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Mr. HARRIS. At this time we are very glad to have Mr. J. R. Staley, of Chicago, who is the vice president of the Quaker Oats Co., and here today representing the National Industrial Traffic League.

Mr. Staley, if we have inconvenienced you by the delay, we can only Say we are sorry. STATEMENT OF JOHN R. STALEY, VICE PRESIDENT, THE QUAKER

OATS CO., REPRESENTING THE NATIONAL INDUSTRIAL TRAFFIC LEAGUE

Mr. STALEY. Mr. Chairman, I have two statements to make. They are in unrelated subjects. One has to do with H. R. 6208, the circuity, long- and short-haul bill, and the other has to do with H, R. 525, the section 22 amendment. I can not deal with both of them in the time which seems to be available. It seems that I will have to come back. This is my second trip here to Washington in an effort to tell you something about these things. I will be glad to come back later. I will be glad to talk about either of these bills, whichever one you want first, H. R. 525 or H. R. 6208. If you will express a preference I will address my remarks to the one that you select.

Mr. HARRIS. Both of these subjects are at the heart of this transportation policy report and are included not only in the bills referred to, but are sections in the over-all bills which relate to the same subject. Therefore, you may proceed as you feel you would like to at this time.

Mr. ALEY. I shall address my remarks to H. R. 6208.

My name is John R. Staley. I reside in Chicago, where I am employed as vice president of the Quaker Oats Co. Í appear here on behalf of the National Industrial Traffic League as a member of the league's committee on rate construction and tariffs.

I also appear as a private citizen, a taxpayer, and an officer of the Quaker Oats Co.

Briefly, the National Industrial Traffic League is an organization of more than 1,600 shippers, some large and some small, located in every State in the Union, and shipping every character of traffic that moves by rail and highway and water. Its members consist exclusively of shippers or shippers' organizations. There are no carrier members in the league.

I should like to emphasize that we shippers in the league are the people who pay the freight charges on these railroads and trunkline and waterways and other mediums of transportation, and we pay the taxes that go with it.

The league wholeheartedly and emphatically supports the provisions of H. R. 6208 and urges that this bill be taken up and acted on at this session of Congress without regard to the more substantive changes of section 4, the long- and short-haul rule of the Interstate Commerce Act, proposed in H. R. 6141.

The league, by a great majority, is on record as favoring substantially the repeal of section 4. We realize, however, that project is not an easy one; many phases of it will require careful consideration by Congress. On the other hand, we believe the provisions of H. R. 6208 are noncontroversial. The bill was introduced by request of the Interstate Commerce Commission; it is overwhelmingly supported by

the shippers of the country and by the railroads. Also, I have been advised by a number of carrier associations such as the American Trucking Association, the Inland Waterway Association, and others, that they have no objection to the provisions of H. R. 6208. It is hard for me to believe this bill if enacted could do any possible injury or harm to any form of transportation. We expect to show, on the contrary, it will immensely benefit the shipping public, will save huge sums of money for the carriers, and greatly facilitate the transaction of business between carriers and shippers.

I shall not attempt to describe in detail the conditions of railroad freight tariffs following World War II—these little monstrosities [indicating]. Suffice it to say, they had become an extraordinarily complicated collection of schedules from which it was almost impossible to determine rates with any degree of speed or accuracy.

After a great deal of conversation, prolonged delays, and excuses by the carriers, at the insistent urgence of the National Industrial Traffic League, the railroads on September 1, 1951, established a tariff research group consisting of a prominent professional staff organized to analyze the tariff difficulties and to make and implement recommendations designed to remove unnecessary tariff complications. To oversee the work of the research group, the railroads created a revolving administrative committee consisting of nine chief traffic officers from lines in various operating districts. The league appointed a corresponding committee of nine which likewise affords complete geographical representation. The two committees have worked closely together on a basis of absolute equality, and have consistently received wholehearted cooperation from the Interstate Commerce Commission, as well as the State commissions throughout the Nation. I am a member of that joint committee on the shippers' side.

Since it began its work, the joint committee has discussed and acted upon hundreds of propositions aimed at improving the efficiency and removing the complexities of freight tariffs. The results have been gratifying, producing enormous savings in time for all users of tariffs, whether they are railroads, or shipper patrons.

While the tariff research group explored every area of potential simplification and came up with many answers, they reached a point late in 1953 where further substantial improvement of freight tariffs was blocked by the requirements and limitations imposed in connection with the granting of fourth section relief.

This description of the tariff simplification program is given to make abundantly clear that the league's support of H. R. 6208 is not for the purpose of increasing the degree of circuity allowed in connection with operation of rates, nor is it for the purpose of creating more routes. Neither is it the purpose of this bill to repeal or nullify the provisions of section 4. In fairness it should be noted, however, the league has been on record for several years as favoring repeal by Congress of the long- and short-haul provision.

The league, in supporting H. R. 6208, recommends no change in the substance of the Commission's administration of section 4. It seeks only a change in the form of administration which will rid tariffs of unnecessary complexities and permit the fulfillment of a universal desire for simplified tariff publications. A change in the administration of section 4, which will make possible the elimination of the

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worst of the remaining tariff complexities, is hardly a controversial 1 subject. It is in this spirit we approach and support H. R. 6208.

In this entire discussion and in what I may have to say hereafter, there is no thought of criticism of the Interstate Commerce Commission or its staff, and we intend to cast no reflections on their qualifications, experience, or performance of the difficult and complex task of detailed administration under the existing statute.

The joint committee in their program to simplify freight tariffs have operated from two bases—uniformity and brevity. This [indicating) isn't very brief. These make the major contributions to the end results of clarity and certainty.

The circuity limitations and other restrictions currently imposed in connection with the granting of fourth-section relief are in many respects at war with these two basic elements of simplification and they strongly tend to defeat clarity and certainty in rate schedules. Freight tariffs are many times as voluminous as really necessary simply because orders prescribing fourth-section relief have made it compulsory to establish singly or in combination specific routes, various and sundry circuity tables, or formulas for determining authorized maximum distances, purely arbitrary and artificial limitations, and numerous other potpourri.

The publication of specific routes from every origin to every destination in a tariff contributes more to the volume problem than any other type of publication required by the fourth section.

Frequently circuity limitations will be imposed in such a manner that it is practically impossible to reflect them in a tariff except by publishing the specific routes which are available under the terms of the order. What this does to the size of tariffs can be readily il. lustrated by an examination of a few commonly used agency issues. Here's what we see after some of these tariffs are "treated” following the issuance of circuity limitation orders:

The Southern Freight Tariff Bureau barytes tariff 839-A, 16 pages of rates and 91 pages of routes; 73.9 percent of the tariff is devoted to routes.

The Southern Freight Tariff Bureau superphosphate tariff gives 12

pages of rates and 56 pages of routes.

Southwestern Lines alcohol tariff gives 76 pages of rates, 283 pages of routes, 74.6 percent devoted to routes.

Central Territory Railroads grain tariff-I will refer to that again, 535-C, 55 pages of rates, 477 pages of routes.

The significance of the foregoing analysis is simply this: The first tariff requires 16 pages to publish the rates, but needs 91 pages to describe in detail the routes over which the rates apply.

To get away from the volume problem which often reaches astronomical proportions and I am not exaggerating--tariffmakers may resort to other complicated methods of complying with these circuity limitations. One is a form of publication which shows a rate from a specific origin to a specific destination and opposite that rate the maximum mileage over which it may be applied; usually this is 13313 percent of the short-line distance. Incidentally, short-line distances are not operating distances, but on the average are about 10 percent lower than the length of normal operating routes. Then there will be given reference to as many as 50 or 100 mileage tables of vari

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ous railroads which participate in the rates. The tariff user is supposed to examine the mileage tables of the lines comprising the route he wants to use and see if the mileage over the intended route is within the limitation imposed by the fourth-section order. This can easily take from 30 minutes to an hour's time, aside from the fact no railroad freight stations and shippers have all these mileage tables in their files. It is a synthetic answer.

What causes the problem is simply this: The carriers go to the Interstate Commerce Commission about a new set of rates they propose to publish—quite often, rates which the Commission itself has prescribed. They say to the Commission, "Here is a system of rates we propose to establish. We have outlined certain origin and destination groups; we have set up key rates in conformity with the principles you laid down in your order, but we find ourselves with conditions where there are long- and short-haul departures chiefly because of circuitous routes where a longer line wants to meet a shorter line's rates."

Rates ordinarily reflect mileage, the rate from St. Louis to Memphis, for example, is based on the short-line distance of 298 miles; but the Missouri Pacific route is 327 miles and a rate over that route, based strictly on mileage, would be higher. Naturally, the Missouri Pacific wants to meet the short-line rate to Memphis and participate in the Memphis traffic; it also wants to—and may be required tomaintain rates to other stations on its line based on the scale the Commission prescribed. The Commission has rarely, if ever, even hesitated to grant such relief. But because the “reasonably compensatory' clause in the present law is construed as applying to circuitous routes, as well as direct routes, the Commission has in nearly every case imposed certain limitations.

Sometimes it is a provision that routes must not be longer than 1331percent of the short-line route; sometimes it is a stipulation that the rate must yield a specified minimum revenue per ton-mile or per car-mile over competing routes. The Commission staff employs numerous tricks and devices and there is no real uniformity in their approach. Anyhow, once the relief is granted with such restrictions, it immediately places on the railroad company the burden of determining in some manner what routes can be used and what routes can't. The railroads have resorted to some fantastic publications to achieve this purpose, and that's what we're complaining about. After the carrier finally devises a scheme or method of getting the routes stated in the tariff, every tariff user, including the shipper, the local freight agent, the auditor, and others, must try with a nutpick or something, to find out from the tariff if the route desired to be used is authorized. This is a continuing burden imposed on tariff users as long as the rates exist.

Determining the applicable routes may seem like a simple chore, but most people have no realization of the magnitude and complex nature of the railroad system of the United States. Recently we had occasion to take a look at the available and authorized routes on class rates, between two stations: Dallas, Tex., and Detroit, Mich. Believe it or not, there are available 4,717,664 authorized routes between these 2 towns. As there are several thousand other stations in Texas and Michigan, imagine how many routes would be involved between all stations in just these two states.

There have been a few cases before when, despite the present law, the Commission has felt compelled to pay heed to the unanimous insistence that relief be afforded without any circuity limitations. One of these was the Western Grain case involving most all of the freight rates on grain from western grain-producing points to everywhere. The grain shippers, the millers, the grain markets, the Department of Agriculture, and everyone else agreed the unlimited fourth-section relief which was granted on a temporary basis should be preserved and that they should not have saddled on them a system of routing which would enormously multiply the size of the tariffs.

As illustrative of the concern of those involved, they pointed to an eastern grain tariff involving only 22 origins, on which relief had been granted subject to circuity limitations. This tariff consisted of 660 pages and 477 of them, or 72.7 percent, were devoted to routing which had been published to satisfy a fourth-section circuity order. In the western grain tariffs, the rates from 30,855 origins required only 2,698 tariff pages, of which only 527 are devoted to routing. Put it another way:in the eastern tariff, each origin required 21.6 pages of routing because of a fourth-section order; if the same proportions were observed in the west, it would require 66,638 pages just to show the routing.

We attribute this superior showing to the fact the western grain tariffs have no fourth-section circuity limitations running against the application of the rates.

Our files are replete with instances of tremendous enlargements of simple tariffs because of these fourth-section orders.

It is almost unheard of for a shipper to ask for the opening of numerous additional routes.

Shippers are not looking for wide-open wasteful transportation routes. On the contrary, they want their freight handled over direct and efficient and fast-moving routes. Sometimes, however, the very shortest routes are not the best from the standpoint of service or economical operation. We want to get merchandise to our customers, not just give it a joyride. We would have been indifferent to these routing restrictions except for the fact that in the last few years it has become almost an intolerable burden to use tariffs which are like Chinese puzzles as the result of these Rube Goldberg routing limitations.

Time and time again, in trying to explain the purpose of this legislation, we have been asked: “Well, why do you need more routes than you have now? You have hundreds of them; you said yourself you had millions.” It isn't that we want more routes; we want fewer pages in the tariffs. The imposition of restrictive routings is no hardship on us if we could have it without all of this complex tariff publication; but you cannot pick up a freight tariff as you can a telephone directory and get a number out of it and know that that’t the rate and have it automatically routed for you. Again I say, the shippers are not asking for more routes and are not asking for more circuity in the operation of rates. What we want is the elimination of a provision in the present law which forces the railroads (under orders from the Interstate Commerce Commission) to print a lot of complicated, unrealistic, fantastic, gobbledygook. Our own rate clerks (and they are expensive people to employ) are terribly slowed down puzzling out

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