TRANSPORTATION POLICY FRIDAY, JUNE 8, 1956 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON TRANSPORTATION AND COMMUNICATIONS OF THE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D. C. The subcommittee met at 10 a. m., pursuant to recess, in room 1334, New House Office Building, Hon. Oren Harris (chairman of the subcommittee) presiding. Mr. HARRIS. The committee will come to order. As we resume the hearing this morning in connection with the Cabinet Committee's Report on Transport Policy, and proposed legislation to implement this report, we have a number of witnesses who were scheduled to appear yesterday and also today. Of course, recognize the problem that we had yesterday which prevented us from conducting any hearings whatsoever. we all In view of the fact that Congress is coming into its last few weeks of the session and the necessity of completing this record, and the desire of the committee to be eminently fair to everyone, I must reluctantly announce that we are going to have to limit the time for the direct presentation by the witnesses in order to give everyone a fair chance and opportunity. Therefore, we are going to have to limit the witnesses in their direct testimony to 15 minutes. Of course, the examination will have to depend on the attitude of the members of the committee. We have Mr. T. C. Burwell, vice president of the A. E. Staley Manufacturing Co. Mr. Burwell, I believe your address is as stated here. STATEMENT OF T. C. BURWELL, VICE PRESIDENT, A. E. STALEY MANUFACTURING CO., DECATUR, ILL. Mr. BURWELL. 2 Montgomery Place, Decatur, Ill.; yes, sir. My name is T. C. Burwell. I reside at No. 2, Montgomery Place, in Decatur, Ill. I am at the present time and have been for 31 years a member of the board of directors of A. E. Staley Manufacturing Co., and also a vice president. In addition, I am a member of the board of directors of the A. E. Staley Manufacturing Co., London, Ltd. Our company is engaged at Decatur, Ill., in the processing of corn and soybeans. Our activities are divided bushelwise about 50 percent corn and 50 percent soybeans. We are the second largest corn-wheat milling industry in the United States. We pioneered and we are the largest soybean processor in the United States. In addition to that, we produce 5,000 tons of formula 1271 feeds per month and we also operate one of the largest vegetable-oil refineries in the State of Illinois. In addition to that, we operate a soybean plant at Painesville, Ohio. At Decatur, we handle something in excess of 60,000 carloads of freight annually. Our transportation bill is approximately $18 million; about $17 million to the railroads, about $500,000 to the trucklines, and about $500,000 to oceangoing vessels. We do not only a national but an international business. It is my view that all agencies of transportation should be regulated similarly. I think the legislation should be less instead of more. I think it could be accomplished by a law that provided that a rate should be reasonable per se, that a rate should be nondiscriminatory. In determining the reasonableness of any rate, it ought to be based on the mode of transportation and not the effect it would have on any other mode of transportation. As to section 4 of the act, I think that section could well be eliminated. I might say that in 1937 and 1938, the corn-wheat milling industry operated at only a little more than 60 percent of capacity, and that was by reason of the fact that there was tremendous imports of tapioca flour coming into this country duty free. We were unable to compete with that and, therefore, the industry ground some 30 million to 40 million bushels less corn in those 2 years than we would normally grind. The railroads were willing to make rates to such points as Mobile and Port St. Joe, Fla., and Savannah, Ga., and those points, but they couldn't make the rates without first getting relief from the fourth section unless they cut the revenue at the intermediate territory. We finally got relief from the fourth section of the act and the rates were put in and we were then able to compete with this tapioca flour to a better advantage than we were prior to that time. I think there ought to be some amendment or some new section in 13, similar to 13. I think we people who pay the freight bills are paying a lot of burdens for local passenger trains that operate purely intrastate, and the State commissions, on representations from labor, are sometimes reluctant to take off those trains even though there is a showing that they are operating at a loss, and I think there ought to be an appeal in the Interstate Commerce Act that a railroad could appeal from a decision of a State commission, provided they could show that the continuation of those local intrastate passenger trains cast an undue burden on interstate commerce. As to section 22, I think the provisions in H. R. 525 are more in line with my thinking. Section 22, if I recall correctly, was established to permit the railroads who were not land-grant railroads to meet the rates of land-grant railroads. The land grants were repealed approximately 10 years ago and it seems to me at that time section 22 ought to have been repealed in the act. That, Mr. Chairman, I believe, is my statement. Mr. HARRIS. Mr. Burwell, thank you very much for a very concise but yet definite and splendid statement on those provisions in which you and your company are interested. In view of the experience you have had, certainly, your testimony should have great weight. Any questions, Mr. Dolliver? Mr. DOLLIVER. Your industry is of very great importance in the area that I come from in Iowa, because we produce a great deal of corn. Perhaps some of it comes to the Staley Manufacturing Co. Mr. BURWELL. I would say we have three competitors in Iowa. Mr. DOLLIVER. Along the Mississippi River? Mr. BUBWELL. Cedar Rapids; yes, sir. Mr. DOLLIVER. And Keokuk at Clinton? Mr. BURWELL. Yes. Mr. DOLLIVER. I am interested in what you say about the provision as to minimum rates. As I understand your first point, it was that you thought there should be a relaxation with respect to the control of the Interstate Commerce Commission on minimum rates; is that correct? Mr. BURWELL. That is correct. For instance, I think that all modes of transportation ought to be regulated alike, and rather than load down all of them, I think there ought to be a general relaxation of the regulation. I think it could be accomplished very nicely by a determination that a rate in and of itself is a reasonable rate so long as it is a nondiscriminatory rate. Mr. DOLLIVER. Do you think that should include, that relaxation, as between carriers, the same mode? That is to say, if 1 of your clients was on 2 rail carriers, they should be allowed to compete ratewise as to traffic from your plant? Mr. BURWELL. I think so, unless the circuity was tremendous. The circuity ought to be reasonable, I would think. Mr. DOLLIVER. Several days ago in these hearings a representative of your Quaker Oats Co. testified very vigorously about the impediments or the delay that was caused by the application of a long-andshort-haul clause to your freight operations. Do you have any comment on that? Mr. BURWELL. I think the fourth section ought to be entirely eliminated. We have this situation, just within the last 30 or 60 days. We have four competitors that have available water transportation. We shipped 1 customer last year 58 carloads of starch and that is a lot of starch. We were notified that he was going to buy from one of our competitors because he could move the starch entirely by water. We finally retained the business, but we have to absorb-cut our price to meet that 37 cents a hundred. I don't think that anybody ought to hold the umbrella over the water carriers and I think there ought not to be any provision that their rates should be any percentage or anything else less than the rail rates. I don't think one mode of transportation ought to have anything to do with the rates of another mode of transportation. Everybody ought to stand on their own bottom. Mr. DOLLIVER. As I understand it, the principal objection to the long-and-short-haul clause was the way it was administered, that it took so long to get a circuitous route or a new rate into effect that the delay was very disastrous in bringing about any adjustment of rates. Is that your view, also? Mr. BURWELL. That is my view, and I might give you a very concrete example of that. We pioneered the soybean industry, the first people in the United States. After about 5 years, we decided to test the Pacific coast. I myself have made a trip out to the Pacific coast and up to that time they had known nothing except oriental meal coming in on Japanese boats, Japanese-flag ships, at a rate of $6 a ton. On that first trip I sold 13,000 tons of meal, set up brokerage out there, brokers, and then the question was there had never been any freight rate out to the Pacific coast, but they didn't want to break down the rate to the intermediate territory. So they finally decided to file a fourth section application and then the Mississippi and the Oklahoma and the Texas cottonseed people came in and intervened in the case and opposed the relief. We were able to show that the San Joaquin and Imperial Valleys in California produced more cottonseed meal and cake than was used on the Pacific coast and there were actual movements back as far as Colorado. The cottonseed people told me off the record that they didn't want to go to California, but they merely wanted to get in there and use the soybean proposed rate to the Pacific coast to break down the cottonseed rate to the intermediate territory. It is almost an endless procedure to get the fourth section relief. Mr. DOLLIVER. Thank you, Mr. Chairman. That is all. Mr. HARRIS. Thank you very much, Mr. Burwell. Mr. Clarence D. Todd, general counsel for the Contract Carrier Conference. STATEMENT OF CLARENCE D. TODD, GENERAL COUNSEL, CONTRACT CARRIER CONFERENCE Mr. TODD. Mr. Chairman and gentlemen of the committee, I have been general counsel of the Contract Carrier Conference since 1939, except for a period during the war when I was in the Army. In addition to being the general counsel of the Contract Carrier Conference, I also practice law here in Washington and handle many of the legal problems for individual contract carriers. The Contract Carrier Conference has as its purpose the protection and fostering of the best interests of contract motor carriers throughout the United States. Our position in this matter is simply this: That we are supporting the American Trucking Associations in their opposition to the bill in its entirety. However, my partieular assignment is to discuss only those provisions that deal with contract carriers. Mr. HARRIS. You may have your entire statement included in the record, Mr. Todd. Mr. TODD. Thank you, Mr. Chairman. I was going to ask if it could be copied into the record as read and there are just a few points that I would like to emphasize. Mr. HARRIS. Yes, and the exhibits that you have attached to it may be also included with your statement. Mr. TODD. Thank you very much, sir. (The statement referred to follows:) STATEMENT OF CLARENCE D. TODD, GENERAL COUNSEL, CONTRACT CARRIER CONFERENCE OF AMERICAN TRUCKING ASSOCIATIONS, WITH REFERENCE TO H. R. 6141 My name is Clarence D. Todd. I am general counsel of the Contract Carrier Conference of the American Trucking Associations, and have held this position since March of 1939. In addition to acting as general counsel of the conference, I am engaged in the private practice of law in Washington, D. C., under the firm name of Todd & Dillon. Our firm specializes in handling cases before the Interstate Commerce Commission, other regulatory bodies, and the Federal courts. I have specialized in handling legal matters for motor carriers since 1937 when I graduated from law school and started to practice law in St. Louis, Mo. A substantial part of our clientele has always been made up of contract carriers. Our experience, therefore, with this type of motor carrier goes not only to their problems on an industrywide basis, which are handled through the trade association, but to their individual problems which we handle on an individual basis. The Contract Carrier Conference of the American Trucking Associations is a Delaware corporation, affiliated with the parent association as one of the so-called natural divisions of the industry. It is the purpose of the conference to foster and protect the best interests of the contract motor carriers as an industry. These activities the association has been carrying on since July of 1937. The Contract Carrier Conference is in complete agreement with the position taken by the American trucking associations with respect to H. R. 6141, and concurs in the statements made by previous witnesses presented by the American trucking associations. The conference, like the parent organization, is opposed to the entire bill. However, my assignment is limited to voicing opposition to those portions of the bill which deal with contract motor carriers, and my statement and testimony will be so limited. Section 10 (b) of the bill would amend section 203 (a) (15), part II, of the Interstate Commerce Act by changing the definition of "contract carrier by motor vehicle" to include only those who operate "*** on the basis of bilateral contracts for specialized or individualized service or services equivalent to bona fide private carriage by motor vehicle." This amendment is opposed by the conference for the following reasons: I. The amended definition, as pointed out by the Interstate Commerce Commission in its statement to the committee, would exclude from the scope of the definition of a contract carrier certain classes of carriers who were formerly included. The common carrier definition has not been amended to include these classes. For this reason, if these amendments were made to the act, there would be certain classes of carriers who would fit neither the common nor the contract carrier definitions and would, therefore, be completely unregulated. The conference is unalterably opposed to this inequitable result. 2. The amendment would limit contract carriers to performing services which are a substitute for private carriage. The contract carrier if so limited would be in direct competition with private carriage and only in competition with common carriage to the same extent as is private transportation. The contract carrier would find it difficult, if not impossible, to successfully compete with private carriage because of the economic regulations imposed upon contract carriers which are not imposed upon private carriers. The Association of American Railroads through its spokesman, the late J. Carter Fort, attempted to justify the change in the definition of contract carrier by contending that the contract carrier obtains its authority from the Commission considerably easier than does the common carrier. While it is true the statute provides that a contract carrier need only prove a proposed service "consistent with the public interest and the national transportation policy," and that a comin carrier must prove that public convenience and necessity requires the propd service, the Commission, by administrative decision, requires a showing of inadequacy of existing facilities to sustain a finding of "consistency with the public interest," which is tantamount to requiring proof of public convenience and necessity. To illustrate the type of showing which a contract carrier must make to obtain new authority, we quote from Walter C. Benson Company ExtenNon-New York, New Jersey, and Pennsylvania (No. MC-73613 (Sub No. 3), 61 M C. C. 128, 130): "While shipper professes a need for the proposed service it has not tried all of the existing services and has made no investigation to ascertain the extent that single-line and interline motor carrier services are in fact, available in the territory. It fully admits that there has been no failure by existing motor carriers to transport less-than-truckload shipments and in the only instance that it has employed a motor common carrier to handle truckload traffic the service performed was satisfactory. It seems apparent that applicant proposes nothing in the way of transportation that is not available over the lines of existing carries. It is not material that none of these carriers can perform the proposed |