of the States to prescribe the surgery of cutting off particular passenger trains, closing railway terminals, and similar matters.

We oppose section 6 because we believe it would authorize an unwarranted interference with a function which State regulatory bodies are best equipped to perform. It will be borne in mind that it has been the philosophy of our Government that the railroads are a public utility whose prime obligation is to serve the public. Historically it has been the duty of the State commissions to balance the need for service against the cost and the ability of the carrier to provide such service. I have followed the functioning of the State commissions in this regard and can say that for the most part they have done a good job. I may say from our experience that the State commissions have not been unresponsive to any undue burden on commerce shown in maintaining local service requirements. For example, in a recent State proceeding the New York Central Railroad sought an order of the Board of Public Utilities Commissioners of New Jersey authorizing abandonment of all of the railroad's passenger service on its west shore division running from Weehawken, N. J., northward to Albany, N. Y. The commission, acting promptly, conducted exhaustive hearings through one of its commissioners, receiving evidence produced by the railroad, the railroad employees and residents of the communities served by the road. The commission denied the petition for the complete abandonment, but indicated that the less patronized midday and late evening trains might well be discontinued. Thereafter, promptly upon consideration of a further petition, the board prescribed a revised schedule covering the operation of 11 trains in each direction which preserved the more essential service, thus accommodating the need for service to the cost factors involved in furnishing it. Such a ruling required the intimate knowledge and appreciation possessed by the State board of the needs of the localities involved and of the usefulness of the various transportation facilities in the area.

As bearing upon the competence of local bodies to resolve such problems, I call attention to the studies of another local organization upon the problems involved in the case last mentioned. I refer to the metropolitan rapid transit commission, formed by joint action of the States of New York and New Jersey, one member of which is T. J. Harkins, assistant grand chief engineer of our brotherhood. This commission is charged with devising plans for improving the flow of passenger traffic between the two States. It is considering all methods and means of mass transportation in the area. I am glad to say that, as I understand, one of its primary aims is to devise means to relieve highway traffic congestion by a movement back to the rails. While no one completely discounts the financial problems attendant upon the maintenance of passenger service in some localities and under some circumstances, we believe that the objective of the Congress should be to preserve and improve, rather than to abandon and destroy, rail passenger service.

The Interstate Commerce Commission, by its letter dated December 22, 1955, to the Honorable J. Percy Priest, chairman of your committee, although advising that the Commission had no objection to the enlargement of its authority, stated that it had no statistical information bearing upon the supposiion that State regulatory commissions had been unduly hesitant in authorizing discontinuance in intrastate railroad passenger service which had ceased to be profitable.

Perhaps in consequence of this observation and the need for further study, the Interstate Commerce Commission, as the committee has been informed at the hearing, on March 19, 1956, instituted a comprehensive investigation of the deficit in passenger train service and of possible ways and means of reducing or eliminating that deficit (ICC docket 31954). One factor in the problem is the proper ascertainment of the true extent of the so-called passenger deficit. It is our opinion that carrier claims on this subject are exaggerated and require further appraisal. I am hopeful that in this investigation the accounting methods and formulas which in part have been responsible for the showing of alleged passenger deficits will be revised and a truer picture of the problem will be revealed. Railroad spokesmen before your committee have suggested that any recommendation for adoption of section 6 might properly be deferred pending developments in the above mentioned ICC investigation. Certainly, under the circumstances, your committee should not report favorably upon the provisions of section 6.

As I have said, if this section 6 is deleted, we favor the remainder of the bill. The most important changes which this bill would bring about appear to be those which have to do with rates. The central theme of the report which the bill seeks

to carry out is greater reliance upon competition between the different modes of transportation in the establishment of charges for transportation service.

I make no pretense at being a rate expert, and I certainly do not have any substantial knowledge about the technicalities involved in rate making. But there are certain commonsense observations which apply here. There is no justification for any law or for the interpretation of any law in such a way as to require one form of transportation to keep its rates artificially high in order to provide business for a competing form of transportation.

While there is no suggestion that any carrier be given the right to render service at less than cost nor to unduly discriminate in doing so, surely if any carrierrail, truck, barge, pipeline, or otherwise-can, without undue discrimination, reduce its rates, increase its traffic, and make money in the process, it should have full and unrestrained power to do so.

A proposal to that effect appears to be the most important part of the bill before you. We have full confidence in the ability of the members of this committee to write the law in such a way that the carriers-all carriers-would be given that power. The shipping and traveling public as well as the carriers and their employees would greatly be benefitted by that action, and we sincerely hope that this committee will proceed as rapidly as possible to make this change in the law.

Another desirable goal to be reached in connection with consideration of the bill is the stimulation of fair competition between regulated and unregulated carriers. For many years the regulated carriers have suffered an untenable competitive position as the result of stringent requirements of the Interstate Commerce Commission with respect to the publication and fixing of rates. On the other hand, as has been shown to your committee, the unregulated carriers, which handle two-thirds of the highway intercity freight ton miles and almost 90 per cent of the waterway tonnage on rivers and canals, are free of Federal rate restriction, and insofar as the Commission is concerned are able to fluctuate their rates as the competitive situation dictates. The proposal to permit regu. lated carriers latitude within which they may fluctuate their rates will result in a step toward the ideal situation in which regulated and nonregulated carriers may compete in such a way as to offer shippers the most economical form of transportation for their goods. Proper regulation by the Interstate Commerce Commission of presently nonregulated carriers and of contract carriers should be provided for in the overall solution of the problems here referred to.

STATEMENT OF NATIONAL COUNCIL OF FARMER COOPERATIVES

We appreciate the opportunity to present to you the policy positions of the National Council of Farmer Cooperatives with respect to the far-reaching transportation proposals embodied in the subject legislation.

The council is made up of farmer-owned and farmer-controlled business associations with are engaged in the daily purchase of transportation service from all modes of surface carriers. The transportation charges on such service in large part are deducted from the proceeds of sale from the products marketed by our member associations for their farmer members and patrons, or are reflected in increased cost of the farm production supplies purchased by our member associations for the farmers they serve. Hence, the interest in these proposals of the large segment of the agricultural shipping public for whom we are authorized to speak is not theoretical, it is a direct and practical interest which affects the amount of income that the farmer will receive for the products he produces.

THE COUNCIL MEMBERSHIP

The council, with headquarters at Washington, D. C., is a national farm organi zation whose membership is composed entirely of farmer-owned and farmer-controlled business associations engaged in marketing, in raw, processed, or manufactured form practically every type of agricultural commodity produced on the Nation's farms and procuring for their members and other patrons the major types of farm supplies needed in agricultural production,

One hundred and twenty-two such marketing and purchasing associations make up the direct voting membership of the council today. However, a considerable number of these direct members operate on a statewide or regional basis and are made up of from several to several hundred separate local, county, or district as

sociations to bring the total of the separate farmers' business associations represented in the council membership close to 5,000, serving a farmer membership approximating 3 million.

Council members are assigned to divisions according to the dominant commodity or service activity of the member organization. There are 19 such divisions as follows:

Council members serve farmers in every State of the Nation, and also Puerto Rico. The council and its members have a vital economic stake in the preservation of a sound, balanced national transportation system, including the rail, motor, and water carriers which are subject to economic regulation and also the private and exempt motor carriers which are subject only to the safety requirements of the Interstate Commerce Act. Many of our members are among the railroads' best customers and are also daily users of the other regulated forms of surface transportation. These regulated carriers cannot, however, because of inherent service and economic limitations meet fully the reasonable transportation needs of agriculture. That is the reason that the council, along with many other agricultural groups, have resisted the continuing efforts of strong forces within some parts of the Government and among the regulated carriers to directly curtail the scope of the operations of the private and exempt carriers or to channel to the regulated carriers some of the transportation, which the exempt and private carriers are best equipped to perform, through the imposition of artificial and uneconomic restraints upon them.

HOW THE COUNCIL POLICIES WERE ADOPTED

We believe this phase of the matter is of importance to your committee to make clear that the policy positions hereafter set forth in this statement have a broad and democratic base of development and approval by farmers and their representatives, who would be affected by these proposals.

On May 1955, soon after the issuance of the report to the President, entitled "Revision of Federal Transportation Policy," in April 1955, by the Presidential Advisory Committee on Transport Policy and Organization, the chairman of the council's transportation committee named 8 special subcommittees, composed of from 3 to 5 members each who were traffic managers, commerce counsel, or other transportation representatives of our member organizations, to consider the 12 specific recommendations in the Cabinet Committee Report and the implementing legislation. These subcommittees presented their reports with recommendations at a meeting of the full transportation committee on November 3-4, 1955. The recommendations of the council's transportation committee on these matters were considered by the delegate body of the council at its annual meeting at Los Angeles, Calif., on January 16-17, 1956, and the policies as adopted by the council delegate body' are set forth in this statement. It should be noted that the council operates under a rule of unanimity under which no policy is adopted if there is a negative vote by a single division of the council.

DECLARATION OF NATIONAL TRANSPORTATION POLICY

The council is opposed to any attempt to rewrite the declaration of national transportation policy in the Interstate Commerce Act in such a manner as to introduce any new language in general terms with indefinite and uncertain meaning. Any changes or amendments to the declaration of policy should be limited to clear and definite language for the accomplishment of such specific objectives that further study may indicate to be desirable.

1 The council policy on "Service Deficits" stated on p. 14 hereof was adopted by the council board of directors in January 1953.

The council is committed to as full and complete operation of the competitive forces of supply and demand as is consistent with the public interest-that means the proper interests of all segments of our economy. The council favors the application of this principle in setting the price or charge for transportation service as well as for the setting of price for goods and services between other sellers and buyers.

Agriculture, of all groups in our economy, operates under the most competitive conditions and today the farmer is harvesting the bitter fruit of having to operate in an economy which is highly competitive as to what he has to sell but is subject to a high degree of administered pricing as to the goods and services, including transportation, that he must buy.

The Cabinet Committee Report and section 2 of H. R. 6141 would introduce entirely new language in the national transportation policy preceding section 1 of the Interstate Commerce Act. Such terms as "dynamic competition", "technical innovations", "new rate and service techniques", "full competitive economic capabilities", included in the proposed new declaration of national transportation policy are illustrative of the new language in general terms with indefinite and uncertain meaning which are bound to mean different things to different persons dependent upon their specific economic interest or their official judgment.

To the extent that any elements in the present statement of the policy are omitted from the new language, to that extent it might appear that Congress disapproves of the omitted elements.

We do not ascribe perfection to the present wording of the national transportation policy. We do suggest, however, that the sound legislative approach to any needed changes in the present declaration of policy is to improve on the present statement by any demonstrated need for changes therein rather than discarding it completely. Any wording of elements in the present policy which it is clear need change or omission in the light of experience, let such specific changes be suggested and considered on their merits. If there be additions to the present wording which need to be made in the public interest let the proponents of such changes make them in specific terms so that they can be considered on their merits.

That is the substance of the council policy and the basis for our opposition to the proposed new national transportation policy contained in section 2 of H. R. 6141.

MAXIMUM-MINIMUM RATE CONTROL

The council believes the power to fix specific transportation rates in appropriate cases, as well as the power to fix minimum and maximum rates, is essential to effective enforcement of the statutory prohibitions against unjust discrimi nation. We, therefore, oppose the withdrawal of the present power of the Interstate Commerce Commission to prescribe specific rates and also oppose any limitation upon the Commission's discretion with respect to the level of minimum or maximum rates pursuant to any statutory concepts of cost.

A major basis for the council's opposition to the repeal of the present rule of ratemaking as contained in section 15 (a) of the Interstate Commerce Act and the substitution of an entirely new rule is that under the new rule the Commission would not have the power to fix specific rates. We believe that unless the power to prescribe specific rates is retained in the Commission there will be no practicable way to enforce statutory prohibitions against unjust discrimi nation against shippers and geographical areas.

The present rule of ratemaking directs the Commission in the exercise of its power to prescribe just and reasonable rates to give due consideration among other factors "to the effect of rates on the movement of traffic by the carrier or carriers for which the rates are prescribed." [Italic supplied.]

There is no provision in the present law which directs the Commission, in prescribing specific rates to give consideration to the effect of rates on the movement of traffic by other carriers than those for which the rates are prescribed. If it is true, as contended by some carriers, that the Commission does give undue consideration to the effect of rates upon the movement of traffic of other carriers than those for whom they are prescribed so as to result in an arbitrary allocation of traffic as between various modes of transportation, we would cer tainly have no objection to a statutory prohibition against such exercise of regulatory power which results in the arbitrary allocation of traffic. to one mode of transportation in preference to another.

We understand that the Commission does not sanction such use of its ratemaking power although it may be that there are occasions when the allocation of traffic appears to have been the result of the Commission's action.

But the answer to any such regulatory problem is not, in our opinion, for Congress to eliminate the power of the Commission to set specific rates, where desirable and necessary, to enforce the statutory prohibitions against unjust discrimination but to take steps to see that the power in setting specific rates is exercised properly and as Congress intends.

Likewise, council policy is opposed to any statutory limitation upon the Commission's authority in passing upon minimum and maximum rates which will permit a carrier without review by the Commission to charge on certain traffic, as a compensatory minimum, only the out-of-pocket costs directly attributable to that traffic and on other traffic a maximum which does include a disproportionate share of the carrier's fully allocated costs on all traffic.

There is today much agricultural traffic that is most adaptable to movement by rails. In fact there is some traffic that can be moved only by rail, and some that can be moved only by truck. The theory of "dynamic competition" sounds good and we support the theory as a theory. There is a practical side, however, to the delicate balance and relationships between transportation rates that affects the pocketbook of the shipper as well as the carrier.

The council representing farmer business associations spending millions of dollars for transportation yearly, that comes out of the farmers' returns, knows that if a bare minimum, representing out-of-pocket costs only is charged on the highly competitive traffic to get that business, then the high maximum must be charged on some part of the noncompetitive traffic in order for the net earnings of the carrier to be maintained. We are concerned with the application of the theory where the farmer is caught in the squeeze of the high maximum rate on his noncompetitive traffic.

The matter of cost data is an interesting subject for the economists and technicians to theorize on. However until more complete and accurate cost data on transportation are available so that the shippers would not be at the complete mercy of the carriers in testing the reasonableness and compensatory merits of proposed rates, we believe it would be very unwise and dangerous from the standpoint of the interests of the shipping public to embark on any such revolutionary ratemaking proposal as would be involved in the proposed new rule of ratemaking.

LONG-AND-SHORT HAUL CLAUSE (4TH SECTION)

The Council favors retention of the long-and-short haul clause (fourth section) in part I of the Interstate Commerce Act in its present form.

Section 4 of the Interstate Commerce Act (as amended) makes it unlawful for any common carrier to charge or receive any greater compensation in the aggregate for the transportation of passengers, or of like kind of property, for a shorter than for a longer distance over the same line or route in the same direction, the shorter being included within the longer distance, or to charge any greater compensation as a through rate than the aggregate of intermediate rates.

However, upon application to the Commission common carriers may in special cases, after investigation, be authorized by the Commission to charge less for longer distances than for shorter distances for the transportation of passengers or property, but in exercising this authority the Commission may not permit the establishment of any charge to or from the more distant point that is not reasonably compensatory.

The proposed tariffs may, in the event the carriers' application is approved, become effective upon 1 day's notice.

The report prepared by the Presidential Advisory Committee on Transport Policy and Organization recommends removal of the requirement that rail or water common carriers obtain prior approval for charging greater than the aggregate of intermediate rates and for charging less for longer than for shorter distances.

Although changes in the transportation industry may have removed the need for section 4 in some areas, Council members in other areas still feel that farmers and other shippers in their section would suffer severely if section 4 were removed from the Interstate Commerce Act.

In view of likely injury to those areas, council policy advocates and it seems wise to retain section 4 in its present form particularly when, if necessary, exceptions to its application can be granted by the ICC on as little as 1 day's notice.