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means. In our opinion, this is no time for Congress to throw all the switches in favor of the railroads against the public interest and against the interests of other means of transportation.
We enclose copies of two resolutions adopted by our board of directors on April 30, 1956. Very truly yours,
J. FRANK BELFORD, Jr., Director. RESOLUTION OF NEW YORK STATE WATERWAYS ASSOCIATION, INC. The following resolution was adopted at a special meeting of the board of directors held April 30, 1956. Moved by Mr. H. A. Gilbert, seconded by Mr. A. C. Welsh, and unanimously adopted.
S. 951, 84TH CONGRESS The New York State Waterways Association, Inc., has expressed opposition to S. 3111 of the 83d Congress, a bill which later died in committee without action. Its counterpart in the 84th Congress is S. 951, which would extend into the field of bulk transportation on inland waterways the devitalizing influence of Government regulation. Among the many hundreds of contract carriers now serving the public on all of our inland waters except the Great Lakes the bill's effects would be to restrict competition and to prevent them from bidding effectively for the new traffic steadily growing on our waterways. It would virtually preclude the entry of new carriers into the business.
The bill would benefit a handful of prosperous major barge lines holding unlimited commodity rights and extensive territorial rights as common carriers under present regulation.
This special interest legislation, however, would be to the great disadvantage of the shippers of bulk commodities who would be called upon to pay increased rates, to the public in general who would be expected to absorb these higher costs in the prices of consumer goods, and to the more than 99 percent of the carriers who deliver more than 90 percent of the traffic on our inland waterways.
We urge Congress to reject such legislation and to remember that the benefits of our public waterways improved at public expense should redound to the many and not to the few. Resolved, That we oppose S. 951 or any similar bill.
RESOLUTION OF NEW YORK STATE WATERWAYS ASSOCIATION, INC. The following resolution was adopted at a special meeting of the board of directors held April 30, 1956. Moved by Mr. A. C. Welsh, seconded by Mr. H. A. Gilbert, and unanimously adopted.
TRANSPORTATION AMENDMENTS ACT OF 1955
S. 1920, H. R. 6141, and H. R. 6142 are identical bills introduced "by request" to implement the report of the President's Advisory Committee on Transportation Policy and Organization. They are entitled the "Transportation Amendments Act of 1955” and, according to the basic document, would modify the existing "obsolete" national transportation policy and the established scope and methods of regulation so as to place increased reliance on competitive forces in transportation pricing "under a system of dynamic competition" and to reduce economic regulation of transportation "to a minimum consistent with the public interest.” 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 new policy would be to encourage and promote full competition between modes of transportation subject only to certain vague provisions intended to prevent the charging of rates less than cost.
The existing system of economic 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. Our present national transportation policy is based upon the judgment 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 impede its flexibility and efficiency. At least 90 percent of inland water traffic consists of bulk commodities not inherently subject to regulation under present law. Shippers and carriers alike are well satisfied with the rigorous competition now existing among carriers of these basic materials of commerce under a system of free enterprise beneficial to all. 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 sensible approach to this objective 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.
Resolved, That the New York State Waterways Association, Inc., oppose the Transportation Amendments Act of 1955.
STATEMENT OF MORRIS CREDITOR, PRESIDENT, THE OHIO RIVER Co.,
CINCINNATI, OH10 My name is Morris Creditor. I am president of the Ohio River Co. with offices at 705 Atlas Bank Building, Cincinnati 2, Ohio. I have been with the company since 1937 and have been its principal officer since 1945.
The Ohio River Co. is a common carrier barge line operating from Pittsburgh to Chicago on the Ohio and Mississippi Rivers and the Illinois Waterway. The company has joint rates and operates in connection with other common carriers, which enables it to serve all points on the Mississippi River system, the Gulf Intracoastal Waterway, and Florida points. At present the company owns and operates 17 towboats and over 450 barges. Its fleet is now being further expanded by G large modern towboats and 130 barges, orders for which have all been placed and deliveries of which are being currently made.
It is my purpose to make this statement brief since we have authorized Chester C. Thompson, president of the American Waterways Operators, Inc., Washington, D. C., the Waterways Freight Bureau, Chicago, I., and Waterways Counsel Opposed to Regulation Extension to speak for us and present testimony on our behalf. The primary purpose of this statement is to go on record as unalterably opposed to the recommendations of the Presidential Advisory Committee on Transport Policy and Organization and the legislation covered by H. R. 6141 and H. R. 6142. This legislation supposedly is designed to protect the common-carrier industry. As a member of this industry such legislation would hurt us rather than help us.
From all indications the legislation proposed in these bills was conceived by the railroad industry and by no other mode of transportation. Neither shippers, the general public, nor the Congress itself has given initial sponsorship to such legislation. It is another instance where a pressure group is seeking legislation advantageous to itself and harmful to other modes of transportation and to the public interest.
The railroads handle about 50 percent of the total ton-mile traffic in the United States. The inland waterway industry bandles only about 8 or 9 percent of the traffic. The railroads claim they are losing about $700 million a year in their passenger service. I do not recall any claims having been made by the Tailroads that, as an industry, they are losing money on freight business. If all the barge lines on the inland waterways were put out of business overnight and all the freight tonnage handled by these barge lines was taken over by the railroads, the 8 or 9 percent referred to above would still not overcome the loss of $700 million per year the railroads claim to suffer in their passenger business, because the combined net profits of all the barge lines operating on the inland
waterways of the country would hardly equal one-tenth of the loss claimed by the railroads in their passenger business. I do not have figures to substantiate this statement, but I respectfully suggest that your committee should endeavor through the Interstate Commerce Commission and other sources to develop the point which I have raised here.
H. R. 6141 and H. R. 6142 are designed to permit the railroads to engage in discriminatory rate practices, to impose more regulation on the barge lines and less regulation for the railroads so that the latter could in due time destroy the former, notwithstanding the pious statements of the railroads. It is respectfully urged therefore that your committee reject this legislation.
WASHINGTON, D. C., June 27, 1956. Hon. OREN HARRIS, Chairman, Transportation Subcommittee, House Interstate and Foreign Commerce Committee,
Washington, D. C. DEAR MR. CHAIRMAN: Now that the hearings of your subcommittee on H. R. 6141 and H. R. 6142 have closed, I wish to take this opportunity on behalf of the Waterways Council Opposed to Regulation Extension to thank you, the other members of the subcommittee, and its staff for the courtesy extended to our organization in connection with its appearance before your subcommittee on behalf of the many hundreds of small carriers and numerous shippers and consumers, on the inland waterways, of which the Waterways Council is representative. Permit me also to compliment you on their behalf for the thorough and conscientious manner in which the hearings were conducted.
It also appears appropriate at this time, in order to assist the subcommittee in its deliberations, to summarize the record of these hearings with respect to the proposed repeal of the dry bulk commodity exemption embodied in section 14 of H. R. 6141 and H. R. 6142. Briefly stated, the hearings demonstrated that section 14 and related sections 13, 16, and 18, should not be enacted, for the following reasons :
(1) Not a single water carrier, inland or otherwise, testified or filed a statement in favor of repeal of the dry bulk exemption, even though, in the past, a small group of large and prosperous common carriers had favored such legislation, when not included in the omnibus transportation bills.
(2) Not a single shipper, shipping organization, or representative of the consuming public, testified or filed a statement in favor of repeal of the dry bulk commodity exemption.
(3) The waterways council, which is representative of the hundreds of small contract carriers, and small common carriers, on the inland waterways, as well as numerous shippers, presented, in the testimony of Mr. David Wright and Mr. James Knudson, and in the statements of Dr. John H. Frederick and Mr. Harry Dyer, a detailed account of how the repeal of the dry bulk commodity exemption would seriously damage the public interest. It would jeopardize the business of the hundreds of small common and contract carriers who operate on the inland waterways, invite cartelization of the waterways by a few large common water carriers, cause rate increases and reduction in flexibility of service in this now cheap and efficient transportation, jeopardize the interests of both small and large shippers, including farmers, chemical companies, coal companies, and numerous others, who now enjoy the benefits of this cheap transportation, and ultimately prejudice the interests of consumers who ultimately receive the benefits of these low costs.
(4) Such unbiased sources as the Transportation Association of America, the National Industrial Traffic League, and the United States Chamber of Commerce, have testified unequivocally in opposition to repeal of the dry bulk com. modity exemption, pointing out that there has been no demonstration that the public interest will be served by such repeal, as well as noting some of the adverse results referred to above.
(5) Most of the major farm organizations, including the American Farm Bureau, the National Grange, the National Council of Farm Cooperatives, and the National Federation of Grain Cooperatives, have registered their firm opposition to the repeal of the dry bulk commodity exemption as detrimental to the farmers they represent and the shipping and consuming public generally.
(6) Such groups as the Manufacturing Chemists' Association, and the National Coal Association, who represent both shippers and consumers who enjoy the
advantages of cheap transportation on the inland waterways, have registered their opposition to the proposed repeal.
(7) Organization of carriers, shippers, consumers, and port authorities, such as the Inland Empire Waterways Association, the Upper Mississippi Valley Association, the Ouachita River Valley Association, and the New York State Waterways Association, have registered their opposition to section 14.
(8) The only nongovernmental proponents of the proposed repeal in these hearings has been the railroad groups, and in particular the American Association of Railroads. The testimony of Mr. James Knudson, on behalf of the waterways council, shows the tremendous prosperity which the railroad lines which parallel the waterways have enjoyed in the past 10 years, clearly demonstrating that there is no urgent need to bolster their operating revenues at the expense of water carriage. The testimony of Mr. David Wright, and the testimony and statements of a number of representatives of the large common carrier segment of the inland waterways industry, including Mr. Harry Ames, Mr. J. Haden Alldredge, and Mr. C. E. Childe, makes clear that, on the basis of costs, water carriage of bulk commodities is so much cheaper than rail carriage, that the railroads cannot possibly compete on a cost basis for the dry bulk commodity shipments now moving on the waterways.
(9) The two governmental proponents of the proposed repeal were Secretary of Commerce Weeks, himself, and through his subordinate, Mr. Philip Ray, and the Interstate Commerce Commission, Mr. Weeks' testimony that the common carriers required such legislation to promote their growth and financial soundness, was demolished in the testimony of Mr. David Wright, and in the supporting exhibits, showing the great prosperity which the large common carriers by water have enjoyed in recent years, and the testimony of Mr. James Knudson making the same demonstration with respect to railroad lines paralleling the waterways. The statement by the Interstate Commerce Commission that authority to regulate dry bulk movements and carriers is needed if overall regulation is to be effective and stable rates maintained is fully answered in the statements of ex-Interstate Commerce Commissioner James K. Knudson, Mr. David Wright, and Dr. John Frederick. The fact is that overall regulation including dry bulk movements has never been deemed advisable, necessary, or in the public interest by the Congress, as the legislative history of the existing law shows. Moreover, the statement of Dr. John Frederick demonstrates that rates on nonregulated dry bulk shipments have been far more stable than the rate pattern of regulated traffic. Of course the most compelling proof that the Commission's request is really one of regulation for regulation's sake alone is the fact that not a single shipper, consumer, or water carrier in these hearings has supported the repeal of the dry bulk commodity exemption.
(10) The only other reason advanced for the proposed repeal was in Secretary Weeks' statement on his second appearance before the subcommittee on June 20, that the repeal should be enacted to provide common carriers the opportunity to furnish transportation at charges competitive to those made by carriers enjoying the benefit of the exemption. As Mr. David Wright pointed out in his testimony, the exemption applies to all carriers on the inland waterways regardless of whether some other part of their business or traffic is regulated, and bumerous carriers presently operate both under regulation, and under the drybulk exemption. Thus if the objective is fair competition, it now exists, and Secretary Weeks' statement only can mean that rates must be raised on the dow-exempt traffic to make it more profitable for the already prosperous common carriers who seek such traffic.
This, in summary, is the record now before the subcommittee. The waterways council sincerely hopes that the subcommittee, after its own careful study, will be convinced that repeal of the dry-bulk commodity exemption is not in the public interest, and will so report to the full committee and to the House of Representatives. Such a finding would remove the constant threat of economic suffocation through regulation which has been hanging over the numerous small unregulated carriers, and the threat to the shippers who are dependent upon them, that their cheap, efficient transportation will be lost.
It is respectfully requested that this letter be incorporated in the record of these hearings. Respectfully yours,
FOWLER, LEVA, Hawes & SYMINGTON,
By HENRY H. FOWLER,
STATEMENT ON BEHALF OF THE COLUMBIA BASIN RIVER OPERATORS IN OPPOSITION
TO H. R. 6141 AND H. R. 6142 The Columbia Basin River Operators is a nonprofit corporation composed of 17 towboat and barging companies operating under the jurisdiction of the Interstate Commerce Commission on the Columbia and Willamette Rivers and on the Pacific coast.
The water carriers, members of the Columbia Basin River Operators, are unanimously opposed to any change in the Transportation Act of 1940 as proposed by H. R. 6141 and H. R. 6142, wherein certain changes in the present statutes regulating the various modes of transportation are proposed.
The present national transportation policy became effective in 1940 and the various carriers, water, rail, and truck, have continued to prosper and to ade quately and efficiently serve the transportation needs of the shippers of these United States.
The national transportation policy directs the Interstate Commerce Commission "to recognize and preserve the inherent advantages of each" mode of transportation and to "encourage the establishment and maintenance of reasonable charges for transportation services without unjust discrimination, undue preferences or advantages, or unfair or destructive competitive practices." The policy then continues "all to the end of developing, coordinating, and preserving a national transportation system by water, highway, and railway, as well as by other means, adequate to meet the needs of the commerce of the United States of the postal service and of the national defense." During the past 15 years the Commission, pursuant to this declaration of policy, has regulated the charges and rates of the various carriers, permitting each carrier to survive under rates which are just and reasonable.
The river lines are extremely vulnerable to selective rate cutting by competing carriers due to the fact that normally the barge lines are limited to a few commodities which lend themselves to barge transportation. It is therefore easy for the rail carriers to cut the rates on the commodity or commodities handled by the barge line, and if such rate cutting is not controlled, put the barge lines out of business. This may appear unrealistic, but a mention of a recent case involving the reduction of said petroleum rates in the Pacific Northwest will, I believe, prove my point.
In January of 1953 the various rail carriers serving the Pacific Northwest reduced their rates on bulk petroleum in an effort to recapture this traffic from the barge and truck lines. For a number of years the barges on the Columbia River have moved a considerable volume of petroleum to upriver destinations where it is then transported by the trucks to interior destinations. The rail rates were suspended by the Commission and subsequently the Commission, by its order, found the rates just and reasonable but failed to discuss the national transportation policy which had been brought in issue by the barge lines. This failure was grounds for the Federal District Court of Oregon to restrain the reduced rates from becoming effective and ultimately sending the matter back to the Commission for its consideration of the national transportation policy. During the court's decision it stated :
"Bluntly stated, we fear that the proposed railroad rates if approved will drive the barge lines out of business. *
"All or practically all tankcars in the Pacific Northwest were diverted to the east coast during World War II because of the submarine menace. During a 2-year period the military needs of the Army and the Air Force, as well as civilian needs, were served almost exclusively by barges and trucks. At present, trucks are making rapid movements of aviation fuel between airbases, and barges are moving explosives without passing through populated centers. In view of the sensitive geographic location of the Pacific Northwest, the present turbulent state of international relations, and the vulnerability of this area to invasion and destruction, we believe that the Commission was obligated to consider and evaluate this and similar testimony concerning our national defense and to have made appropriate finding."
This case just mentioned is only one of the numerous cases wherein said rail rate cutting has threatened the existence of the barge lines on the Columbia and Willamette Rivers. In another instance on the Willamette River, the rail carrier reduced its rates before the barge lines had started into business. The reduced rail rates were for no other reason than an attempt to prevent the establishment of a barging service on the Willamette River,