Now, in the case of household goods, of course, during wartime, they do not move too many household goods. There is not enough transportation plant to take care of that. So, of the two reasons there, first, the type of shipper that is involved, and because today it is a very expensive thing for an ordinary householder to have his goods moved any distance. It is causing a tremendous burden, and that burden is being created by very, very low quotations which are being accepted by the Department of Defense particularly, but also by the Government generally.

Mr. HARRIS. I could appreciate that, and I appreciate the individual situation that develops.

I was hoping, however, that whatever consideration we should give to the problem here, we would deal with it on a matter of principle or policy and not have to deal with it on a specific commodity.

Mr. ARPAIA. In effect, we are saying that we believe that the Government should not have special rates, except in time of an emergency or war, and that those rates when made then, even during time of emergency or war should be binding, in the absence of fraud and clear error, because you have this tremendous problem where, years later, they try to "renegotiate" the rate, and you have a lot of litigation resulting from that. They again try to obtain even lower rates for the past movements.

Mr. HARRIS. That is the policy which the Commission has unanimously approved here with the exception of the separate views of Commissioner Mitchell?

Mr. ARPAIA. Judge Mitchell would abolish section 22 completely without having that reservation in time of emergency or war.

Mr. HARRIS. Now, the views of the majority of this Commission in this respect coincide with the views expressed by the Department of Commerce here to us in the last couple of days in that respect. Mr. ARAPAIA. No.

Mr. HARRIS. I understood that that was pretty much what they said.

Mr. ARPAIA. No, the Department of Commerce report as expressed by Mr. Smith here yesterday still wants special rates. Only the special rates would be sort of hemmed in by certain restrictions.

Mr. HARRIS. In other words, they want this more restricted than does the Commission, then?

Mr. ARPAIA. No. They want to be free to make special rates for the Government traffic.

Mr. HARRIS. Yes, I understood that, and the Commission says, "We do not want to have that freedom except under certain conditions." Mr. ARPAIA. Certain times, of war and emergency.

Mr. HARRIS. Yes.

Mr. HINSHAW. Mr. Smith said yesterday in his statement that the Government rates they paid even under negotiation were 14 percent higher than the commodity rates on the basis of, I believe, statistics furnished by the Commission.

Mr. ARPAIA. I am afraid that those statistics are a little bit misleading.

The fact is-I think Mr. Jelsma should explain that to you.

Mr. JELSMA. Those rates which he spoke of deal only with the 1 percent waybill, assignments. It is a statistical analysis taken from waybills.

Now, they are comparable rates of commodities, or statistics, and as you pointed out yesterday, Congressman, about the "cockeyed movement," those rates take into consideration that type of movement. That is why, because they are for different movements than normal flow of traffic. That is why in comparing mile block with mile block, 100 mile block with 200 mile block, there are instances where a commodity rates under section 22 is higher than other commodity rates not under section 22; but that in no way changes the fact that section 22 rates are below the established rate.

Mr. HINSHAW. That has been my impression.

Mr. JELSMA. That is correct.

Mr. HINSHAW. And I, of course, was a little bit surprised to find this article in the statistics magazine for December 24, 1955, which points out the section 22 rates averaged 13 percent above other rates in 1954 and that the Interstate Commerce Commission is responsible for the article.

Mr. JELSMA. We are responsible for the article. There is some misunderstanding about the word "comparable." Comparable does not mean "identical."

Mr. HINSHAW. That is my understanding of it, too.

Thank you. And I think that if there is to be refutation of that portion of Mr. Smith's statement by your unit, that a careful brief statement or study of that matter should be made as quickly as possible for the committee, as, of course, Mr. Smith's statement, based on another set of statistics, will hold unless this refutation is presented. Mr. ARPAIA. Well, we could have Mr. Jelsma prepare a statement which would explain that figure that was used here.

Mr. HINSHAW. Very good.

Mr. ARPAIA. And file it with the committee.

Mr. HINSHAW. Yes.

Mr. HARRIS. Yes, we will be glad to have you do that.
(The information referred to, later submitted, is as follows:)

INTERSTATE COMMERCE COMMISSION,

BUREAU OF TRANSPORT ECONOMICS AND STATISTICS,
Washington, May 1, 1956.

Subject: Request of Congressman Hinshaw in regard to section 22 rates published by Bureau of Transport Economics and Statistics

MY DEAR CONGRESSMAN: In response to subject inquiry regarding testimony of Earl B. Smith, Director of Transportation and Communications, Office of the Assistant Secretary of Defense, you are advised that a large volume of Government traffic consists of commodities moving between points for which no cominodity rates exist. As a consequence, in the absence of any other arrangement, it would be necessary to pay high classification ratings for this traffic. Section 22, however, provides a means for the Government to negotiate reduced rates which are in this sense similar to the negotiated commodity rates granted commercial shippers for volume movements.

Analyses by the Bureau of Transport Economics and Statistics based upon the Commission's 1-percent rail carload waybill sample have compared the section 22 quotations with commodity rates for similar but not identical commercial traffic. Section 22 traffic for specific commodity classes, territorial movement, and length of haul were compared to commodity rated traffic covering the same commodity classes, territorial movement, and length of haul. It must be emphasized that similar moves only could be compared since in no case are there

movements on both commodity rates and section 22 quotations on the same commodity between identical points. These comparisons of similar movements showed that the section 22 quotations averaged 13 to 14 percent above commodity rates for the years 1950 and 1952 through 1954.

The fact that the section 22 level was somewhat higher than average comparable commodity rates is not unexpected in view of the different types of traffic involved. A substantial portion of the section 22 reductions applies where there is infrequent movement or movements in the opposite direction of established volume traffic. Section 22 quotations, however, are always reductions below established rates and provide for lower freight charges to the Government than would otherwise be the case.

Specific cases of actual reductions are shown in the exhibits following page 96 of the hearings before a subcommittee of the Committee on Interstate and Foreign Commerce, United States Senate, 83d Congress, 2d session, on S. 904 and S. 906, April 26 and 29, 1954, amendments to section 22 of the Interstate Commerce Act, which cover certain military shipments for a period in 1951 and 1952 (exhibit attached). Similar reductions from otherwise applicable rates exist on traffic moving under section 22 quotations today.

This exhibit is based on a 30-percent representative sample of all Government bills of lading covering Departments of the Army and Air Force carload traffic and all Government bills of lading for the Department of the Navy, including the Marine Corps. They cover transcontinental territory for the period June 1, 1951, through May 31, 1952. The exhibit includes carload traffic between all points for which there was a movement of the commodity shown of 1 million pounds and over. They represent 83 percent of the section 22 transcontinental traffic. All of this traffic would be subject to class rates in the absence of rates made available under the provisions of section 22 of the Interstate Commerce Act and the applicable rate in the absence of section 22 quotation is shown in column 13. The quotation rate is shown in column 8.

Sincerely,

E. R. JELSMA, Director.