solvent position. The ICC should be given jurisdiction when a State commission failed to act within 120 days (R. 358).

Additional proponents

A. E. Staley Manufacturing Co., T. C. Burwell (R. 1272).

American National Cattlemen's Association, Lee J. Quasey (R. 1816).

Equitable Life Assurance Society of the United States, Hunter Holding (R. 1847).

Grand Rapids (Mich.), Chamber of Commerce, C. E. Elerick (R. 1718).

National Council of Farmer Cooperatives (R. 1691).

National Industrial Traffic League, William H. Ott (R. 945). National Live Stock Producers Association, Lee J. Quasey (R. 1816).

National Wool Growers' Association, Lee J. Quasey (R. 1816). United Fresh Fruit & Vegetable Association, Durward Seals (R. 1122-1124).

Opponents

AMERICAN BARGE LINES, INC.; COMMERCIAL BARGE LINES, INC.; COMMERCIAL TRANSPORT CORP., INC.; UNION BARGE LINE CORP.

(J. Haden Alldredge)

A significant change is proposed in section 13 of the act relating to the service requirements of State authorities where they are alleged to impinge upon Federal responsibilities. There is a serious question as to whether by changing the standard of reasonableness in section 1 of the act, the new law, if passed, would not actually curtail the Federal power in this area. State statutes largely reflect the present rate requirements of the Interstate Commerce Act-that is, the State regulatory commissions may (and must when their jurisdictions are properly invoked) fix the exact or precise rates to be charged by common-carrier railroads. With such a change in the Federal standards of reasonableness as contemplated by these bills without corresponding changes in the State laws, or under the restrictions on the Interstate Commerce Commission's jurisdiction over the level of interstate rates, it is not difficult to imagine the beginning of extensive litigation before this subject could be clarified (R. 1700).

NATIONAL ASSOCIATION OF RAILROAD AND UTILITIES

COMMISSIONERS

(Walter R. McDonald)

In 1949 the association set up a passenger deficit committee to make findings and recommendations to aid both the carriers and the public in solving this important problem. In 1952 the committee made its first report, reviewing the causes and extent of the losses, competitive factors, and defects in handling the problem by both carriers and State commissions. Other reports were subsequently made which reflect an awareness by the State commissions of their responsibilities in regulating passenger train services, and these alone

should convince this committee that there is no need for the proposed extension of section 13.

A study in 1951 revealed that over 1,200 class I passenger trains, or 24 percent of total passenger train miles, were operating unprofitably. It has also been found that transportation of United States mail, express, and baggage car shipments, and the operation of dining cars, restaurants, and hotels, classified as "allied services," have accounted for more than half of the recorded passenger deficit. It is important to note that a large measure of these losses can be laid at the door of the Federal Government, which does not indicate that the deficit situation will be improved by further intervention of Federal agencies.

The State commissions bitterly resent the contemplated further invasion of States rights. They can perform a better service to the people of the United States in this field than can the ICC, whose guidance is based only on cold, bare statistics. The cooperation of the ICC in our past efforts has been lacking. It has now instituted an investigation into the passenger-deficit problem, and while it is not believed that the investigation will add significantly to the results of the association study, the latter will cooperate willingly.

It is submitted that approval of the proposal would be premature until the pending investigation is completed and a full report made (R. 1836-1839).

NEW ENGLAND GOVERNORS' COMMITTEE ON PUBLIC TRANSPORTATION

(Donald W. Campbell)

Disapproval is expressed of the proposal to empower a Federal agency to override State law and regulations. In lieu thereof, a reexamination of the statutes by each New England State is recommended, with a view to the elimination of statutory or regulatory provisions which, in the light of present conditions, may properly be deemed unreasonable and unduly burdensome on the railroads (R. 864).

NORTH DAKOTA PUBLIC SERVICE COMMISSION

(John M. Agrey)

Existing remedies within the States for the discontinuance of unprofitable rail passenger service is entirely adequate, if the railroads will avail themselves of it (R. 795).

PUBLIC SERVICE COMMISSION OF WISCONSIN

(A. Wilford Larson)

The instant bill proposes to enlarge jurisdiction of the Interstate Commerce Commission with respect to the discontinuance of passenger service within the States. The Wisconsin commission takes the position that final jurisdiction in such matters should remain with the States. Passenger-train operations are local in character, and the needs of the public can best be evaluated and determined by a State agency. The proposed changes would not be in the public interest (R. 518).

RAILWAY LABOR EXECUTIVES' ASSOCIATION

(G. E. Leighty)

The association does not believe that the additional power contemplated by this proposal should be granted to the Interstate Commerce Commission. The problem involved in closing railroad stations or eliminating schedules is local in character and must be solved in the light of local conditions and needs (R. 761).

Additional opponents

Atlanta Freight Bureau, C. B. Culpepper (R. 1235).

Brotherhood of Locomotive Engineers, Guy L. Brown (R. 1683). Brotherhood of Railroad Trainmen, W. P. Kennedy (R. 762). Montana Citizens Freight Rate Association, Lee Metcalf (R. 825). Order of Railway Conductors and Brakemen, R. O. Hughes (R. 762).

Sears, Roebuck & Co., John C. Allen (R. 1453).

XIII. TRANSPORTATION FREE OR AT REDUCED RATES FOR GOVERNMENTAL
PURPOSES

Provisions of Interstate Commerce Act

Section 22 of the Interstate Commerce Act provides, among other things, that nothing contained in part I of the act (relating to the regulation of railroads, certain water carriers, oil pipelines, and express and sleeping-car companies) shall prevent the carriage, storage, or handling of property free or at reduced rates—

for the United States, State, or municipal governments *** or the transportation of persons for the United States Government free or at reduced rates ***.

The provisions of section 22 are made applicable to common carriers by motor vehicle by section 217 (b), to common carriers by water by section 306 (c), and to freight forwarders as to transportation or service in the case of property by section 405 (c) of the act. Amendments proposed by H. R. 525, H. R. 6141, and H. R. 6142

H. R. 525 would amend section 22 of the act by striking out the words "for the United States, State, or municipal governments," and the words "or the transportation of persons for the United States Government free or at reduced rates."

Section 9 (a) of H. R. 6141 and H. R. 6412 would also amend section 22 of the act by striking out the words "for the United States, State, or municipal governments," and the words "or the transportation of persons for the United States Government free or at reduced rates."

Section 8 of H. R. 6141 and H. R. 6142 would provide, among other things, for a section 15 (a) (5) authorizing the establishment of rates, fares, charges, and rules and regulations of special application for transportation service to the United States, State, and municipal gov ernments by carriers subject to the act. Such rates would be subject to all of the applicable provisions of the act except those relating to suspension and the long-and-short haul clause. Under certain cir cumstances, the rates could be filed on short notice, or made retroactive, and the filing, publication, and posting requirements of the act could

be waived where the security of the United States required such waiver.

Section 9 (b) of H. R. 6141 and H. R. 6142 contains a savings clause preserving the legality of rates, fares, or charges for transportation service rendered prior to the amendment of section 22 by section 9 (a) and requires that outstanding contracts providing for such rates, fares, or charges shall be filed and published as provided in the new section 15 (a) (5).

Purpose of amendments

The purpose of the amendments made by H. R. 525 is to prohibit common carriers from granting reduced rates for the transportation of Government property or personnel, except to certain minor respects. The purpose of the amendments made by H. R. 6141 and H. R. 6142 is to remove the present authority under which common carriers may establish reduced rates for Government traffic, and provide authority for carriers to establish, subject to certain terms and conditions, rates of special application for such traffic.

Testimony

DEPARTMENT OF DEFENSE

(Earl B. Smith)

GENERAL SERVICES ADMINISTRATION

(Edward F. Mansure, Herbert K. Hyde, and C. N. Smull)

The Departments indicated views with respect to H. R. 525 and H. R. 6141 and to companion bill H. R. 6142, each of which proposed changes to the Interstate Commerce Act as it pertained to rate provisions on Government traffic. Specifically, H. R. 525 proposed the complete abolition of section 22 of the Interstate Commerce Act insofar as it authorizes, by carriers subject to the act, free or reduced rates on traffic of the United States Government. H. R. 6141 and H. R. 6142 in section 9 (a) provided for the amendment of section 22 to eliminate the provisions authorizing free or reduced rates for freight and passenger traffic of the United States, State, or municipal governments. They further provided in section 9 (b), a saving clause to maintain in effect the validity of any free or reduced rates or charges heretofore made available by carriers subject to the act on traffic of the United States, State, or municipal government (p. 213).

Section 8 of H. R. 6141 and H. R. 6142 proposed to repeal section 15 (a) of the Interstate Commerce Act and substitute in section 15 (a) (5), a provision which would authorize the establishment, maintenance and publication and application of rates, fares, charges, rules, and regulations of special application for transportation to the United States, State, and municipal government by carriers subject to the act. Section 8 also provided that such rates, fares, charges, rules, and regulations shall be subject to all provisions of the act except, (a) suspension, (b) when conditions involving the security of the United States justifies a waiver, (c) section of the act shall not apply, and (d) they may be filed on short notice or made retroactive, where the circumstances so warrant (p. 213).

The recommendation of the Government to the committee was that H. R. 525 not be favorably reported (p. 213) and that H. R. 6141 and

H. R. 6142 be favorably considered insofar as they relate to rates to the Government.

REASONS FOR OPPOSITION TO H. R. 525

GOVERNMENT TRAFFIC IS NOT COMPARABLE TO COMMERCIAL

The development of the country industrywise and transportationwise has established rather definite locations of industrial production and patterns of movement for industrial traffic. Initially, when the volume of industrial traffic was small, shippers and receivers moved their traffic under so-called class rates. These class rates were and are uniform mileage rates applied to each particular commodity under established classification ratings recognizing its particular characteristics. However, as the movement of goods increased in volume and regularity individual industrial shippers and receivers induced the carriers to establish so-called commodity rates, lower than the class rates. Over the years the industrial commodity rate structure both in volume and pattern has developed until today private industrial shippers and receivers have a commodity rate structure at rates lower than the class rates for the greater majority of the traffic they ship. It has been stated that less than 10 percent of this freight traffic of the large shippers moves on class rates (p. 217).

On the other hand the Government with its far-flung operations and large volume of traffic does not enjoy the overall stability of traffic movement that is today natural to industrial shippers. While the Government does enjoy to some degree the use of commodity rates (p. 242, 243) which have been established for commercial shippers, because of its far-flung operations and because a larger volume of its traffic must move to meet emergencies than can be anticipated, a great portion of such traffic would necessarily move on the class rates if it were not that those rates were made lower by the carriers under the authority of section 22 (p. 242). Rates made by the carriers under section 22, for the Government, in effect are actually serving the purpose of commodity rates. In spite of the availability of rates under section 22 comparable to commodity rates a great volume of traffic of the Government continues to move on class rates. The inherent instability of Government programs, particularly as they relate to military operations and training programs, cause large volumes of military traffic to generate between points where commodity rates do not apply. The level of activity among the far-flung installations of the Government is constantly changing so that it is almost imposssible to establish overnight a proper rate structure for an establishment as large as the United States Government (pp. 217, 322, 333).

Section 22 provides flexibility and allows heavy movements of traffic to be made on a few hours' notice with rate adjustments being either accomplished or made retroactive to the initial date of movement.

INCREASED COST TO THE GOVERNMENT

The repeal of section 22 by H. R. 525 will increase the cost of Government transportation operations. In addition to requiring the taxpayers to pay bills at unreasonable rate levels, increases in Government personnel will be necessary to comb carefully all tariffs issued for transportation services. The staffs of regulatory bodies, particularly