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age of the Nation's traffic as it handled in the past. This would almost seem to be axiomatic considering the fact that for many years the railroads had no competition. Be that as it may, table I attached hereto which shows specifically the ton-miles transported by contract carriers and the percentage which it bears to the whole shows clearly that the contract motor carriers have not made any inroads on the traffic handled by rail. This table shows that the contract carriers from 1939 to 1954, the last date for which figures are available, have never enjoyed as much as 1 percent of the total traffic transported, and that in the year 1939 the contract carriers enjoyed a larger percentage of the whole than in any year since that date.

Table II attached hereto compares the ton-miles transported by rail carriers with that transported by private and exempt carriers. These carriers, who need no operating authority from the Commission and who are not subject to rate regulations by the Commission, have enjoyed a consistent growth except for the war years, the ton-miles operated have increased from 33,175 million in 1939 to 145,341 million in 1954, their percentage of all ton-miles operated has increased from 6.1 percent in 1939 to 12.9 percent in 1954. Unregulated for-hire and private carriers have undoubtedly benefited by the regulation of both contract and common motor carriers, but the contract carriers have suffered because they have not grown as much as might be expected in an expanding economy such as the Nation has enjoyed for the past 16 years. If the rail carriers get all the business now handled by contract carriers it would not increase the percentage of the whole by as much as 1 percentage point. Therefore, if the railroads, whose tonmiles transported has almost doubled from 1939 to 1955, consider that they need new legislation to put their competitors out of business, it would seem that the contract carriers are a poor target at which to aim.

In H. R. 6141, it is proposed to amend the definition of contract carrier by motor vehicle so that those carriers would only be permitted to compete against private carriers and then only to compete against that type of operation in the event the private carriers service was a specialized or individualized service.

At this point I would like to emphasize that the contract carrier business actually is a private business. They are not public utilities as the railroads or the common motor carriers, and actually the only constitutional basis for regulating contract carriers at all is the fact that their business does have some effect on the railroads and common motor carriers who, in turn, of course, are public utilities.

By this amendment, the contract carrier would practically be taken out of competition with the common carrier. He would be put in direct competition with the private carrier. Therefore, of course, the effect which his business could possibly have on that of the railroads or the common motor carriers would be no greater than the effect which the private carrier has upon those modes of transportation.

It would seem, therefore, that if the definition were to be amended as here suggested, the other regulatory features applicable to contract carriers would be relaxed, and at this point, Mr. Chairman, I woul like to point out that Mr. J. Carter Ford, who is now deceased, in ap pearing before this committee, seemed to take the position that th contract carriers were practically an unregulated industry. That i

far from the truth. A contract carrier must have a permit in order to operate in interstate or foreign commerce.

To obtain that permit, the carrier must prove that existing transportation services are inadequate to fill the need that he proposes to fill.

In addition to that, the contract carrier's rates are on file and here again I think the presentation of the railroads were probably misleading, in that they represent to this committee that the contract carriers may file a minimum rate which has no relationship with the rate that is actually charged.

When the motor carriers were first brought under regulation by Congress, that was true. All the contract carrier had to do was file a minimum rate, but in the amendment in the Transportation Act of 1940, the contract carriers were required to file a minimum rate actually maintained and charged, and from our experience in the handling of contract carrier problems we believe that practically every contract carrier in the country today is filing a rate that he actually charges, and that rate is the rate that moves the traffic.

As a matter of fact, most contract carriers file a separate schedule for each shipper that they serve. So that the contract carriers are not able to hide behind any minimum rate so that competing rail and common motor carriers are unable to find out what our rate is in order to meet that competition.

In addition to the rate regulation, the contract motor carriers must go to the Interstate Commerce Commission if they desire to buy out another carrier under the same provisions of the act that the railroads or the common motor carriers have to go to the Interstate Commerce Commission.

In addition to that, if we desire to issue securities in excess of $1 million, we have to go to the Interstate Commerce Commission for approval of that type of transaction, so that the economic regulations on the contract carrier today are practically the same as the economic regulations that are imposed upon the common motor carriers.

As a result of those economic regulations, the contract carrier has not been able to successfully compete with private transportation and if you will look at tables 1 and 2 of my statement, you will see that the contract carrier industry has remained practically static from the years 1939 through 1954.

Yet, the private carriers and the unregulated or exempt carriers' business has boomed tremendously during those years. The contract carrier growth has not even been what might have been expected as a result of an expanding economy such as we have enjoyed in this country for the past 16 years.

In H. R. 6141, additional or more onerous, I should say, economic regulations would be imposed upon the contract carrier. The Interstate Commerce Commission, in prescribing a rate for a contract carrier, would not only, as they do now under the law, take into consideration the rates of common motor carriers, but the Commission would have to take into consideration the rates of all other modes of transportation that fall under its jurisdiction.

In addition to that, the Commission would not be permitted to give any consideration to the movement of the traffic by contract carriers, and under the law as it is now written today, the Commission must specifically take that into consideration when determining a proper and just rate for a contract carrier.

Under the amendments here proposed, the Interstate Commerce Commission would very well prescribe for a contract carrier the rate charged by a railroad and would be precluded from giving any consideration as to whether that rate would move the traffic by the contract carrier or whether the shipper would simply put on its own trucks and go into private transportation.

If the contract carrier is to be relegated, I say, to the position of substituting his services only for private carriers, with which we do not agree, then certainly he should be given an opportunity to compete with that form of transportation, and the only way that he can compete for the private carrier business is to be in a position to meet private carrier costs, and as long as his rates must be judged in the sight of railroad rates and common motor carriers' rates, it is impossible for him to meet a private carrier cost.

It has always been amazing to me, Mr. Chairman, that the rail carriers in coming up before the Congress of the United States take such tremendous interest in the regulations that govern contract motor carriers. You would think that the contract carriers handled a tremendous volume of the Nation's freight, but that certainly is not true.

As my table No. 1 shows, in 1954 the contract carriers only handled 16100 of 1 percent of all of the freight handled in this country.

If every bit of that tonnage went to the rail carriers, it still would not increase the percentage of the overall tonnage that they handled by as much as 1 percent. In the event the contract carriers were so hamstrung that they would be unable to stay in business and would lose every bit of their business, 95 percent of it would go to private transportation and would only serve to increase the amount of traffic that that type of transportation is handling.

Mr. Chairman, that concludes my oral statement, and I appreciate the fact that my prepared statement will be read into the record.

Mr. HARRIS. Thank you very much, Mr. Todd. We are glad to have your statement here on behalf of the contract carriers conference, and your explanation, which has been right to the point.

We are glad to have those points emphasized, because it will make the record show up more clearly. Mr. Dolliver!

Mr. DOLLIVER. No questions.
Mr. TODD. Thank you very much.

Mr. Harris. Mr. W. J. Burns, managing director of the Munitions
Carriers Conference, Inc.
STATEMENT OF W. J. BURNS, MANAGING DIRECTOR, MUNITIONS

CARRIERS CONFERENCE, INC. Mr. Burns. Mr. Chairman, I was very careful yesterday to look through my testimony in the interest of shortening it as much as possible, and I will be through in 15 minutes.

With your permission, Mr. Chairman, I would like to only highlight what I think are the more important parts of this testimony which supports the passage of the Hinshaw bill, H. R. 525.

My name is William J. Burns. I am managing director and secretary of the Munitions Carriers Conference, Inc., with offices at 1424 16th Street NW., Washington, D. C. I appear here today in behalf of all of the members of our conference in support of H. R. 525.

Recognizing, Mr. Chairman, that in any discussion involving a possible repeal of section 22, that it is very important to have some ideas as to the original history of section 22, I was very careful to search the files of

the Library of Congress and the library of the Interstate Commerce Commission to see what had been written on this subject heretofore, and was surprised to find out that most statements dealing with section 22 refer to the fact that its origin was obscure.

Attached to my statement, Mr. Chairman, as appendix A, I have a rather comprehensive report which I modestly feel is the most detailed report on the subject of section 22 today. I would like, with your permission, to have it entered into the record as appendix A to my statement.

Mr. HARRIS. Very well. We will be glad to have it. In fact, your entire statement may be included in the record. (The statement referred to follows:) STATEMENT OF W. J. BURNS, MANAGING DIRECTOR, MUNITIONS CARRIERS

CONFERENCE, IN CONNECTION WITH H. R. 525 My name is William J. Burns. I am managing director and secretary of the Munitions Carriers Conference, Inc., with offices at 1424 16th St., NW., Washington, D. C. The conference is a national organization including in its membership motor carriers transporting more than 90 percent of the Department of Defense ammunition and explosives shipped by truck. Prior to becoming the first managing director of the conference, I was associated for 3 years with the Military Traffic Service (now the Office of Transportation and Communications), Office of the Secretary of Defense.

I appear here today for the Munitions Carriers Conference in support of H. R. 525. The American Trucking Associations, Inc., in testimony already presented before this committee, has stated its opposition to the enactment of any portion of H. R. 6141 and H. R. 6142, and the Munitions Carriers Conference, Inc., wishes to go on record in support of the position taken by the American Trucking Associations, Inc.

PART 1. ORIGIN, EVOLUTION, INTENT OF SECTION 22 Since a cloud of mystery generally surrounds the "free or at reduced rates to the Government provisions" of the Interstate Commerce Act, I have taken considerable time to study the antecedents of the act, with particular emphasis on the origin, evolution, and intent of section 22. The results of this study, I thought, would be helpful to your subcommittee, Mr. Chairman, and I have taken the liberty, therefore, of attaching it as appendix A to my statement. With your permission, I would now like to summarize my findings.

When section 22 was included in the act to regulate commerce of 1887 (now the Interstate Commerce Act), the Congress, in my opinion, never envisaged the rate abuses and discriminations now being practiced under section 22.

The origin of the "rate concession to the Government philosophy" may be found in the early grants of land and aid to the States. Many of these early acts contained provisions which, in exchange for the grants of land and aid, allowed property belonging to the United States or persons in their service to be transported free from any toll or charge.

During the period 1850-71 the Federal and State governments granted largo arreages of land to the railroads to aid in railroad construction. These grants, couldonly known as the "Land Grant Acts," continued the Government rate conDession phllosophy but varied as to the magnitude of these rate concessions. The acts, for example, contained such phrases as "free from toll or other charge"; subject to such regulations as Congress may impose restricting the charge for such governmental transportation"; "the same shall be transported over said road, at the cost, charge and expense of the corporation or company owning or operating the same"; and "free from all cost or charge therefor to the Government."

The wording "free or at reduced rates,” which is now contained in section 22, sems to have first appeared in a bill to regulate commerce introduced by Con

gressman Reagan of Texas in 1877. Reagan's bill passed the House in 1878 but died in the Senate.

The beginning of the final stage in the evolution of section 22 arrived in December 1884, when the House passed Reagan's bill, H. R. 5461. About the same time the Senate was considering a similar bill of Senator Cullom of Illinois, and when the Reagan bill came up from the House the Cullom bill was passed by the Senate as a substitute for it on January 30, 1885. The differences in the two bills basically revolved around the long-and-short-haul provision, an anti-pooling clause, and enforcement procedures. It should be noted, however, that differences in wording existed with relation to the transportation of Government freight at reduced rates. Since the land-grant acts had placed reduced rates to the Government on a fait accompli basis, the differences in the two bills turned on wording which would make the reduced rates to the Government lawful in an act which was otherwise designed to prevent the very thing reduced rates to the Government imply-discrimination.

The Reagan bill provided "that nothing shall apply to property carried for the United States at lower rates of freight and charges than for the general public" while the Cullom bill stated "that nothing shall apply to the carriage, storage, or handling of property free or at reduced rates for the l'nited States, State or municipal governments.”

Early in 1887, a committee of conferees reported a bill which was passed by the Senate on January 14 and by the House on January 21, 1887. This bill, which was a compromise insofar as the free transportation provisions of the Reagan and Cullom bills were concerned, was signed by President Cleveland on February 4, 1887, and became the Act to Regulate Commerce. Thus section 22 was born.

Section 22, then, was in my opinion intended to be nothing more than a method to lawfully extend the rate concessions which had been given to the government by the railroads for many years prior to the inception of the Interstate Commerce Act, and which was destined to continue through the land grant acts for many years subsequent to the passage of the act.

From 1887 to 1946 the Government moved most of its traffic under the landgrand-rate concessions, and as was pointed out by Mr. Earl Smith, Director of Transportation and Communications for the Department of Defense, “it was not until the repeal of the land-grant-rate concessions to the military on October 1, 1946 that section 22 came into full use."

With the repeal of the land-grant acts in 1946 much of the early Government rate concession philosophy was vitiated. Certainly, the Congress never foresaw the growth of our Military Establishment from the 27,791 men we had in the Army in 1887 to the 3 million we have in our Armed Forces today. It never contemplated a situation where the Government as the largest single shipper in the United States could receive lower rates than are available to commercial shippers. It never envisaged the possibility of section 22 inherently inviting destructive rate cuts.

PART II. HISTORY OF MOTOR CARRIERS OF MUNITIONS The movement of explosives by truck is not new. As early as 1911 a truckload was moved for one of the commercial powder companies—a company which moves approximately 80 percent of its tonnage via this method today. Following passage of the Motor Carrier Act of 1935, interstate shipments of explosives increased, but not until World War II did this tonnage move in volume. The military were quick to recognize the achievements of the trucking industry during the war, and then encouraged wider utilization of trucks to transport munitions during the post-war period.

During the Korean war larger tonnages were shipped by truck than in any of the preceding years, including those of World War II. And it is significant to note that while several billion pounds of munitions have been moved by truck for the military since the end of World War II, there have been no fatalities attributed to an explosion in any of these vehicles.

PART III. MILITARY CONSIDERATIONS “The maintenance of an experienced and qualified motor carrier industry trained in the movement problem involved in the shipment of explosives is deemed essential to meet the needs of national defense." So stated Maj. Gen. Paul F.

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