Mr. PETERS. That is the commercial tariff rate. It is published in the tariff applicable for all commercial shippers today.

Mr. HINSHAW. Then you did not get a special rate?

Mr. PETERS. We got a special rate first, which is higher than the tariff rate, which was later published.

Mr. HINSHAW. Then you should have been glad to have a tariff rate. Mr. PETERS. We asked for a tariff rate in the first instance and were refused.

Mr. HINSHAW. That is unusual.

Mr. PETERS. Private industry was interested in the same movement and when they indicated an interest in the movement, then the carriers published a rate which they thought was the maximum rate the industry could pay They thought the Government might be able to pay the higher rate.

We had no opportunity there to take it to the Commission because it was one of those unusual cases.

Mr. HINSHAW. But that is a kind of case in which, if the carrier had filed a tariff with the Interstate Commerce Commission it would have become effective 30 days hence, and the identical rates which you negotiated under section 22, that would be effective as of that date and if it were not, you would have agreed to the compromise at that rate; would you not?

Mr. PETERS. If the rate had not been provided by section 22 quotation and published on a 30-day-notice basis, part of the shipment would have gone forward, in which event we would have been required to file a complaint. The tariff rate was a class rate about three times as high as the normal commercial company can afford to pay.

Mr. HINSHAW. I said that if the carrier had sought to file a rate and that rate happened to be the same as the commodity rate which you obtained under section 22, that after 30 days it would be effective, providing the carrier made no objection; would it not?

Mr. PETERS. I am afraid I do not understand your question, sir. You provide two questions there.

If we had asked the carriers, which we did, for a commodity rate. and they published it within 30 days, we would have had no problem. Is that your question?

Mr. HINSHAW. If they had published forthwith, yes.

Mr. PETERS. Part of the shipment would have moved forward.

Mr. HINSHAW. At that rate?

Mr. PETERS. We asked for a rate of $21.50 in this particular case and they gave us $28 or $29 a ton.

Mr. HINSHAW. Is that a special shipment?

Mr. PETERS. It is a regular movement which may go forward for 4

years.

Mr. HINSHAW. I am sorry, you are too close to the microphone.

Mr. PETERS. It is a regular movement that may go forward for as long as 4 years.

Mr. HINSHAW. I am sure that we will have to take care of such things but I do not know just how.

That is all, Mr. Chairman.

Mr. HARRIS. I understood from Mr. Hyde's statement that you had made surveys, others have made surveys, and you found no preference existed as a result of section 22?

Mr. DENNISTON. The statement was that we had found none, which indicated transportation at unprofitable rates, words to that effect. Could I at this point interject a little discussion?

Mr. HARRIS. I do not want to get away from this though.

If it relates to this subject.
Mr. DENNISTON. It does.

Mr. HARRIS. Very well.

Mr. DENNISTON. That is, the position of the section 22 rate with the commodity rate. I believe it has not been fully explored just what that relationship is.

Now, when we have a situation, and I would like to use an illustration where there is a published commodity rate from Mobile to St. Louis on a particular commodity, and I am using an actual illustration at this point.

When stockpile points were established for reasons incident to that program, the actual stockpiles were at points in Missouri a few miles beyond St. Louis. The commodity rate, therefore, did not apply since they are invariably point-to-point rates. For that reason, in the absence of that, a much higher rate, and I do not recall the amount but probably on the order of double the amount of rate that would have applied and in this case we did seek and obtained a quotation which simply extended the rate to St. Louis on a mileage pro rata basis of these additional points, and that is an illustration of what we think is placing those rates on a comparable basis.

Now, I would like to give nother illustration of the type of rate that we have under section 22.

In some instances they will deal with matters pertaining to transit, and perhaps as such do not affect the rate itself directly.

In the instance of one commodity which is stored as part of the stockpiling program, the published tariffs have a period of time specified within which transit will apply-1 year, 2 years, or some fixed period.

As an incident to this stockpiling program, it is found necessary to retain those goods in that particular storage for a longer period and the section 22 would extend the time.

In that case, of course, the carriers' costs, when it does eventually move, shall be the costs of the carrier are not affected at all. It is a question of timing and it has moved out at a later period.

As a matter of fact, additional transit payments would have been made for the additional time in storage and that is another illustration of that kind of adjustment.

Further, and more common, one is very similar to the commodity rate. That is this: Between the points which the Government is shipping, which are usually not coincident with the commercial channels, there will be a rate, class rate usually, which is based normally on a 30,000 pound minimum weight.

We will get a reduced rate, but the minimum weight will be increased to 80,000, 100,000, or some such greater minimum weight which in point of fact gives the carrier greater revenue than the class rate would produce at the minimum weight provided in the tariff.

Actually, the revenue per car-mile will be actually greater under that type of rate.

Nevertheless, it is technically a reduced rate and we consider it as

such.

I thought perhaps those comments might be of interest to you.
Mr. HARRIS. You say in you statement here:

GSA has earnestly sought to find any instances where such rates exist—
That is, unprofitable or low out-of-pocket cost.

I notice in the attachment which you had to your letter there is this

statement:

The present rates made by GSA on Government traffic on the whole compared more than favorably with rates paid on similar classifications of traffic by commercial shippers.

Mr. DENNISTON. Yes, sir.

Mr. HARRIS. That is true?

Mr. DENNISTON. Yes, sir.

Of course, bear in mind this: that if a commercial shipper did in fact ship between the particular points we ship between it is true, he would pay that class rate, but when we are speaking of the comparable commodity rate we are talking about the points between which the commercial shipper actually does not ship.

But the point just above that, you say:

Repeal of section 22 will increase the cost of Government transportation operations.

Mr. DENNISTON. That is based on the point already developed, and perhaps not to your satisfaction, that where we are faced with shipping between points where class rates exist we are going to have to pay those class rates, and, believe me, they are higher.

Whether we could get reparation from the Commission is a question. Mr. HARRIS. Of course, it would be helpful to me if I were a rate expert on this matter, but I am not. But it does seem to me that you have an inconsistent procedure here. The Interstate Commerce Commission on the one hand, opposes the change of policy, the national transportation policy, because they had to have authority to say that the rates must be at a level to maintain a sound, competitive transportation system and where one carrier cannot put in a rate that would have an adverse effect on the future of another.

Now, you come along with section 22 and say that is fine to carry that on for everybody except us.

I am just trying to see if I can get some light on the subject, myself. You say now we have a wonderful transportation policy here; it is sound; we must keep it in effect; it has given us the transportation system that is the envy of the world, I believe, to use the exact terms.

And now our same Government comes along and says, "Fine, that is fine for everybody except us, and we don't want to be forced to that policy, and we don't think it is applicable to us."

Now, the question I would like to lead up to with that statement is this: You say there are some shippers who are opposed to adjusting or amending or repealing section 22, and some shippers are for it. Mr. DENNISTON. I think the statement was as to carriers, not shippers.

Mr. HARRIS. Carriers; yes. The carriers are in disagreement.
Mr. DENNISTON. Yes.

Mr. HARRIS. Some think it is a fine procedure, and they ought to have it, and the others say, "We ought to get rid of it."

Could there be anything to the idea that those carriers who are getting the major benefit of the Government haul would be those who are in favor of keeping it as it is and those who are cut out and do not get any business are the ones who want to get it repealed and get it so that everybody will be on a competitive level?

Mr. DENNISTON. I think, sir, that I am not in a position to analyze their thinking on the subject.

It is true, for example, before the Interstate Commerce Commission, of course, there is still pending a proposed rule to be issued by that body in connection with section 22 rates, known as Ex parte No. 192.

Mr. HARRIS. Is that the one they referred to as a fair share of the haul where they are going to tell each segment of our transportation how much of a total this one can have and how much that one is going to have?

Mr. DENNISTON. No, sir; this has to do with the question of filing section 22's before the Interstate Commerce Commission.

In that proceeding there was a split by carrier groups; it is true. The railroad group have opposed the Commission's jurisdiction in the case.

I don't know whether this is a question of difference in lawyers or a question of difference in the end result, but in that case the railroads have opposed the Commission's rules, the motor carriers have supported it.

I don't know whether that is any indication of what you had in mind, or not.

Mr. HARRIS. I really did not have anything in mind about what mode or carrier is opposed to it. I imagine some in the railroad industry are for a repealing; others are against it.

If there is any indication by the visit I had with a group of people not long ago, most all of those in transportation are for repealing it. It seems to me from those present that is the way it looked, anyway. Mr. DENNISTON. So far as reconciling that statement of the Interstate Commerce Commission with our own, I think it would be fair to summarize it this way:

We can recognize, of course, that the regulation of commerce is something that is peculiar above everything else, within the province of the Congress under the Constitution.

Certainly this body is the one that is going to say what the answer is to be.

Mr. HARRIS. But when we do say something, we want it to be the right answer, if we can.

Mr. DENNISTON. Yes, sir.

We, of course, are giving you our advice as we see it. The answer is to be, of course, determined in your judgment.

Mr. HARRIS. I appreciate that, and I want to make it very clear that I do not mean to indicate at all that you are not giving me the best views from your own experience.

Mr. DENNISTON. I am leading up to this: The essential question, of course, is: Should this segment of traffic of the various carriers be

subject to rate regulations or not be subject to rate regulations. I think that is the simple question before you.

We are simply saying that assuming the absence of regulations now existing under section 22, we find it works very well in our administrative processes and so far as we are concerned we are simply trying to bring to your attention the fact that we have earnestly followed this question and attempted to find if rates are being made which would be destructive, which would be too low and otherwise offend the national transportation policy.

We are simply saying that while we have searched diligently we have not found any that fall into that category.

In this Ex parte 192 there was considerable evidence introduced and we prepared a brief in which we analyzed all of the information that was submitted in that record as best we could. Some matters we could not identify, but to the extent we could and in every instance of a section 22 rate which somebody suggested in the record might be too low, in every case it turned out that so far as the earnings of the rate on a per-mile basis or in its relationship to other rates, all follow the pattern of commodity rates.

Mr. HARRIS. I can appreciate your position because you have the responsibility, that is, within economic principles and policies that you recognize that you are going to get transportation as cheaply as possible.

That is your duty in serving the general public, the people, the taxpayers of this country.

I do not think you are quite as concerned as to how sound the various modes of transportation, or the carriers, are as the Interstate Commerce Commission.

What I was trying to point out here is what seems to me to be a conflict in actual policy within our own Government that has been brought to us today by you as opposed to what the ICC says is necessary for a strong, sound transportation system which we must maintain.

Now, if this system is so good under section 22, works out so well for the shipper, and those who must administer it, what would you think about extending it to everybody else, the commercial shippers and let them see what they can do with it?

Mr. PETERS. Mr. Chairman, I would like to add just a few words. Mr. HARRIS. Is it in answer to this question?

Mr. PETERS. I think it goes along the same line.

We are not asking for any special rates below what the commercial shipper would be entitled to on similar traffic.

The indication that we are getting something below the level of rates that commerce and industry would require is, I think, subject to a question that has been stated right here on this table today.

On some occasions that might be true. However, we make every effort to justify the proposed rates we ask for. We do not believe that the carriers have given us rates which were noncompensatory. Mr. HARRIS. Why do you say, then, that the Government saves money by it?

Mr. PETERS. A compensatory rate does not mean that the Government does not save money. It means that the commodity would have moved on an excessively high rate, a more profitable rate, had we not negotiated.