military property and personnel at reduced rates. This awkward situation prompted the Interstate Commerce Commission to state in its annual report for 1941:

*** The confusion incident to present land-grant legislation is impeding desirable changes in rates and is bringing about transportation in some instances that appears to be highly uneconomic."

The Association of American Railroads, in a booklet entitled: "End Government Discrimination Against and Among Shippers-Repeal the Land-Grant Rates," quoted Joseph B. Eastman's 1942 statement before the House Interstate and Foreign Commerce Committee:

"*** it seems to me that the Government ought to pay the same rates for carriage of traffic as are paid by its own citizens, who really make up the country."

Then, in 1943, the House Committee on Interstate and Foreign Commerce, in a report accompanying H. R. 6156, stated:

*The enactment of this legislation will increase the freight bill of the Federal Government, but take little, if any, more from the people of this country. The shippers and consuming public must pay the Nation's freight bill. Where the Government transports its freight for less than the cost to the carriers somebody must pay proportionally more than costs. The only alternative is unjust rates to carriers."

99 32

Congress finally relieved the land-grant railroads from any further obligation to transport persons and property for the military at reduced rates, with these rates ceasing on October 1, 1946.33

GOVERNMENT VERSUS COMMERCIAL SHIPPERS

Today, the Government is the largest single shipper in the counrty. The Department of Defense, alone, has a transportation bill running around $1 billion annually. Clearly, the Congress, in 1887, never envisaged a situation where the movement of Government traffic could have a disrupting effect on our national transportation system, or where discrimination could be practiced between commercial and Government shippers. In 1887, when section 22 was included in the act to regulate commerce, there were only 27,791 men in the Army, while today we have over a million in the Army and an addition 2 million in the other services.

With the land-grant rate concessions out of the way, section 22 remains the only medium through which the Government can secure lower rates than are available to commerce shippers. Since it follows, then, that the same arguments can be used to justify the revision of this section that were used in the landgrant hearings, it should be no surprise that the people in favor of repealing section 22 are substantially the same as those who favored land-grant repeal— the commercial shippers, receivers, and carriers being discriminated against by lower rates to the Government. The Government on the other hand, who benefits most by section 22 rate concessions, argues against the revision of this section.

CONCLUSION

Rate concessions to the Government had their origin in the early grants of aid to the States, and later were continued in the land grant acts and rail equalization agreements. Since the act to regulate commerce of 1887 had as its prevailing principle equality for all persons and communities under substantially similar circumstances and conditions, it was necessary to include in the act a section which would make lawful the rate concessions which had been in existence for many years prior to 1887, and which would continue subsequent to 1887 in the form of the land grant acts and rail equalization agreements.

With the repeal of the land grant acts in 1946, however, much of the early Government rate concession philosophy was vitiated. There would appear to be no reason, therefore, why the Government today should be offered lower rates than are available to commercial shippers. As one of this country's foremost transportation authorities, the late Joseph Eastman, put it in supporting repeal of the land grant rates:

66* * * the Government ought to pay the same rates for carriage of traffic as are paid by its own citizens who really make up the country."

32 Report 1910 of the House Committee on Interstate and Foreign Commerce, 77th Cong., 2d sess.

33 59 Stat. 606.

COMPARISON OF THE PERCENTAGE INCREASE IN THE GENERAL COMMODITY RATE STRUCTURE FOR THE U. S. AS A WHOLE WITH THE

MUNITIONS RATE STRUCTURE FOR TWENTY-THREE MOVEMENTS IN THE SOUTHERN TERRITORY

44

.432

.432

43

.425

42

41

40

COMPARISON OF SECTION 22 RATES ON MUNITIONS WITH THOSE IN EFFECT FOR COMMERCIAL SHIPPERS

147 8

SECTION 22 RATING ON AMMUNITION AND EXPLOSIVES
ON THE DOCKET 28300 SCALE OF RATES.
COMMERCIAL EXCEPTIONS RATING OF 75% ON HIGH
EXPLOSIVES, PROJECTED TO THE DOCKET
28300 SCALE OF RATES.

COMMERCIAL COMMODITY RATING ON HIGH EXPLOSIVES
PROJECTED TO THE DOCKET 28300 SCALE OF
RATES.

130

125

120+

115

110%

110

107%

105

104.9%

100

35

PERCENTAGE OF THE FIRST CLASS RATE IN EFFECT
BASED ON THE DOCKET 28300 SCALE OF RATES

APPENDIX E