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 light 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 I. 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 large acreages of land to the railroads to aid in railroad construction. These grants, commonly known as the “Land Grant Acts," continued the Government rate concession philosophy 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, seems 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 Idied 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 United 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.

Yount, chief of transportation for the Department of the Army, in response to a congressional inquiry in February 1954. General Yount added: "In the interest of national defense it is considered necessary that an adequate system of transportation, embracing all modes, be immediately available. Many military installations, including antiaircraft weapons sites within and around cities, require truck transportation to move ammunition to the point of storage and issue."

PART IV. RATE BACKGROUND

Explosives from a classification point of view have been traditionally high rated. The National Classification Board has stated that for the most part explosives are of relatively high density, and where such is the case the Board has always taken the position that of the 15 elements that go into classification making the 2 most important with respect to ammunition and explosives are value and risk. The consideration of these two important factors is in consonance with Commission findings as far back as the very first ICC volume published. In I I. C. R. 465 the Commission stated: "Hazardous and extrahazardous freight *** are considerations of a controlling nature." And again in Rates on Powder and High Explosives (151 ICC 163), the Commission stated:

"However, there is merit in the carriers' contention that every carload of dangerous explosives must be regarded as carrying a potential disaster in a degree much in excess of that of other traffic, and that notwithstanding the very many precautionary measures taken for safety there remains a danger in handling explosives which cannot be removed by human effort.

"In fixing rates on these commodities we should of course take into consideration the dangers attendant to their transportion and the service afforded by the carriers in order to avoid accidents from such transportation."

More recently, in War Material Reparations cases (294 ICC 144), the Commission in finding the 65 percent of first-class rate, which was at issue in the proceeding, not to have been unreasonable pointed out that "another pertinent consideration in judging the reasonableness of the rates is the high value of explosives and ammunition."

From World War II to October of last year the generally accepted rate on military ammunition and explosives under section 22 was approximately 65 percent of the first class rate-the same rate the Commission found to be reasonable. Then, last October, in the face of the Commission finding, the military asked the railroads for a drastic reduction on these commodities and the railroads in official territory granted a rate reduction through the medium of section 22 which slashed the rate to approximately 40 percent of first class on a volume minimum carload weight of 90,000 pounds. The railroads in western territory were not agreeable to this decrease and reduced their rates only to approximately 55 percent, while the southern territory railroads declined To reduce their rates at all. At that time, the reparations cases were still tending and the railroads had been arguing vigorously that they couldn't possibly have gone below the 65 percent rate at issue. So we were confronted with the interesting anomoly of the railroads reducing the rate to 40 percent in official territory to remove motor carrier competition, and at the same time petitioning the Interstate Commerce Commission for a 7 percent increase on Commercial shipments of general commodities.

PART V. SECTION 22 TODAY

The late Joseph Eastman, in his testimony supporting repeal of the landTant rate concessions, said:

"It seems to me the Government ought to pay the same rates for carriage of traffe as are paid by its own citizens who really make up the country."

That the Congress agreed with the soundness of this view was reflected in the repeal of the land grant acts on October 1, 1946. Yet, section 22 is today being used as an extension of the rate concessions the railroads granted the Government under the land-grant acts.

Now, it might be asked: "Why all this emphasis on section 22?" The answer to this question must be given in three parts: (a) The magnitude of present Government shipments vis-a-vis commercial shipments; (b) the lack of an adJudicator on section 22 movements; and (c) human nature.

(a) The Government today is the largest single user of transportation in the country. The Department of Defense alone has a domestic transportation bill