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STATEMENT OF KENNETH C. BAKER, PRESIDENT OF J. D. STREETT & Co., Inc.,
St. Louis, Mo. My name is Kenneth C. Baker. I am president of J. D. Streett & Co., Inc., of St. Louis, Mo., wholesale marketers and distributors of petroleum products. We are an absolutely independent company and have been in business since 1884.
Since the provisions of bill s. 1920 and bill H. R. 6141 are identical, our references herein are made to S. 1920. Our particular objections are to section 14, which would repeal the bulk commodity exemption, which appears in subsection (b) of section 303 of the Interstate Commerce Act (49 U. S. C. A., sec. 903), and section 13 of S. 1920, which redefines "common carriers by water and contract carriers by water."
Our objections to the proposed changes in these two sections are prompted by the fact that we have invested somewhat over $3 million in towboats and petroleum barges which operate on the Mississippi River inland waterway system. Our start in the transportation of refined petroleum products by barge was some 15 years ago and was occasioned of necessity. Being independent marketers and distributors of petroleum products, we found at that time that unless we could enjoy some cost advantages in 1 of the 3 ways open to such a company as our own, we would soon be eliminated from business by the pressure of lower cost competition. The three ways open to us were production of crude oil, refining, or transportation. Both production and refining were out of our financial reach. Pipeline transportation of petroleum products was also out of our reach, so that the only way left open to us was to transport our products by water.
Our first movements of petroleum products by water were made by independent carriers. However, we soon found that in order to assure ourselves of the movement as and when needed, it would be necessary for us to purchase our own equipment. In doing this we encountered a further problem. In order to have sufficient equipment to meet our peak periods, we found that we had surplus equipment during other periods of the year. Petroleum products are consumed seasonably and as an example, in the spring of the year when farmwork is being done, consumption is substantially higher than at other periods of the year. It was not possible for us to charter other equipment during the peak season as it was also the peak season for other marketers and all available petroleum barging equipment was being worked to the limit. Our solution, therefore, was to acquire enough of our own equipment to meet the peak period and to move material for other companies during such periods as all of our equipment was not required in our own service. This arrangement has worked very satisfactorily over the years and has enabled us to remain in a strong competitive position and, in addition, has enable us to supply needed services to other distributors of petroleum products. It has also resulted in à saving to the consuming public. This saving is described in the following excerpt from one of our advertising pieces.
The present system has worked well for many years and we do not believe that the removal of the bulk carrier provisions would return any worthwhile volume to the rails. A situation which the bulk carriers of petroleum on the Mississippi River system will probably soon have to face is the conversion of the Little Inch pipeline from natural gas to petroleum products. The Texas Eastern Transportation Corp., owners and operators of the line, propose to carry refined petroleum products through this line from the gulf coast and intermediate points to the Pittsburgh area at Moundsville, W. Va. A takeoff terminal would be built at Cape Girardeau, Mo., where petroleum barges would be loaded for movement up the Mississippi River. The line parallels the north bank of the Ohio River for its entire length and spur takeoffs are contemplated for such points as Louisville, Ky., and Cincinnati, Ohio, and in addition the plans include the building of a pipeline from Seymour, Ind., to Chicago, Ill. It is doubtful that petroleum carriers will be able to compete costwise with this pipeline system but unless flexibility of rates is possible, their continued existence is doomed. While it is our understanding that petroleum is not included at this time in the products that it is proposed be excluded from the bulk carrier exemption, we feel it is only reasonable to assume that it will be a short while before petroleum would be added to the list of products to be excluded.
The constantly increasing demands of the unions operating on the river for higher wages and more time off is increasing the cost of water transportation Taaterially and should further restrictions and regulations be imposed upon this
type of transportation, its future is indeed dim. We, therefore, earnestly request that the provisions of sections 13 and 14 of S. 1920, as proposed, not be approved by the committee.
Mr. HARRIS. I have received a statement of Mr. D. G. Ward, chairman of the legislative subcommittee of the Manufacturing Chemists Association traffic committee, and also a statement from Mr. Harry C. Burnett, traffic manager, Inland Navigation Co. Those two statements may also be included in the record.
(Statements referred to follow :)
STATEMENT OF D. G. WARD ON BEHALF OF THE MANUFACTURING CHEMISTS'
ASSOCIATION, INC. My name is Donald G. Ward. I am chairman of the legislative subcommittee of the Manufacturing Chemists' Association traffic committee. I am empowered under authority of its board of directors to submit this statement on behalf of the association and to generally support this legislation with exceptions which, we believe, are required to maintain an efficient and economical transportation system under private ownership and operation adequate to serve the needs of commerce and national defense.
The Manufacturing Chemists' Association, Inc., is a nonprofit trade organization of chemical manufacturers, organized in 1872, whose member firms are responsible for over 90 percent of the tonnage of all chemicals produced and transported within the United States. By a very conservative estimate, its members have well over 800 plants located throughout the country with representation in almost every State. They have a vital interest in all modes of transport, not only in connection with the assembly of raw materials used in their manufacturing processes, but also in the distribution of their manufactured products.
The Manufacturing Chemists' 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 carrier by water” and “contract carrier by water."
The committee has been holding hearings on this legislation for a number of weeks and has heard many experts testify for and against the proposed legislation. No doubt these witnesses have discussed the technicalities involved in this legislation in thorough detail. In order to conserve the time of this committee. I will not endeavor to review the technical details involved in the legislation but do want to bring to the committee's attention several points of vital interest.
I have made an extensive study of this question and have not found any support for the view that any general public interest would be served by extending regulations to water transportation of commodities moving in bulk.
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. This economical water transportation is expected to expand materially within the next few years and has been and will continue to be a major factor in the chemical and other industries locating plants along and adjacent to our waterways. The industrial development along the Mississippi, Ohio, Columbia, Hudson Rivers, and numerous other waterways, as well as our coastal cities, has been because of the availability of this water transportation, the most important factor affecting the development of our cities, towns, and communities. This development could not possibly be assisted by extending regulation. The effect could only be detrimental to the economic development of our cities located along the seaboard as well as river valleys.
A large proportion of bulk commodities moving by water are not suceptible to transportation by competing carriers with the result that we would retard the development of our water transportation without any great assistance to our 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 regulations would tend to develop and encourage private barge operations by large industrial users of the inland waterways to the disadvantage of the for-bire carriers and small producers.
The statement has been made in the past that users of waterway transportation favor this legislation. This is not correct. Organizations, such as the National
Industrial Traffic League, Transportation Association of America, Chamber of Commerce of the United States, and the association for which I am appearing, have all taken the position that public interest would not be served by extension of regulations.
I wish to repeat that this legislation is neither in the public interest nor in the interest of national defense and should not become law. Thank you.
Mr. HARRIS. I have various communications with reference to the subjects under consideration here-H. R. 6141, H. R. 6142, H. R. 525, and related matters. They may be included in the record' in connection with these various subjects. (The telegrams referred to follow :)
PARKERSBURG, W. Va., June 12, 1956. Hon. OREN J. HARRIS, Chairman, Subcommittee of House Committee on Transportation and Communications,
New House Office Building, Washington, D.O.: Had made arrangements to be present at the hearing, Wednesday, June 13, in hearing room 1334, New House Office Building, and voice our very strong opposition to section 14 of H. R. 6141, which seeks to repeal the existing dry bulk. exemption. However, unforeseen business developments make it impossible for me to attend, so please place this telegram on the record as indicating our unqualified and vehement opposition to said section 14.
ATLAS TOWING Co.,
NATIONAL RIVERS AND HARBORS CONGRESS,
Washington 6, D. C., June 4, 1956. Hon. OREN HARRIS, Chairman, Transportation and Communications Subcommittee, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington 25, D. C. DEAR MR, CHAIRMAN: In connection with the hearings which your subcommittee is currently conducting on H. R. 6141, and other transportation bills which have been introduced to implement the recommendations of the Presidential Advisory Committee on Transport Policy, I enclose certified copies of 2 resolutions which were adopted by the 43d National Convention of the National Rivers and Harbors Congress on May 12, 1956. This convention was attended by 358 registered delegates from 43 States, Hawaii, Puerto Rico, the District of Columbia, and Colombia, South America, in addition to many others who did not register-guests, visitors, etc. These delegates were from all sections of the country, representing both legislative and executive branches of the Federal Government; State, city, county, and other local governmental agencies and interested groups; commercial, waterway, flood control, and reclamation associations; agricultural, labor, industrial, and trade organizations, and transportation interests; with memberships totaling several million.
We believe this unanimous expression of representatives of such different interests and pursuits is strong evidence of the general sentiment of the people of the United States concerning the matters dealt with in the resolutions referred to. The National Rivers and Harbors Congress is opposed to H. R. 6141 and particularly opposed to those sections which, if enacted, would (a) diminish the powers of the Interstate Commerce Commission to restrain the destructive competitive practices of the railroads; (b) modify the national transportation policy by repeal of the clauses which read "to recognize and preserve the inherent advantages of each mode of transportation; and (c) repeal the dry bulk exemption (sec. 303 (b) of the Transportation Act of 1940).
The National Rivers and Harbors Congress, which is dedicated to the development of the Nation's water resources, believes that water transportation is one of the many important benefits of this development; that this benefit is currently being rendered to the public to a steadily increasing degree under present law; and that enactment of the proposed legislation your subcommittee is con
sidering would not only inhibit the future growth of this transportation but could very well produce a drastic reduction in water traffic from its present levels.
It is respectfully requested that this letter and the two resolutions enclosed entitled "The Cabinet Committee Bills" and "Proposed Repeal of the Dry Bulk Exemption” be accepted as testimony and included in the printed record of your present hearings. Very truly yours,
OVERTON BROOKB, Member of Congress and President, National Rivers and Harbors
THE CABINET COMMITTEE BILLS Where our national transportation policy of 1940 now recognizes and would preserve the inherent advantages of each means of transportation and foster sound economic conditions among the several carriers, the President's Cabinet Committee on Transport Policy has recommended a change which would encourage and promote full competition between modes of transportation subject only to certain vague provisions intended to prevent the charging of rates less than out-of-pocket cost.
Our present system of regulation of railroads was designed for the purpose of restraining their practices of selective rate-cutting which in the past have been so successful in stifling competition by water carriers. Inland water for-hire transportation owes its very existence and its encouraging current growth to the fact that this system of regulation has at last become partially effective, We recognize that it is in the public interest to protect small carriers who render efficient services from the destructive rate practices of large carriers who, by virtue of their size alone and regardless of efficiency, have historically been capable of putting their small competitors out of business unless a proper restraint is exerted by government.
These transportation amendments, while purporting to reduce economic regulation of transportation, would do so only for the railroads and with respect to water transportation would actually increase the scope of regulation in such a way as to restrain competition. To place artificial restrictions upon water carriers while relaxing the restraints upon rail carriers will relegate inland water transportation to the field of private carriage where its benefits are limited to only those shippers large enough to afford their own fleets.
We are impressed with the prosperity of the railroads and wish them continued success. We recognize the need for maintaining an efficient and sound railroad system in the United States, but we are convinced that the proper inethod is to improve the outworn administrative and operating practices of the railroads and not to cripple their small competitors. Let Congress continue the policy of survival of the fittest in transportation and not be tempted to substitute survival of the biggest.
CERTIFICATE I hereby certify that the foregoing resolution was unanimously adopted by the 430 National Convention of the National Rivers and Harbors Congress in Washington, D. C., on the 12th day of May 1956.
WILLIAM H. WEBB,
Executive Vice President. PROPOSED REPEAL OF THE DRY BULK EXEMPTION Current efforts by special interests to induce Congress to impose Interstate Commerce Commission regulation upon the transportation of dry bulk materials on our waterways would have the effect of replacing free enterprise with a regulated cartel. On our waterways there are over 1,700 carriers, of whom roughly 1,000 are contract carriers engaged in vigorous competition among themselves in the transportation of bulk commodities basic to our national economy. This competition under our system of free enterprise has produced rapid technological progress and effective transportation to the benefit and satisfaction of shippers and carriers, as well as to the public who ultimately derive these benefits. Legislation which would impose the devitalizing influence of Government regulation in this field, and virtually preclude the entry of new carriers into the business, and
place small carriers at the mercy of large carriers would benefit no one other than a handful of prosperous major barge lines.
We urge Congress to reject such legislation and to remember that the benefits of our God-given rivers, improved by the Government for the benefit of the public, must not be delivered into the hands of a few for their own exploitation,
CERTIFICATE I hereby certify that the foregoing resolution was unanimously adopted by the 430 National Convention of the National Rivers and Harbors Congress in Washington, D. C., on the 12th day of May 1956.
WILLIAM H, WEBB, Executive Vice President.
NEW YORK STATE WATERWAYS ASSOCIATION, INC.,
New York 4, N. Y., June 5, 1956. Hon. OREN HARRIS, Chairman, Transportation and Communications Subcommittee, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington 25, D. C. DEAR MR. HABRIS: This association, dedicated to the development and protection of the waterways of New York State for purposes of flood control, navigation, and recreation, had intended to send a member to testify before the current bearings on H. R. 6141 and other transportation bills implementing the report of the Cabinet Committee on Transport Policy. Since we understand that the hearings are being terminated June 15 and that those who are scheduled to testify are being encouraged to send in statements in order to conserve the committee's time, we are taking this opportunity to write to you with the request that this letter and its enclosures be entered in the record of the hearings. The New York State Waterways Association, whose membership includes shippers, industries, carriers, port authorities, trade groups, and individuals throughout the State of New York, recognizes that the public benefits resulting from water transportation are among the primary benefits of our rivers, lakes, canals, bays, and sounds. We oppose H. R. 6141, S. 951, and any other bills whose effect would be to reduce governmental restraints upon the destructive competition of railroads and to diminish that free and healthy competition among water carriers which insures that the benefits of waterway improvements are passed along to the public. Common carrier service by water in New York State has been rendered virtually nonexistent even under existing law by arbitrary action of the Interstate Commerce Commission in allowing rail rates to be depressed below cost, allowing traffic which could move at a profit to water carriers to be diverted to the railroads where it contributes to the many losses of the railroads which must be made up by excessive profits in other areas. While this process may temporarily benefit certain shippers while they have water transportation facilities available, experience has shown that when these facilities are no longer available the rail rates for these shippers rise rapidly and the sole beneficiary of such action therefore becomes the railroad concerned. The shippers, the public at large, and the water carriers in particular all become losers.
After a history of such treatment by the Interstate Commerce Commission our common carriers by water in most cases have become unwilling to venture the investment in transportation facilities to satisfy public demand. The waterway industry subsists very largely, therefore, upon traffic exempt from Interstate Commerce Commission regulation which is noncompetitive with rail. Rates on these commodities under free competition have been stable and have prevailed at a level insuring modest profits to carriers and maximum economy to the shipper and to the publie.
Under these conditions to extend Interstate Commerce Commission regulation into the field of bulk commodity transportation would have the effect of freezing these rates at levels higher than they have been. Simultaneously, to give the Tallroads more latitude in their destructive competition with small carriers by water might very well sound the death knell of dry bulk water transportation in New York State.
Never in history have the railroads of this Nation prospered to the extent they do now. This prosperity is achieved in spite of the great losses they incur in the process of handling traffic which would be moved at a profit by more efficient