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counter severe competition from fuel oil, a substantial part of which is transported in tank barges on the inland waterways or in tank vessels on the Great Lakes, either privately owned or exempt under section 303 (d). The exemption should remain unchanged as to both.

Water bulk transportation is a specialized service and differs from private carriage only in the fact that receivers, like electric generating plants, are not engaged in the transportation business (R. 1719-1720).

Alarming losses in Illinois coal production are attributable in no small measure to prohibitively high rates maintained by the railroads which have made it impossible to market coal at important points in the Midwestern States in competition with natural gas and fuel oil. The use of exempt barge transportation was begun, and the volume has increased in recent years.

Because fuel costs represent the main part of their expenses, electric utility plants have invested millions in facilities on navigable waterways, and have come to depend upon the stability of rates charged by exempt water carriers.

Elimination of the exemption will result in Commission-required increases to protect the railroads, and would immediately result in the diversion and loss of substantial tonnages of Illinois coal moving by barge to natural gas or oil.

There commendations of the advisory committee are quite conflicting. It recommends reduction of economic regulation to a minimum, on the one hand, and, on the other, recommends the elimination of the dry-bulk exemption which subjects those water carriers to regulation (R. 1721-1722).


(D. G. Ward) The witness stated that the association is basically in agreement with the fundamental principles outlined in the Cabinet Committee Report and supports these principles with the exception of sections 13 and 14 of H. R. 6141 which propose to repeal the dry-bulk exemption and modify the definition of "common carriers by water and contract carriers by water."

In excess of 500 million tons of bulk commodities are moving on the inland waterways, with many additional millions of tons moving coastwise. This business was primarily developed under the present laws and without regulations. A large proportion of bulk commodities moving by water are not susceptible to transportation by competing carriers, with the result that any regulation would retard the development of this type of water transportation without any great assistance to the regulated railroad and trucking industries. In fact, even the limited number of regulated common carrier barge lines who favor this legislation would not materially benefit, as extension of regulation would tend to develop and encourage private operations by large industrial users of the inland waterways to the disadvantage of the forhire carriers and small producers. No support appears for the view that the public interest would be served by this extension of regulation (R. 1606-1607).


The proposal to repeal the dry-bulk commodity exemption would bring a large volume of waterway traffic under full economic regulation. In the past, water carrier regulation has been the product of railroad regulation and complaint. No railroad crisis confronts the Nation at the present time, and even this limited reason for instituting regulation in 1940 is now absent (R. 1375).

The proposal would constitute a repudiation of our historic free waterways policy. It would deprive the Nation of the benefits of lowcost water transportation, discourage development of the waterways, and cause serious dislocations of industrial and commercial establishments dependent upon water transportation (R. 1377–1378).


(Harry B. Dyer) Any extension of the regulation of inland water carriers is opposed. The rescinding of any presently existing exemptions for bulk commodities would not only tend to impede the progress of technological developments in river transportation, but would increase the cost of river transportation to the general public. It would tend to create a monopoly among the existing carriers, and permit them to relax into complacency with the comforting knowledge that no new competition could enter the business (R. 1572-1573).


(F. F. Estes) To provide for a maximum-minimum range in ratemaking without ICC review, by which rates on intercarrier competitive traffic could be lowered at the will of the railroads and the eroded revenue recouped by higher rates on the so-called noncompetitive traffic, and then deny the bulk commodities the avenue of shipping over specialized carriers exempt from regulation, would vitiate one of the primary goals of the Weeks committee, namely, to give the ultimate consumer the benefit of the lowest possible transportation costs.

Bulk transportation users have, during the past 16 years, come to rely and depend upon the reasonable stability of the water rates, and have been able to promote and maintain trade that would never have been possible under the prohibitive freight charges of regulated carriers. Industries have invested large sums of money to locate at points where water transportation can be utilized. These plants should not be wiped out (R. 874–875).


(Angus McDonald) Under the exemption for dry-bulk movement, farm products have enjoyed favorable rates for water transportation. The Farmers' Union is opposed to any change in this situation. A repeal of the exemption would have two results: (1) it would cut down on the number of carriers able to compete in water transportation, and thus increase the


rates; and (2) result in an increase in private carriage by organizations which could afford to invest in the necessary barge operations (R. 1330).


(Roy F. Hendrickson) A number of the member grain marketing associations employ river transportation and have substantial investments in river loading and receiving elevators, and a few have barges. River transportation has made it possible to find buyers far distant from surplus-producing areas, thus expanding outlets to the advantage of grain growers. This is particularly necessary in view of the difficult surplus problem.

Facilities for handling grain and using river transportation have been expanded on the assumption that the dry-bulk exemption was settled policy. Further expansion is pending but will be postponed until this matter is clear.

Repeal of the exemption would result in higher rates, reduction in available services, and elimination of the flexibility of grain movements. It would not result in diverting traffic to railroads or regulated water carriers. Substantial markets would be cut off altogether, with probable diversion of more traffic to trucks. In addition, more of the cooperatives would be forced into private river transportation (R. 1447).


(Lloyd C. Halvorson) If a change is needed to bring about equality of regulation, the Grange favors less regulation of the common water carriers, rather than more regulation of the exempt carriers. It opposes legislation either to repeal or to restrict the bulk commodities exemption (R. 1335).


(William H. Ott) Government regulation of carriers should be based on the need for protection of the public interest, or the elimination of demonstrated abuses. Generally, bulk-commodity water service on the Great Lakes as well as coastwise and intercoastal is not substantially competitive with land transportation. Much bulk-commodity transportation must be integrated with other operations of the business concerned. There may be some exempt operation that is competitive, but it is not shown that any public benefit would flow from control. To regulate this traffic would increase the overall cost to the public with minor benefit to competing carriers (R. 940–941).


(William N. Maddox) The proposed repeal of the bulk-commodity exemption is opposed. To regulate the movement of coal by American vessels, for example, would place them in an intenable position in attempting to compete with foreign vessels. One of probable results would be that the

present contract barge lines would be transformed into private barge Iines. Contract barge lines and barge lines handling presently exempt traffic are not competitors of the railroads, but compete generally between themselves. It is doubtful that the railroads, if attempting to compete with these barge lines, could in most instances maintain comparable rates capable of returning reasonable contribution to their overhead burden. The present provisions covering water carriers appear to be adequate (R. 1074-1075).


(George P. Baker) It is not established that the lack of regulation of the water carriage of bulk commodities has any substantial effect on the competitive situation between bulk water carriers and other carriers. Under such circumstances, extension of regulation is not recommended (R. 370).


(Dudley Sanford) Repeal of the bulk commodity exemption is not in the public interest. The exemption applies equally to both common and contract water carriers, and does not have the effect of diverting traffic from the former. I carrier providing exempted service anticipates making a profit. The rates are limited by the forces of competition. None of the considerations of public interest which make regulation advisable are present.

Is applied to this company, the proposal would remove the barging of coal from the area of competitively established rates and place it under regulation, resulting in artifically increased transportation costs which would have to be passed on in the form of higher rates for electricity (R. 786-788).


(David A. Wright)

The results beneficial to the public interest of the bulk commodity exemption in the Transportation Act of 1940 justify its retention. Free competition in the movement of dry bulk commodities on the inland waterways is resulting in a dynamic growth in this traffic. The growth is due to the fact that the service is substantially cheaper than other modes of transportation. In the face of rapidly mounting costs and rates experienced by all forms of transportation, free competition as to bulk commodities on the inland waterways has resulted in lower and more stable rates to shippers than the rates prevailing for regulated traffic.

Since 1940 there have been rapid and substantial technological developments in the types of barges and towing equipment and techniques of service. Also, free competition in this field has caused the entry of many new carriers including many small ones. The reliability and availability of service has increased with the entry of these new carriers. Because of these advantages, the shippers of coal, grain, chemicals, fertilizer, sand, and gravel naturally oppose the

proposed repeal of the present exemption of dry bulk commodities from regulation by the I. C. C. (R. 1493-1495).

The exemption of the transportation of bulk commodities by water from the general scheme of regulation was a thoroughly and carefully considered step. It was based on the principle that enterprise and competition in transportation on the waterways should remain free except to the extent that the public interest required regulation, leaving the inherent advantage of low-cost transportation afforded by the waterways to free and unrestricted use. There was no substantial competition between bulk transportation on the waterways and transportation by rail, and, therefore, the exemption did not place the regulated carriers under unfair competitive disadvantage.

The reasons for the bulk exemption extend as much to the inland waterways as to the Great Lakes. Any limitation of the exemption to bulk movements on the Great Lakes would discriminate against communities and shippers on the inland waterways, particularly on the upper Mississippi River (R. 1495–1498).

The extension of regulation on our inland waterways to the transportation of dry bulk commodities would substitute a regulated cartel for a working system of free competitive enterprises. Repeal of the considered exemption is supported by four large common-carrier barge lines which have formed the Conference for Inland Waterways Dry Bulk Regulations. The conference was formed especially to support repeal of the dry bulk commodity exemption. If the repeal is enacted the conference members will be able to prevent new entries into the business of hauling bulk commodities, and they would also be able to freeze existing operators to the narrow confines of existing movements. Thereafter, it would be inevitable that the combined pressures of an inability to grow or to modify operations to meet new conditions, and the pressures of detailed regulation on small businesses ill-adapted to such regulation would result in the barge and towing business becoming monopolized in a few hands.

The resulting freeze on the expansion of existing water carriers would, in time, produce merger, consolidation, or bankruptcy of the vast majority of exempt carriers and regulated common carriers with limited operating rights. Once a few large regulated water carriers have evolved, then these large carriers would collaborate in rate fixing. It may be reasonably assumed that the resulting rates would be higher than the former rates which resulted from the spur of unregulated competition.

The only beneficiaries of the repeal of the exemption would be the 4 conference members, 5 small connecting barge lines which are de pendent upon the major carriers, 1 isolated water carrier on the east coast with extensive operating rights, and certain railroads (R. 1498 1501).

No appropriate public interest is suffering injury because of the exemption of bulk carriers on inland waterways from ICC regulation. Instead, since 1940 the water carriers have improved their vessels, equipment, and service to the public.

Since the water carriers have lower operating costs, the railroads desire regulation of water rates. This would increase the water rates

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