« PreviousContinue »
tificates ; 48,539 applications for temporary operating authority ; 15,372 applications for extension of temporary authorities; 33,194 applications under section 212 (b), to transfer or lease certificates or permits.
These figures should be contrasted with the number of applications filed by barge lines for certificates and permits between January 1, 1946, and September 1, 1954, which we set forth below:
There can be no doubt, whatsoever, in view of the foregoing data, that regulation brings in its wake all of the manifestations of cartelization.
It, therefore, appears to be beyond cavil, as the distinguished antitrust committee recognizes, that "competition can be impaired either by conduct transgressing the antitrust laws or by Government regulation fixing prices or rates or restricting freedom of entry." And as this committee noted, there is an apparent trend toward such cartelization under Government control. This tr nd persists despite the fact that, in its administration of the Interstate Commerce Act, the Commission has in effect been enjoined to take note of Sherman Act and Clayton Act principles.
Personally, I believe that progress under the competitive system comes from the constant development of new forms and methods and their entry into free competition with the old. ('nless and until they hare been demonstratrd to be detrimental to the public, they should, so far as possible, be allowed to find their proper place in the industry, rather than have a place assigned to them by a dominant group with monopolistic power. The erection of a fence around an industry to keep out newcomers is basically repugnant to the policy which underles our antitrust legislation. It is only justifiable when there is an overruiing public need therefor.
Through the years the Interstate Commerce Commission in the face of its present desire to be given extended authority to regulate several amended water carriers has taken note of this policy. It did so even before the Sherman and Clayton Acts were enacted, saying as early as 1 1. C. C. 278 in Re Southern Railtay & Steamship Association, in a report prepared by the first and great Chairman of the Commission, Judge Cooley:
"In thus deliberately making provision for competition, Congress must be supposed to have done so because the public interest required it. That competition is the life of trade is one of the most generally accepted of maxims; among its principal benefits is the protection it gives against extortionate charges."
In the first volume of motor carrier reports, the Commission took the same position, saying in Pan American Bus Lines Operation (1 M. C. C. 190, 208):
"Publie regulation can enforce what may be called reasonable standards of safe, continuous, and adequate service, but it can hardly be expected to take the initiative in experimentation and the development of new types of service. In fact the carriers would probably resist regulation in the courts, if it did undertake to follow such a line, on the ground that it was an invasion of managerial prerogatives and discretion. Competition is the best known spur to such an endeacor and we are not persuaded that Congress intended to eliminate it. * * *” (Italics ours. ]
The same deference to the theme of competition in the national interest runs through other Commission reports. Collating just a few : "Both the courts and this Commission have long recognized that reasonable competition is clearly in the public interest.”. Santa Fe Trail Stages, Inc., Common Carrier Application (21 M. C. C. 725, 749); "Healthy competition between different agencies "f transportation is undoubtedly in the public interest.” Naval Storcs from Mississippi to Guif Ports (285 L. C. 0. 723, 733). "The public ought not to be deprived of the benefit of improved service merely because it may divert some traffic from other
carriers.” Kansas City Southern Transport Co., Inc., Common Carrier Application (10 M. C. C. 221, 237–238). "One competitive carrier or class of carriers has no vested right in the continuation by another of an inefficient metbod of operation * * * we believe it to be the policy of Congress and the proper function of this Commission to foster any form of progress in transportation which will serve the public interest.” Atlantic Coast Line Railroad Co. Extension (30 M. C. C. 490, 492).
“The public is entitled to adequate service by motor vehicle as well as by rail when public convenience and necessity require the proposed motor carrier operations.” Interstate Motor Lines, Inc., Extension (46 M. C. C. 351, 360). See also Coastal Tank Lines, Inc., Batension (47 M. C. C. 520, 524).
"No carrier is entitled to protection from competition in continuance of a service that fails to meet the public needs." Marshall Extension of Operations, Dover, N. H. (47 M. C. C, 477, 481).
"One of the established purposes of section 207 is to protect established carriers against institution of competing operations except when existing carriers are unable or unwilling to respond to an existing need.” Omaha & C. B. Railroad & Bridge Company (49 M. C. C. 445, 465).
The courts have also referred to the obligation of the Commission to guard against monopolies in transportation. The Supreme Court, in Interstate Commerce Commission v. Parker (326 U. S. 60, 73), stated :
The Commission is trusted by Congress to guard against the danger of the development of a transportation monopoly. * * * It has the duty to preserve the inherent advantages of each mode of transportation." [Italics ours.]
In Long Transportation Corporation v. United States (96 Fed. Supp. 915, 930), it is stated that:
"Under Federal law carriers first in the field within a particular area do not enjoy legal protection against competition subsequently arising."
In Norfolk 8. Bus Corporation v. United States (96 Fed. Supp. 756), the court stated :
"Competition may be in the public interest, and the carrier first in business has no immunity against future competition."
In C. E. Hall and Sons v. United States (88 Fed. Supp. 596), the court held that:
"An increase in competition is not a reason for denying the Commission's authority to issue a certificate."
But, despite these proper asseverations on the part of the Commission and the courts, the trend toward cartelization of the regulated carriers continues; and if these several hundred water carriers come under Commission discussion, the trend will overtake them.
The merger drive is underway on the waterways. For example, American Barge Line Co. and Commercial Transport Corp. (formerly one of the carriers opposing the new legislation), the second and sixth largest carriers, are proposing to form the largest single inland water-carrier operation, doing a combined business of over $45 million a year.
It is believed that the merger-consolidation trend immediately would go into high speed with the advent of regulation. Either the small carrier would be driven to the wall by the proposed regulatory legislation and compelled to merge or the lack of operating flexibility would compel it to seek new rights by acquiring another carrier's rights. Assistant Attorney General Barnes' conclusion to his statement to the Antitrust Subcommittee has full applicability to the issues before this committee. He stated :
"One belief we share, I suggest, is that competition should be the major guide in our private-enterprise economy. Competition can be impaired or crippled as readily by Government regulation as by violation of the antitrust laws."
That would be the result here, a regulated cartel being substituted for the presently existing dynamic and profitable competition among these many carriers on the inland waterways. It would be unfortunate if our Federal regulatory processes were permitted to become a new weapon of the monopolists, instead of the means of protecting the public interest. As has been demonstrated elsewhere, and as the testimony of numerous shipping and other organizations will make clear, this flexibility, with its low costs, which carrier operation exempt from regulation permits, has contributed to a prosperous and healthy transportation service on the inland waterways. Good service has been obtained through the stimulus of competition. The proposed legislation would do more than extend regulation for regulation sake; it would extend regulation as a device to permit the few large common carriers to capture control of the inland waterways.
The Congress must ask itself the questions: Do we want the foregoing things to happen to the now exempt and freely competing dry bulk carriers? Do we
want them to merge, consolidate, diminish in number? Is there a pressing public need for such a basic change in their status? If the answer is “No” to each of these questions, section 303 (b) should not be repealed. IV. THE REPEAL OF SECTION 303 (B) WOULD BE ENACTMENT OF CLASS LEGISLATION OF
THE MOST DISCRIMINATORY TYPE May I pass now to point 4 in this discussion, to wit, that the repeal of section 303 (b) would place the Congress in a position of enacting class legislation of the most grossly discriminatory kind.
We recognize that class legislation though bad per se may at times be necessary. It has become so with respect to many fields of our national, social, and economic life. Exemptions in laws such as the Interstate Commerce Act are one manifestation of class legislation and there are examples in all titles of this act. In the legislative process, the "class" that is unduly favored by legislation is soon discovered and exposed and the legislation is repealed if it is not right in the first place. But, if the personalized law thus made has good reason to continue to exist, the public ordinarily does not demand its change. The dry bulk exemption was right ab initio. The public is not demanding a change.
The repeal of the bulk carrier exemption proposed by the railroads, a few water carriers, and the Cabinet Committee has no underlying public pressures requiring its repeal. There are no widespread complaints or righteous indignations concerning it. A few railroad presidents who waited on the administration contended in 1954 that the railroads were in financial trouble and that something ought to be done about it, so an Advisory Committee was set up and this committee gave birth to the idea that one way to help the railroads is to hamstring the water carriers. This is proposed class legislation of the boldest Tariety.
In title I of the Interstate Commerce Act, that is the part dealing with regulation of railroads, we find exemptions and exceptions having to do with
1. Free passes for officers, agents, and employees and their families;
9. In case of floods, fire, famine, etc. Since the railroads are by nature and inheritance common carriers and since regulation affecting them was carried over from the common law they, themselves, have never been as exemption conscious or felt need of special exceptions, such as have been granted to other types of carriers, which I shall now talk about. This probably accounts for their desire to have the exemption affecting dry bulk water carriers removed. The railroads have few problems of entry since they reached the peak of their trackage in 1910. Their main problem in the area of public convenience and necessity is to be allowed to abandon unprofitable branch lines. The water carriers are not opposing the legislation that will give the railroads more freedom of action in this field.
In part II of the Interstate Commerce Act, which deals with the regulation of motor carriers, there are exceptions or exemptions relating to the interstate operation of:
1. Private carriers,
When the Motor Carrier Act was passed each of these exemptions or exceptions was documented as a necessity. The farm community, in particular, was insistent on the enactment of the exemptions relating to the transportation of agricultural commodities, and the fishing interests demanded freedom of action for truckers hauling its commodities. The railroads and the Cabinet Comınittee would also do away with these exemptions, but it is significant to note that both of these advocates move Government regulations for the other fellow to soft-pedal their approach to these exemptions, knowing full well what the consequences would be if they were to put on a genuine drive to repeal them. I would infer that, tonnagewise the bulk exempt water carriers haul more agricultural commodities, including fertilizer and its ingredients, than do the exempt motor carriers. It would be interesting to know what the Secretary of Agriculture, one of the members of the Advisory Committee thinks about repealing section 303 (b), in view of the agricultural interest at stake.
Part III of the Interstate Commerce Act, which contains the regulatory laws relating to water carriers, in addition to the dry bulk carrier exemption, with which we are here concerned, has also the following exemptions or exceptions from regulation :
1 Furnishing of vessels under charter for use in private carriage,
5. Transportation of passengers between points in the United States via foreign ports,
6. Contract carriers not competing with rails, motor carriers, etc.,
7. Railroad and motor carrier water carriage, such as the use of car ferries, lighterage, towage, etc., incident to part I and part II of the act,
8. L cal pickup and delivery service,
12. Intrastate commerce. I wish to place particular stress on the exemptions relating to liquid cargoes in bulk and to the exemption relating to vessels passing through international waters, since these exemptions are related to the dry bulk exemption, which is recommended for repeal.
Pa't IV of the act relating to freight forwarders also contains exemptions and exceptions from regulation, it being expressly provided that the provisions of this part are not to apply to
1. Service performed by or under the direction of a cooperative association, 2. By a federation of cooperatire associations,
3. By a forwarder where the services performed have to do with ordinary livestock,
4. Where the services rendered have to do with fish,
7. To the operations of a shipper or group or association of shippers in consolidating or distributing freight for themselves or for the members thereof on a nonprofit basis.
8. To the operations of a warehouseman or other shipper's agent in consolidating or distributing pool cars. There isn't a single one of these exemptions or exceptions in any of the four parts of the act that does not have an effect on the total community of transportation interest that the balance of the act encompasses or specifically upon the other types of transportation. Who is to say, for instance, whether the railroads are not suffering as much by furnishing free transportation to their ennplovees and their employees' families as they are a diversion of a little dry bulk traffic to the unregulated water carriers? I personally have been on railroad passenger trains when most of the people in the car have been traveling op passes. It is a notorious fact that the railroads are running hundreds of million dollars a year into the red in operating their passenger-carrying services. This committee should ask itself whether the several hundred small water carriers should be placed under regulation in order to succor the railroads who would be in otherwise optimum condition were it not for the passenger department deficits that hang around their collective necks like the well-known millstone.
Or, take the agricultural exemption. There are thousands of itinerant trucks in this country hauling raw agricultural produce. The peach crop of Georgia
could not be harvested on time without the assistance of these trucks and much of agriculture's perishable produce would be handicapped in its movement to market were these exempt carriers not available. Of course, there are abuses, but by and large the exempt carrier performs a necessary service for agriculture. Unless and until the railroads and other common carriers can render effective serviee for these exempt carriers it is poor policy to talk about restricting their operations by Government controls.
This committee should ask itself whether, in this headlong attempt of the Cabinet Committee to knock out exemptions, it will be fair to repeal the exemption relating to dry bulk carriers and thereby stultify the operations of several hundred small water carriers and at the same time leave intact the exemptions relating to the transportation of agricultural produce by motor carrier. The farming community, to be sure, is bigger and more powerfully in a legislative battle than the water carriers, but what about the principle of the thing? And what about the fact that these water carriers move many agricultural commodities also?
The two most glaring inconsistencies proposed by the Cabinet Committee have to do with the repeal of the exemption relating to dry bulk transportation and the continuance in effect of the exemptions relating to liquid commodities and the dry bulk carriers operating on the Great Lakes. One is tempted to ask whether lake water is any holier than river water or whether petroleum and liquid chemicals are more politically potent than grain or coal or iron ore in the legislative scheme of things. If it is a fact that the bulk exemptions in the water carrier provisions in the Interstate Commerce Act work a hardship on the railroads, why doesn't the Cabinet Committee advocate a repeal of all of them? Or is this strictly divide-and-conquer technique?
In the minds of the several hundred dry bulk carriers there would be discrimination of the grossest kind and class legislation of the most indefensible kind occur if the Congress were to repeal section 303 (b) and leave standing all of the other exemptions in the Interstate Commerce Act, particularly those upon which I have laid stress.
The committee might also ask the question: Where is this trend toward the ufting of the exemptions going to stop? This year we are asked to raise the exemption on dry bulk commodities--next year it will be liquid commodities, the year after that, farin commodities, or fish, or disabled soldiers, or transportation by small craft, and so on ad infinitum. Where will you stop once you start?
It will be demonstrated by these small water carriers and their supporting witnesses before this proceeding is closed that it will be setting an exceptionally unjust precedent for the Congress to bow to the recommendation of the Cabinet Committee and repeal the dry bulk exemption. Several shippers of coal, iron ore, grain, fertilizer, and other commodities will tell you why this is so. From my vantage point as a transportation consultant I believe repeal at this time is unwise and unnecessary.
Since the public was never let in on the secret of the Cabinet Committee's deliberations, it certainly can be said that this committee does not speak for the public. It all comes back to the original statement on which we rest our case as small water carriers-that only if it is in the public interest to do so should the dry bulk exemption be repealed, and it is our contention that it is not now in the public interest to do so.
V. SUMMARY In summary the position of these several hundred small carriers of dry bulk commodities with respect to the proposed legislation is that
1. The public interest, and particularly the shippers' interest is being and will be better served by them as carriers exempt from Federal Government regulation in that they are, by virtue of the existing exemption, able to offer to the shipping public the lowest cost and the lowest priced transportation for the commodities that they haul.
2. The imposition of Government controls will burden, handicap, and stultify their services in a manner that will actually injure the shipping public that has come to rely upon these carriers by subjecting them to rules, regulations, and practices that will have the inevitable effect of raising the costs of operation and consequently the prices of transportation to the shipping public.
3. That, under regulation, the trend toward consolidation and merger that has prevailed in the fields of regulated carriers will overtake these exempt carriers and that the end result will be fewer water carriers offering services controlled from Washington at higher rates to the public.