forwarder service to be regulated. Thus, neither the well-established and recognized limited-scope pool-car operators nor the cooperative shipping associations of the day were in the minds of those who proposed regulation, although such associations had been active in transportation for many years. This was natural, since the considerations which gave rise to the desire for regulation in the public interest all related to the common-carrier-type forwarder. For example, the latter was the sole object of inquiry in the Interstate Commerce Commission's well-known freight-forwarding investigation (229 I. C. C. 201 (1938)), and the Commission's recommendation of forwarder regulation based on that record was correspondingly limited.

When, as is indicated above, it became expedient and urgent for the common-carrier-type forwarders to take the initiative in demanding their own regulation (because they conceived this to be necessary to protect their then existing joint rate arrangements with their underlying motor carriers), it was also to the interest of the common-carriertype forwarders to restrict the application of forwarder regulation as much as possible so that the corresponding privileges and advantages gained from assumption of such regulation would not have to be shared with others, such as with cooperative shipping associations. Thus, the proponents of freight-forwarder regulation forcefully opposed from the outset any inclusion of any such shipper consolidating activities in the act. In presenting their proposed scheme of forwarder regulation to the Congress in 1940 one official witness for the Freight Forwarders and Consolidators Institute stated unequivocally-which is now the Freight Forwarders Association

* there are shippers who might be considered as forwarders.

** However, this legislation does not provide for them, and we have not attempted to provide for them as forwarders. * **

Then later, referring to the policy of allowing shippers of owning forwarding companies—

***I do not think that they should be given the same privilege that the recognized forwarder is given, so far as joint rates are concerned. I would say they were shippers, as long as they handled their own goods-and their own goods only. (Witness Fisher G. Dorsey, testifying on behalf of the Freight Forwarders and Consolidators Institute, hearings before Senate Subcommittee on Interstate Commerce on Senate Resolution 146, June 12, 1940, p. 349.)

The same theme of restriction of freight forwarder regulation strictly to the common-carrier-type operator runs consistently through the hearings, debates, and reports on the bills of the 77th Congress (H. R. 3684 and S. 210), which finally resulted in Public Law 558, enacting part IV of the Interstate Commerce Act including section 402 (c) in its present form. During this handling shippers, railroads, and Congressmen became aroused to the possible threat to long-established pooling and nonprofit consolidation practices, with the result that it was recognized that this sound principle and practice could not be adequately protected by a mere textual explanation, or by clarificationonly a definitive exemption would suffice.

This exemption originated in the House hearings of March 1941, was incorporated in the House committee's report No. 1172, August 13, 1941), and was carried through into the conference report on the bill (H. Rept. 2066, May 4, 1942), and thereupon adopted in the Senate, 88 Congressional Record 4021. Its development from a state

of mere suggestive language to its final enactment in the completed exemption of the present section 402 (c) is indicated in the following quotations and reference (February 28, 1941):

By virtue of the definitions and exemptions in the bill the legislation does not provide for the regulations of (1) the operations of warehousemen loading or distributing pool-car shipments, who do not assume responsibility for the through movement or transportation of the consolidated shipments to their respective destination points, and who do not depend for their revenues upon their ability to take advantage, for themselves, of the lower rates which are applicable due to consolidation of shipments into carload and truckload lots or units *** Chairman Clarence F. Lea, introducing H. R. 3684 into the House hearing before Committee on Interstate and Foreign Commerce, House of Representatives, H. R. 3684, 77th Cong., 67 Traffic World 583.)

March 20, 1941:

H. R. 3684 in its present form, fails to consider the interests of shippers and receivers of freight. This brings me to the two specific provisions of the bill which retailers would like to see changed.

The first of these two provisions is the definition of a freight forwarder, which is found in section 402 (e), beginning on page 2, line 13, of the bill. As now written, this definition creates a twilight zone in which it will be difficult, and even impossible, to tell whether or not a person is a forwarder. For example, a group of merchants in California may find it desirable to consolidate or pool their shipments into carload lots so as to obtain the lowest freight rate. Under the present definition in H. R. 3684, this group of merchants could be held to be conducting forwarding operations, and if it were so held, these retailers would be prohibited from conducting these operations under section 410 (c) (2), and would have to seek other means of transportation at an increased cost which would have to be passed along to the consumer in the form of price increases. Or as another example, let us take a group of manufac turers of one commodity located in the same community. In order to give their customers the benefit of low transportation costs, these manufacturers combine their shipments on a cooperative basis, thus gaining the advantage of carload rates. Under the present definition of the bill, this could be called a forwarding operation and unlawful under section 410 (d) (2).

I realize that it is not the purpose of this definition to cover the type of operations I have mentioned. Chairman Lea's statement, made at the time the bill was introduced, clearly says so. *** (Witness P. F. Kelley, American Retail Federation, House hearings, H. R. 3684, p. 324).

March 20, 1941:

*** We believe it is the intention of this committee to regulate only freight forwarders who hold themselves out to provide transportation for the general public. In other words, the common carrier type of forwarder.

In order to insure these three types of operations being excluded from the definition of "freight forwarder," we support the new clause (to be added at the end of sec. 403 (b)) proposed by the National Industrial Traffic League in its testimony as follows:

"Nothing in this act is to be construed as limiting the right of a shipper or group of shippers from consolidating freight themselves on a nonprofit basis or by employing an agent to do so, into carloads or into volume tonnages so as to obtain lower rates which are in effect and lawfully on file with the Commission. Such shipper or group of shippers will not be subject to the Freight Forwarder Act" (Witness L. F. Mongeon, National Retail Dry Goods Association, House hearings, H. R. 3684), pp. 320, 322-323).

March 1941: Comparable testimony was given during the same House hearings by the representatives of the following interests: Railroads (pp. 380, 383, 402, 419), freight forwarders (pp. 478, 479, 490, 491), American Trucking Associations (pp. 258, compare 198), National Industrial Traffic League (pp. 342, 343, 344), Chicago Association of Commerce and Industry (pp. 359, 361), Los Angeles Chamber of Commerce (pp. 195, 495), Shippers Conference of Greater New

York (p. 499), Southwestern Industrial Traffic League and related groups (pp. 391-392), aircraft industry (p. 193), food interests (p. 325), furniture interests (pp. 382, 383, 384, 386, 387, 461, 462, 502, 513, 515), paper and paper products, shippers and forwarders (pp. 281, 389, 498), rubber interests (p. 382), Wisconsin furniture and paper groups (pp. 495, 496).

And now, gentlemen, I wish to emphasize the fact that the majority of these witnesses and the bulk of this testimony in the House hearings in 1941 related to general commodities.

The freight forwarders have put it in the record in separate hearings before your committee that the carriage was primarily related to one commodity, bulk. Every one of those witnesses and there are other witnesses in the Senate who also covered it to a lesser extentevery one of those witnesses in the upper group shown on page 11 of my statement covered general commodities. They were talking about all-out cooperative associations. And I hope that the committee will take notice of the fact that although there were not as many nonprofit cooperative associations in 1940 as there are now, and they did not handle as much business, did not do as much good to the transportation communities, they were broad and they were extensive, and the pattern was substantially the same as it is now.

It is extremely significant that the support by American Trucking Associations, Inc., was expressly conditioned on retention of the principle of elimination of "pool-car methods of shipping" from regulation (House hearings, p. 198), as was the support by National Retail Dry Goods Association on full protection thereof (House hearings, pp. 321, 323) and by National Industrial Traffic League on adoption of its amendment covering

merchants or manufacturers, or agents of merchants or manufacturers, or groups of shippers who consolidate cars not as a business (House hearing, p. 343; see 87 Cong. Rec. 8221).

And the National Industrial Traffic League proposed an amendment which was reworded somewhat and became section 402 (c) and the language was used by the House committee in reporting the bill. August 13, 1941:

The definition [of regulated freight] therefore draws a line of distinction which clearly excludes brokers, nonprofit associations of shippers, warehousemen, and pool-car operators, as those persons normally operate, since such persons do not do all of the things required under the definition to constitute a freight forwarder. In order to make absolutely sure, however, that the definition cannot by construction be held to cover shippers, groups of shippers, and nonprofit associations of shippers, consolidating or distributing freight for themselves or their members, or to cover warehousemen, pool-car operators, and other shippers' agents engaged in consolidating or distributing pool cars, and not assuming responsibility for the through movement of the property, subsection (c) was included in this section (House Committee on Interstate and Foreign Commerce, explanation of specific provisions of S. 210, as reported, H. Rept. 1172, 77 Cong., 1st sess., pp. 5–6).

October 23, 1941, Representative Wolverton's explanation of the bill to the House, 87 Congressional Record 8216:

DEVELOPMENT of Freight FORWARDING OPERATIONS

For many years shippers have pooled their shipments of less-carload freight and consolidated them into carloads to obtain the benefit of carload rates, which

are lower than the less-carload rates. Some of these operations are cooperative in character. * * *

October 23, 1941: Chairman Lea (87 Congressional Record 8212): *** Then in subdivision (c) of the same section, it is specifically stated that the bill does not apply to operations of shippers in consolidating or distributing freight for themselves on a nonprofit basis for the purpose of securing the benefits of carload, truckload, or other volume rates. It is further provided that the operations of warehousemen or other shippers' agents in consolidating or distributing pool cars, whose services and responsibilities to shippers in connection with such operations are confined to the terminal area in which such operations are confined to the terminal area in which such operations are performed.

The motor carriers and various interests were concerned about the question of exemptions. There was once a great apprehension about the exemption provisions originally contained in the bill. We believe we have ironed that matter out completely by adopting language that clearly expresses the original purpose of the bill.

October 23, 1941: Colloquy between Messrs. Priest and Halleck (87 Congressional Record 8226):

Mr. PRIEST. I just wonder if this bill includes by its definition of what a freight forwarder is certain groups of shippers or shipper agents who might consolidate themselves to serve themselves or the persons that they represent and who are not doing business for profit or as a public service? Is the bill clear in that respect, in the opinion of the gentleman?

Mr. HALLECK. That was one of the most difficult problems with which we had to deal. The answer to that question is emphatically “Yes.” * * *

Mr. HALLECK. Mr. Chairman, we listened to those pleas. We understand and knew that for instance the furniture manufacturers have for years been pooling their shipments and taking advantage of the special rate. There is also an exemption for farm commodities; there is an exemption that has been talked about for one commodity forwarder; then, in addition, there is a specific provision that any shipper or group of shippers who utilize the services of the so-called underlying carriers under similar conditions to those of the forwarders may have the same advantage of these special rates. So I am convinced in my own mind that we have covered all of the cases in which there is real merit and that hard. ship will be kept at an absolute minimum.

October 23, 1941: S. 210, with amendments, including new section 402 (c), passed House (87 Congressional Record 8233).

April 1, 1942: Excerpt from staff memorandum (by A. II. Perley) relating to differences between House and Senate versions of S. 210:

EXEMPTIONS

(House, sec. 402 (b), (c), p. 7.)

Section 402 (c) of the House substitute contains provisions which are more in the nature of clarifying provisions than exemptions. This subsection was included as a supplement to the definition of "freight forwarder" in order to make sure that the bill will not be construed to bring under regulation shippers, groups of shippers, or nonprofit associations of shippers, consolidating or distributing freight for themselves or their members, or to cover warehousemen, pool-car operators, and other shippers' agents engaged in consolidating or distributing pool cars and not assuming responsibility for the through movement of the property.

***

Question: Shall this subsection be retained in the bill?

The bill passed the House, passed the House on that basis, with the staff memorandum before it. As was pointed out in the Senate, the House bill had an exemption and the Senate bill had no exemption. You will notice that the staff memorandum calls it an exemption.

The proponents of section 19 are arguing here that this is not a true exemption, it is only a clarification, but both in this staff memorandum

and in a great deal of the discussion in handling the bill all of the way through, and finally the expression in the law of the land, it is called an exemption, and it means it.

May 4, 1942: Conference report. (This carried forward sec.. 402 (c), the forwarder-exemption provision, vebatim from S. 210, as passed by the House. H. Rept. 2066.)

May 11, 1942: Representative Wolverton's statement (in connection with the explanation of the conference's action on "commodities clause," section 408 (d) of the bill):

Furthermore, in view of the liberal provisions of section 402 (c), which make part IV inapplicable to cooperative or nonprofit forwarding or pool-car operations of a shipper or a group or association of shippers, the restriction of shipper control of forwarders does not appear to be of any considerable practical moment *** (88 Conggressional Record, 4068. Compare 88 Congressional Record 402 (Senate)).

May 16, 1942: S. 210 (Public Law 588) became law. In the official version of the law section 402 (c) was placed under the title "Definitions and Exemptions" following section 402 (b) which provides cooperative association and related exemption, and is therefore to be considered as an exemption of full dignity.

SUMMARY AND CONCLUSION-LEGISLATIVE HISTORY AND INTENT

It has been previously represented to the House Subcommittee on Transportation and Communications by other interests (sympathetic with proposed sec. 19 of H. R. 6141 and H. R. 6142) that section 402 (c) was addressed to single-commodity-type pooling, that it was a clarifying provision only, and that its scope was narrow. Based on the above materials, which are representative only, the only possible conclusions that can be drawn true to the facts are:

1. That the whole practice and principle of shipper pooling and cooperative consolidation of freight was before the Congress in its very broadest aspects, especially (but not exclusively) in the House hearing and debates, and included consideration of cooperative shipper associations indistinguisheable in type from present exempt operations;

2. That the Congress clearly recognized the vital importance of such shipper pooling and cooperative consolidation of freight as a fundamental element of strength and efficiency in the transportation picture, and enacted freight forwarder regulation on the definite premise that such practices being unrelated to the problems of common carrier type forwarders which created need for regulation, be left unaffected by the legislation, in the public interest; and

3. That inclusion of section 402 (c) in the Interstate Commerce Act as a broad exemption was necessary to secure full effectuation of this result.

Such inclusion was absolutely essential to preserve private business' right to obtain economical and efficient transportation services in its own way, enabling small business to protect itself against competition of carload shippers at volume rates, in view of the very substantial risk of misapplication or misconstruction of the extremely technical "freight forwarder" definition contained in the act and the overriding