As I view the bill, it simply removes that technicality. After all, the purpose of regulation should be to encourage the fullest possible use of any advancement in transportation.

The railroads are providing piggyback service under two basic plans. Under one plan they handle their own freight, which they would normally load into boxcars, in trailers on flatcars.

Under the other plan they make the service available to haul the trailers of motor carriers.

Obviously the railroads can provide the service under the second plan at a much lower cost, for in that case the primary expense to the railroad is hauling the trailers over the rails. The forwarders who give them the trailers do everything else, such as solicitation, gathering and loading, billing and distribution, collection of charges, accounting, and the like. When they handle their own freight, the railroads must themselves absorb the expense of all these things.

As the law now stands it has been held that forwarders may not take advantage of the second plan, under which railroads make piggyback service available to motor carriers, but can only use the first plan, which is not at all suited to forwarder operations.

Motor carriers, on the other hand, are permitted to use the second plan, under what has been called joint rates, paying the railroads a so-called division, which is nothing more than a flat charge.

It has been testified, and I have no doubt it is correct, that the motor carriers thus are able to move their trailers on rail flatcars at charges as much as 40 percent below tariff rates. Even if the rail tariffs were otherwise suited to forwarder traffic, the forwarders, of course, could not obtain any business in competition with motor carriers whose costs. are 40 percent lower than their own.

What the motor carriers are now doing, under so-called joint rate arrangements with railroads for piggyback service, is exactly what freight forwarders have always done. The motor carriers assemble, consolidate, and break-bulk and distribute freight, using the railroads for the line haul.

This is the field that the freight forwarder logically and legally occupies and there is no reason why he should now be barred from the field by a technicality or defect in the law.

The bill could be justified on the grounds that it equalizes the situation of freight forwarders with that of motor carriers insofar as utilization of rail piggyback service goes. But there is a great deal more to it than that.

The bill would enable forwarders, who are in the best position to do the job, to help develop what amounts to an innovation in transporta

tion service.

One of the cardinal purposes of transportation regulation is and ought to be the encouragement of the development of new methods and services, and the improvement of existing methods. It is certainly exactly contrary to that purpose to tie the hands of the freight forwarders when it comes to the development of a service that forwarders are tailormade to perform.

H. R. 9772-FREIGHT FORWARDER PERMITS

Competition is fine and should be preserved. But in the case of common-carrier transportation, it was decided long ago that Federal controls and restraints were necessary in the public interest.

In a sense, regulation is controlled competition.

One of the controls which for many years has been imposed on common carriers is a limitation on the number in the field.

This is done by the licensing provisions, so that when a new operator wants to enter the field he must furnish proof that the public. interest requires his services, and that he will not simply be providing unnecessary and wasteful competition with service that is already adequate.

Freight forwarders exist by reason of their ability to consolidate freight into economical units for frequent and speedy line-haul service. When the available traffic for a given point is split up among too many carriers, none of the carriers are then able to furnish adequate or regular service.

As far back as 1952, I testified before the Senate Interstate Commerce Committee on a measure similar to the pending bill; that the freight-forwarder business had reached a point where more rigid restraints should be placed on the institution of new service.

No action was taken on that legislation, and the number of forwarders operating in any given area has continued to increase.

As a result, we find today curtailed service to many parts of the country because the available traffic is split among entirely too many carriers, with the attendant result being that many employees with years of service are forced out of the industry.

Certainly it is not in the public interest to grant licenses indiscriminately to all who ask, when it can only result in flooding the market and making it impossible for any carrier to furnish regular or speedy service, especially to the smaller cities.

These licensing provisions should be tightened up as soon as possible. As it is now, about all you have to do is to find some shipper that says he would rather have your service, and the Commission gives him a permit.

The law now does not permit the Commission to turn down the granting of a permit because there is adequate or sufficient service at the present time, and the result is that we are splitting the available traffic so slim that none of the forwarders is able to make frequent and adequate service to many of the points, particularly in the smaller cities.

The result is that the freight is either delayed or it is unable to be handled as expeditiously as the shipper needs his freight handled. The only way that the forwarders can operate is by consolidating shipments into economical units so that they can ship them at carload rates and furnish this kind of service to the people.

That is about all I have to say.

Mr. ROGERS. Thank you, Mr. Bier.

Mr. Hinshaw, did you have any questions?

Mr. HINSHAW. No; thank you.

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

Mr. BIER. Thank you.

Mr. ROGERS. We have one other witness here who wants to make a very brief statement, Mr. Hudson Biery. Is he present?

STATEMENT OF HUDSON BIERY, EXECUTIVE VICE PRESIDENT, OHIO VALLEY IMPROVEMENT ASSOCIATION, INC.

Mr. BIERY. Mr. Chairman, my statement has the virtue of brevity. Mr. ROGERS. Thank you.

Mr. BIERY. My name is Hudson Biery. I am a resident of Terrace Park, Ohio, near Cincinnati. I am executive vice president of the Ohio Valley Improvement Association, Inc., an organization of industrial business, civic and financial agencies that has promoted the development of the Ohio River Valley since 1895. The association is a corporation, not for profit, organized under the laws of Ohio. It is primarily concerned with the orderly development of navigation facilities, flood control and water resources of the Ohio Valley. Its affairs and policies are directed by a board of 21 trustees, elected by the membership, all of whom serve without pay.

I am also a commissioner for the State of Ohio, of the Ohio River Valley Water Sanitation Commission, an interstate pollution control agency composed of eight States of the Ohio Valley; New York, Pennsylvania, Indiana, West Virginia, Virginia, Ohio, Kentucky and Illinois. I am appearing today for the first-named organization.

The Ohio River Valley is a vast inland empire comprising a substantial portion of 9 States and a small portion of 5 more States, having a combined valley population of approximately 20 million people, with a land area of 204,000 square miles.

The vast industrial development of this region has been dramatically brought to the attention of the American people, through various publications of national distribution, during the past few months. I refer to such periodicals as the June issue of Fortune magazine, to the Business Week, of September 17, 1955, and U. S. News & World Report, of April 27, 1956. Other publications calling attention to the phenomenal development of the Ohio Valley have included New York Times, Wall Street Journal and official bulletins of the Federal Reserve banking system.

The statistics indicate that the industrial expansion of the Ohio Valley within the past 6 years has been approximately $10 billion. A fundamental factor in this huge development has been favorable transportation of all kinds, including railways, inland waterways, pipelines, highways and airlines. Other factors naturally include available water supplies, natural resources, inland security, sound labor, centers of distribution and a vigorous economy. As the result of a stabilized economy that has been developing in the Ohio Valley for the past century, the region is now the industrial heartthrob of the Nation. Under this well-adjusted economic situation, the valley is carrying a substantial portion of the national tax burden. It is also the very center of national defense.

Various attempts are being made to tamper with this economy and several of these relate to its vital transportation services. The industrial expansion of the Ohio Valley has resulted from things as they are and as they have been, involving many basic relationships that have been in effect for a great many years.

Some proposals included in H. R. 6141 would disturb and readjust some of these basic relationships in the field of public transportation. These proposals have been thoughtfully reviewed by the legislative

committee and by the trustees of our Ohio Valley Improvement Association and studies have been made covering proposed changes in the national transportation policy. Their views have been reduced to a brief statement on transportation policy that was adopted by ballot and ratified on April 5, 1956, at a meeting in Pittsburgh. There are only two pages of this statement of policy and, with the consent of the chairman, I would like to read it into the record at this point.

Statement on transportation policy by Ohio Valley Improvement Association, Inc.: The national transportation policy as expressed and implemented by the Interstate Commerce Act is based on the principle that the national interest requires a transportation system offering a broad range of means and types of transportation services, with such regulation of rates and services and such restrictions upon entry into the transportation business as are necessary to preserve the inherent advantages of each, to prevent unfair and destructive competition and to provide facilities adequate for the Nation's needs in peace and in war, at just and reasonable rates without discrimination, preference or prejudice. The basic industry and future development of the Ohio River Valley are dependent upon low-cost transportation by all available means.

The present system of regulation is the product of gradual growth and development in response to technological improvement and economic and social change. It provides a setting within which a reasonably satisfactory balance of competitive forces has been maintained and efficient and adequate transportation services have been made available.

Of critical importance in maintaining this balanced transportation economy has been the principle that economic and financial power, as distinguished from superior efficiency, may not be employed to destroy competitive forms of transportation and to establish monopolistic positions. Thus carriers whose operations provide substantial revenues from noncompetitive traffic have been prevented from employing such resources to engage in destructive competition.

The basic policy recommendations of the Presidential Advisory Committee on Transportation and the legislative proposals introduced in the 1st session of the 84th Congress to carry out those recommendations reflect a proper concern with the problem of increasing the role to be played by free competition in the operations of regulated carriers. It is the sense of this board of trustees, however, that adoption of the Advisory Committee's recommendations with respect to ratemaking and the standards applicable thereto, and particularly with respect to the long- and short-haul clause would'

(1) Immediately result in increased rail rates on noncompetitive traffic and

(2) Confer upon carriers, such as the railroads, having substantial vloumes of noncompetitive traffic and low direct or incremental costs, an undue and unfair advantage over carriers dependent upon competitive traffic, regardless of true economic efficiency as measured by comparative total costs.

Thus the balance of competitive forces would be impaired and a tendency toward monopoly set in motion which would result ultimately in higher costs to the public on all traffic. This we are convinced would seriously jeopardize the development of the Ohio River

Valley which is dependent for its future growth upon the continued availability of low-cost transportation by water, rail, truck, and pipeline.

The position taken herein as to the dangers inherent in the proposals of the Presidential Advisory Committee are consistent with the view of the Interstate Commerce Commission respecting the report and implementing legislation S. 1920 and H. R. 6141-as expressed to the House and Senate Interstate and Foreign Commerce Committees by letter dated December 22, 1955.

Accordingly, this board of trustees expresses its disapproval of those recommendations of the Presidential Advisory Committee which are designed:

(1) To grant greater freedom to transportation agencies to cut rates on competitive traffic at the expense of noncompetitive traffic, or

(2) To limit and restrict the ratemaking powers of the Interstate Commerce Commission, or

(3) To prescribe standards for rates which depart from the established principle that the inherent advantage of each mode of transportation shall be preserved against destructive competition.

Limitation of the comments of this board of trustees to the particular phases of the Weeks committee report and of the proposed legislation discussed herein is not intended to imply either approval or disapproval of any other recommendations or provisions thereof, as to some of which there are differences of opinion among the trustees of this association, while as to others, of a detailed and technical nature, no study has been made.

Adopted by the board of trustees of the Ohio Valley Improvement Association this 5th day of April 1956.

I appreciate this courtesy of being permitted to appear at this time.

Mr. ROGERS. It is very nice of you to come. The committee appreciates your appearance here and your testimony. We thank you very

much.

Mr. BIERY. Thank you.

Mr. ROGERS. The committee will stand adjourned until tomorrow morning at 10 o'clock.

(The following statement was submitted for the record:)

STATEMENT OF E. C. SCHMITT, TRAFFIC MANAGER, SOUTHERN PINE ASSOCIATION My name is E. C. Schmitt, business address is 520 National Bank of Commerce Building at 210 Baronne Street, New Orleans, La. I am employed full time by Southern Pine Association as traffic manager. The Southern Pine Association is a voluntary nonprofit organization composed of manufacturers of numerous kinds and articles of southern pine lumber who have operations located all over the South and Southwest in the States of Louisiana, Texas, Arkansas, Oklahoma, Mississippi, Georgia, Tennessee, Florida, Alabama, North Carolina, South Carolina, and Virginia. The aggregate production of the subscribers to the association represents approximately 20 percent of the total southern pine lumber produced. Therefore, it can be said that the Southern Pine Association has an interest transportationwise in the distribution of a product that is important to the economy of the United States.

The lumber shippers whom I speak for have followed the discussion of the Cabinet Committee report, which would be implemented by the provisions of H. R. 6141, with keen interest, particularly the proposals with regard to competitive rates. As we interpret the report, one of its basic recommendations is that the