In addition to the actual savings per 100 pounds shown above, there is an even greater percentage saving because the shippers association charges on actual weight with no minimum while the freight forwarder charges shipments weighing less than 100 pounds as 100 pounds, or at much higher package charges. To retail stores in Seattle, the nonprofit shippers association total saving per 100 pounds averages from $1.75 to $2 per 100 pounds below that of Acme Fast Freight, Universal Carloading, and other forwarding companies when all the savings on large and small shipments is considered.

In addition to the freight savings, numerous reductions in transit time have been effected by arranging direct spotting of cars for menbers and by making direct release from consolidating point without rehandling freight over Chicago or other transfer cities enroute to the west coast.

The nonprofit shippers associations are designed to meet the needs of limited areas and limited membership. These associations have gone a long ways in diminishing the use of the old national phrase "prices slightly higher west of the Rocky Mountains."

The proposed amendments to section 402 (c) of the act would put such impossible conditions as standards for determining what are legitimate associations that no association could long exist. For that reason the Western Traffic Conference strongly opposes the legislation here proposed.

It is submitted that the proper way to control the expansion of nonprofit shippers associations is for the certificated forwarders and others to bring their rates closer into line with their costs than to legislate the low-cost shippers associations out of business.

WHY WE OBJECT TO SECTION 19 OF H. R. 6141

The Western Traffic Conference believes that part IV of the Interstate Commerce Act does give proper protection to the certificated freight forwarders if existing law is enforced. The Western Traffic Conference does not object, however, to a change in the law provided Congress sets fixed and unalterable standards, not subject to interpretation, to preserve the basic right of shippers to join together and consolidate their shipments without harassment. Here is why we oppose section 19 of the proposed bill before us today.

(1) The bill states the Interstate Commerce Commission can, on its own motion or complaint, consider any association as to its lawfulness. The Interstate Commerce Commission and the freight forwarders have that power today. Any forwarder can complain under the Interstate Commerce Act of unlawful operations. It is used in the freight-forwarder section. It is more often used in the motor-carrier section. It is commonplace for one truckline to challenge the authority of a trucker to operate. The Interstate Commerce Commission has the power to investigate and has investigated. There is no need for that part of section 19 here proposed.

(2) Section 19, second condition, would require the Interstate Commerce Commission to determine if the activities are not being conducted solely for the purpose and in the limitations of section 402 (c). The Commission can and does investigate nonprofit associations under existing law. They are doing it all the time and are making suggestions for change when any question arises. The

present law requires the association to be nonprofit. It requires the association activities to be limited to its members. The Internal Revenue Service of the Treasury Department checks the associations. The State laws, for example of the State of Washington, set rigid limits for nonprofit cooperative associations. There are many, many existing tools to bring any improper shipper association into line or eliminate it. No change in existing law is necessary to do that. The way to kill any "fleas" that may exist on the "dog" is not to kill the "dog." Section 19 here would do that.

(3) The third test in section 19 is whether the challenged association would violate the national transportation policy. Nobody knows what is the national transportation policy. The railroads and trucklines are before the Commission today to spell it out. It means anything 6 out of 11 members of the Interstate Commerce Commission say it means on any day, providing the courts will sustain them. The wording of the national transportation policy could hardly be more ambiguous. It means anything to anybody.

The wording of the national transportation policy cannot be adopted as a test of a nonprofit shippers' association. Does the policy even contemplate nonprofit shippers' associations? What is meant by "inherent advantages"? What is meant by "safe" freight forwarder service? What is meant by the use of the words "adequate,” “economic," and "efficient" forwarding service? What are "sound economic conditions"? What are "reasonable charges for transportation service"? Would a reasonable charge be one nearly $2 per 100 pounds higher on the average than a shipper association total charge? What does "unjust discrimination," "undue preference," or "advantage" mean? What are "unfair or destructive competitive practices"? What does "coordinating" and "preserving" a national transportation "system" mean? What does "adequate to meet the needs of commerce" mean?

I am sure every member of this committee will recognize the complete ambiguity as a standard or test insofar as shippers' associations are concerned. For that reason we strongly object to the national transportation policy as any standard or test under section 402 (c) of the act.

(4) We object to the condition that the Commission should "consider facts of organization and establishment" of the nonprofit association. Unless Congress spells out what consideration should be given, it is no standard at all. Anyone can "consider" anything. If Congress means this as a test, it should tie the test down to some determinable fact, and point out what should be "right" and what is "wrong."

(5) We object to the test that the Interstate Commerce Commission should consider the scope of activities geographically, as to commodity handled, and persons served. That test could not be more objectionable. Department stores are members of Western Traffic Conference. They carry thousands of items that run the gamut from A to Z. Why should an association who has a department-store member be condemned because it handles many items of freight while an association with no department-store members handles a lesser number of items. Boeing Airplane Co. uses over 50,000 items in their 1 operation. Most stores and plants and jobbers handle a widely diversified line of goods today. Items handled is no test of the legitimacy of an organization.

Equally true, the geographical area served is no test, for many, many national concerns have branches all over the country. If an association serves all their branches, to say that is wrong because of that fact makes an impossibly unfair legal restriction. The test should properly be the legitimacy of the operation and not the area served. Equally true, if the members of an association can substantially improve their transportation cost and service by serving more than one limited area, they should be allowed to reduce their costs without artificial limits.

The test of the number of people served is wholly unfair to small shippers. There are several large national merchandising concerns in almost every retailing field, from 10 cent store merchandise to women's clothing, with many ranges in between. One or two such national shippers together could create an efficient pool. It may and does take 50 to 100 small merchants and retailers in the sparsely settled West to operate an efficient pool without terrible holding delays in their shipping schedule to develop a carload of freight. The test of the number of members would be grossly unfair to small businesses who need the benefits of the pool fully as much as the larger organizations who could do the same job with less members.

(6) The test that the Interstate Commerce Commission should consider the basis of charges, if any, for the service is not of itself unreasonable. Congress

should, though, carefully spell out the consideration the Commission should give. The essential point is only this-that the ultimate savings and benefits to the association of the consolidation be passed on to the members. Any nonprofit association, be it a shipper group or a medical or education or research nonprofit association, has certain administrative and overhead expenses as well as direct out-of-pocket costs. The final net overall savings to the association should be considered. If those net savings are not going to the members then something is wrong under both present and proposed law.

(7) The test that the Commission should consider the extent to which a shippers association competes with a freight forwarder is wholly objectionable. In effect, Congress is asking to legislate out anyone that competes with the freight forwarders. We believe that to be a wholly un-American approach. Practically all freight moving is theoretically competitive with a freight forwarder. If the nonprofit association did not exist, shipper association freight could move by any of 4 or 5 services, including the freight forwarder. It might move by railroad less than carload; it might move by truck; by express; by air freight; by freight forwarder; or by water. If low cost shippers association service dried up, the movements might well dry up. To make the existence of a paralleling freight forwarder service a test of the right to exist for a shippers association is wholly unrealistic and unfair.

THERE IS NO ECONOMIC NEED FOR LEGISLATION TO PRESERVE THE CERTIFICATED FREIGHT

FORWARDERS

The last report of the Interstate Commerce Commission showed the certificated freight forwarders handled approximately 5 million tons of forwarder freight. The amount of shippers association freight forwarded is a very small percentage of that total. The best estimate is substantially less than 10 percent based on a comparison of total freight forwarder tonnage originated by rail in 1954 versus the freight forwarder rail tonnage for the same year as shown in ICC official reports.

In 1955 certificated freight forwarder shipments and tonnage were up over 10 percent that of 1954. Their net income before taxes was up approximately 17 percent and up nearly 13 percent after Federal income tax. On the basis of money invested in freight forwarder operations, the certificated freight forwarders have an unbelievably high rate of return.

CONCLUSION

The Western Traffic Conference is unalterably opposed to section 19 of the Freight Forwarder Act as proposed here. It is fatally deficient in law in that it does not set up clear-cut standards for the determination of the right of nonprofit shippers associations to exist. As drafted, section 19 would do irreparable harm to all shippers associations, good or bad.

The Western Traffic Conference believes existing laws, if properly enforced, can cull out any improper associations without change in the law.

The Western Traffic Conference would not oppose changes in section 402 (c) of the act provided the basic right of shippers to consolidate their freight was not impaired. The standards Congress should establish must be clear cut and not subject to interpretation. The essential features of any legal change should require only that the members effectively control the association and that the ultimate savings resulting from the consolidation be passed on by the association to the members.

Section 19 of H. R. 6141 falls far, far short of meeting the requirement of good law. It should be rejected.

Mr. ROGERS. Mr. Hinshaw, do you have any questions?

Mr. HINSHAW. Yes.

In view of the statement which I believe you heard made here regarding part IV, do you see any objection to the repeal of part IV in toto?

Mr. ALLEN. Mr. Hinshaw, that is something I would want to proceed pretty cautiously on, very frankly. I am very well aware of some of the abuses that existed prior to the regulation of the freight forwarder. I believe the freight forwarder does serve a useful function.

In the case of my company, our transportation bill to the freight forwarders exceeds $1 million a year. I would want to study that pretty carefully. It seems to me that we have gone quite a way from the original concept of regulation of the freight forwarder as existed at the time the original part IV was passed.

Mr. HINSHAW. Would it affect shippers' associations in any way that you can see to repeal part IV?

Mr. ALLEN. I think basically there is any volume of business that many shippers such as ours would be perfectly willing and happy to see the freight forwarder accomplish if we felt that he could do as good a job, and maybe at slightly more money than it costs us in operation through an association. A lot of things happened in this thing which would indicate, the way the regulation has actually developed, the shippers' association has been able to accomplish a number of things from the standpoint of proper service and costs which maybe or maybe not the freight forwarders could have accomplished. I do not want to appear to be evading answering your question, but the whole problem of whether or not we should have regulation of freight forwarders is pretty involved and I would certainly want to think it out pretty carefully before I attempted to give you a direct

answer.

Mr. HINSHAW. I hope you give it thought and give us your conclusions.

Mr. ALLEN. Thank you.

Mr. HINSHAW. I am going to have to leave, Mr. Chairman. I notice that the last witness has a very volminous statement and that he is located in the city of Washington.

Mr. ROGERS. Pardon me, Mr. Hinshaw.

Thank you, Mr. Allen.

Mr. ALLEN. Thank you.

Mr. ROGERS. It is my understanding Mr. Carl Bier is here. As I understand it, he has only about a 5-minute statement, if you could stay for that, Mr. Hinshaw.

Mr. Childe, you have a rather voluminous statement and I am wondering if it would not be better to have you come back at another time.

In view of some matters that came up on the House floor this afternoon, it upset the committee hearing a little bit, which is not unusual. I wonder if it would be convenient for you to come back at another time.

Mr. C. E. CHILDE (transportation consultant). Do you have a specific time in mind, Mr. Chairman?

Mr. ROGERS. No, sir; I do not right at the present time. I have not discussed with Mr. Harris when he wants to reconvene the committee, but, so far as I am concerned, I should think that you would be the next witness un at the beginning of the next hearing if that time was to your convenience.

Mr. CHILDE. Of course, I wish to conform to the committee's convenience. I merely asked the question so that I would not have any conflicting engagement at the time the committee set for hearing.

Mr. ROGERS. Projecting into the future, it appears, Mr. Childe, that probably Thursday morning will be a better time for you to give your testimony if that suits your convenience. I have not discussed it with Mr. Harris, as to what we can or cannot do on it, but could we notify

you or have one of the staff members notify you sometime today or in

the morning?

Mr. CHILDE. Yes, sir.

May I suggest this:

I hold my engagements open for Wednesday and Thursday until I hear from your staff?

Mr. ROGERS. Thursday? What has happened is that there are approximately 60 witnesses who are going to be present tomorrow. Of course they all cannot testify, but quite a few are from out of town, which means that Thursday morning will probably be the first open date or the date that we can work the witnesses around to where you can be included.

I will discuss it with Mr. Harris and see if we cannot work it out So you appear first on that day.

Mr. CHILDE. Thank you, Mr. Chairman. I will be governed accordingly.

Mr. ROGERS. Thank you very much, Mr. Childe.

Mr. Bier, if you will come forward and identify yourself, you may proceed with your statement.

STATEMENT OF CARL H. BIER, GENERAL CHAIRMAN, BROTHERHOOD OF RAILWAY CLERKS, CINCINNATI, OHIO

Mr. BIER. My name is Carl H. Bier. I am general chairman of the Brotherhood of Railway Clerks, with headquarters in Cincinnati, Ohio.

I represent the employees generally who work for freight forwarding companies. They have a vital interest in the welfare of the freight forwarding industry and naturally are concerned with legislation which affects freight forwarders.

H. R. 9548-PIGGYBACK BILL

One of the bills now before your subcommittee for hearing, H. R. 9548, is of particular interest to us because it is designed to permit freight forwarders to engage in a rapidly developing transportation operation known as piggyback.

The bill would authorize freight forwarders and railroads to make contracts covering the movement of trailers loaded with forwarder freight on railroad flatcars.

As a representative of the employees, of course, it is my job to try to preserve the jobs of the people who work in the industry. We see no reason why the freight forwarders should not be accorded the same privilege in the right of forwarding trailers on flatcars from station to station as is accorded the truck lines, and at rates that the truck lines are now able to ship those trailers over the rails.

The piggyback service of the railroads is currently being widely advertised and talked about as an innovation in transportation. Freight forwarders, who by experience and organization are the best qualified people to make the full advantages of the service available. to the public, are being prevented from doing so by what amounts to a technicality.