 25 million individual shipments.
I shall state, as briefly as possible, the views and position of the freight forwarders with regard to such of the pending proposals as appear to us to have the most direct effect on the industry. That will include certain of the provisions of the omnibus transportation bills, H. R. 6141 and H. R. 6142, and all of the provisions incorporated in bills H. R. 9548, H. R. 9771, and H. R. 9772.
These last three bills are directed exclusively to the amendment of part IV of the act, and they have the wholehearted support of the forwarding industry. While they do not spring from any specific recommendation contained in the Cabinet Committee report, they have for their purpose the strengthening of the common-carrier transportation system. I intend to show that these three bills are of immediate urgency, and that the facts on which they rest for support are easy to understand and evaluate.
My testimony will be divided into two major parts. First, I will undertake to deal with the provisions of the omnibus or Cabinet Committee bills, H. R. 6141 and H. R. 6142, insofar as they directly affect freight forwarders. In the second portion of my testimony I will deal with what I have referred to as the three freight-forwarder bills.
OMNIBUS TRANSPORTATION BILLS-H. R. 6141 AND H. R. 6142
You have heard a great deal of testimony regarding the meaning and purposes of the various provisions of the omnibus bills, and the philosophy and intent of the report from which they stem. The chairman of the Cabinet Committee and his assistants and advisers, as well as some of his colleagues on the committee, have given you their concepts of the report and the implementing legislation and their reasons why they think the bills should be enacted. Every major form of transportation, as well as shippers and others, has given your subcommittee the benefit of its views and recommendations. Any attempted analysis by me of the broad purpose and underlying philosophies involved in these proposed measures would therefore be repetitious.
Freight forwarders are common carriers who utilize the services of all forms of physical carriage, rail, motor, and water. They are coordinators of the services of the basic carriers that form the physical transportation plant. The strength and vitality of the forwarding industry depend in large measure upon a strong and healthy physical transportation system, in which each agency performs as efficiently