3. We oppose the amendment of the long- and short-haul clause (sec. 4 of the act) and the repeal of the aggregate of intermediate clause.

4. We oppose the amendments relating to the suspension of rates and charges (sec. 7 c).

5. We oppose the cancellation of all outstanding orders of the Commission, including orders under section 4 of the act (sec. 25).

6. We favor the proposal to accord no more favorable rates on Government traffic than that accorded to other shippers generally (sec. 8, par. 5).

7. We favor the proposal to give the Commission substantially the same power and control over abandonments and service matters as it now has with reference to rates in intrastate rate matters.

The livestock associations are interested in efficient operation of all types of carriers. They believe there is need for all of them.

They realize, however, that there are wide differences in the relative economic strength between carriers of different types and carriers of the same type that such differences must be recognized and considered from the standpoint of the public interest.

To give controlling weight to mere out-of-costs in making rates for competitive reasons, without due regard to other factors and circumstances, would not be in the public interest because of the resulting destructive effects on carrier service and the shifting of a disproportionate share of the transportation burden shippers in noncompetitive situations. This would seriously affect livestock producers and shippers in the smaller towns in country areas.

The chief functions and responsibilities of the Commission pertinent here may be briefly stated to be:

(1) To protect the shipping public against:

(a) Unreasonable or excessive rates and charges; and

(b) Undue discrimination and undue prejudice.

(2) To protect the shippers and the carriers against:

(a) Destructive competitive practices between carriers of the same type; and

(b) Competition between carriers of different types.

The predominant effect of the proposed amendments relating to rates and charges would be that such rates as the carriers might wish to reduce, either on their own initiative to meet particular competitive situations, or as a result of shipper pressure, would tend to gravitate to a so-called mere compensatory level, or the level of the direct ascertainable cost.

If the rates reduced by the railroads, for instance, to meet competition of the motor carriers or water carriers, did not yield sufficient revenue the railroads in all probability, would resort to filing petitions for general increases in rates. Repetition of the process of reducing rates on so-called competitive traffic, followed by general increases, would be inevitable, as the volume of traffic at merely the out-of-pocket cost would increase. The result would be that rates on noncompetitive traffic would be forced to bear a disproportionate share of the transportation burden.

This would be particularly detrimental to the livestock industry, because it is widely scattered over many sections of the country, and is not highly concentrated.

Both railroad and motortruck transportation is important to the needs of the livestock producers. Livestock of necessity is frequently moved a number of times; for example, from ranches to pactures and feeding areas and eventually to markets and slaughtering points. This often involves several hauls by railroad in some cases, by motortruck in others, but more frequently part by rail and part by motortruck. The hauls by motortruck are generally within distances of 200 miles. The rail hauls are generally for longer distances.

The volume of livestock originated by class I railroads has declined greatly, notwithstanding that the volume of livestock marketed has steadily increased during the past 9 years, 1946 to 1955 inclusive, as shown by the following table:

It also appears that due largely to the highly increased rates and inadequate rail service the volume of livestock received at the principal public markets by motor vehicle has substantially increased in the past 9 years. For instance, in 1946, 57.2 percent of the cattle were received by truck compared with 82.5 percent in 1955, an increase of 25.3 percent. Calves by truck increased from 62.3 percent in 1946 to 84.8 percent in 1955, an increase of 22.5 percent. Hogs by truck increased from 60.7 percent in 1946 to 87.0 percent in 1955, an increase of 26.3 percent. Sheep and lambs by truck increased from 35.9 percent in 1946 to 54.1 percent 1955; an increase of 18.2 percent.

The following table shows that not only has the number of carloads of livestock steadily declined but the railroad revenue therefrom has continued generally on a downward trend notwithstanding the increases that are now about 90 percent higher than in 1946:

It should be observed that both in the number of tons and number of carloads originated, the volume of livestock in 1955 is less than half of that in 1946.

These decreases are all the more significant in view of the very substantial increases in the number of tons of livestock marketed annually since the year 1950.

The next table shows the extent of the decreases under 1946 in the carloads originated, tons originated, and in freight revenue for each succeeding year 1947 to 1955 inclusive: Annual decreases under 1946

This shows more vividly the extent to which livestock rail traffic and rail revenue has been declining during the past 9 years, and that notwithstanding the increases in rates the rail revenue from livestock in 1955 is 10,215,533 less than in 1946.

It is rather significant to observe that in each of their petitions for general increase in freight rates and charges since April 15, 1946, the railroads have repeatedly stated that the proposed increase in rates and charges will be just and reasonable and will not result in a loss of traffic to an extent which will deprive the railroads of the benefit of a substantial increase in revenue.

It is recognized that livestock producers must pay and bear the transportation and other marketing costs and cannot pass on to others such added costs, as appear to be the case in other segments of our economy.

Because of this the livestock producers must have all possible outlets available for their livestock in order to get the benefit of day-to-day competition of buyers from all sections of the country. The high levels of livestock rates have decreased the competitive outlets to the livestock producers and greatly reduced the total volume of rail traffic. This was recognized by the Commission in one of the more recent general advance cases (Ex Parte 123, 226 I. C. C. 41), brought on petition of the railroads for increases in rates where at page 99 it stated:

"Undoubtedly the rate structure and the rapid extension of the system of improved highway has encouraged the use of competitive modes of transportation

for livestock. A decentralization of marketing and of slaughter is in progress, and there is a tendency to use a larger proportion of livestock produced close to the slaughtering plants and markets. Such a decentralization, besides diminishing the total volume of rail ton-miles, decreases the competitive markets available to the industry in disposing of its animals, and thus affects farm prices." [Emphasis added.]

Another pertinent statement appears on page 140 of the above report: "The applicants have throughout the record indicated their intention, if granted the general authority sought, to proceed with diligence to make the necessary readjustments which commercial and traffic conditions may require, while at the same time resisting any efforts to fritter away the increases by improvident reductions for casual or competitive purposes, or because of the pressure of shippers who wield the threat of diversion of traffic."

In a latter general advance case (Ex Parte 168, 272 I. C. C. 695 (1948)) appeared the following statement concerning the cumulative effect of rate increases, where at page 112 it stated:

"As previously shown, the cumulative effect of increases in rates already made and those now authorized may tend to diversion or suppression of traffic because exceeding the value of the service. The petitioners have represented that they are aware of this situation, and may be expected to protect their traffic and revenue therefrom by rate revisions necessary for the purpose."

While the present rates on livestock are the highest level in history, due to cumulative increases, the railroads have made drastic reductions in rates on other commodities as stated by the Commission in a still later general advance case (Ex Parte 175, 280 I. C. C. 179 (1951) at p. 63):

"In many instances the railroads have removed these increases. In other instances rate reductions have been greater than the increases here in question. *** We recognize that the railroads must meet the competition of other transport agencies, particularly the motor carriers, in order to retain sufficient traffic to keep them in operation."

However, the railroads have declined requests of livestock associations to reduce rates on livestock. We are apprehensive that in the event the proposed rate-making amendments were enacted into law and the contemplated reductions made on so-called competitive traffic would not produce adequate revenue results, would only aggravate the situation as far as the livestock producers are concerned by the prospect of being burdened with still higher rates and the inevitable reduction in market outlets for their livestock.

These are the chief reasons why we are opposed to amendments of the act as more specifically indicated in other parts of this statement.

NATIONAL TRANSPORTATION POLICY

The present national transportation policy was included in the Transportation Act of 1940.

Railroad management and labor constituting a committee of six made the unified draft to apply to all modes of transport via rail, motor, and water,

Commissioner Eastman in testimony before the House committee hearing at page 1705, said:

"You will also note that the so-called Committee of Six, which was strictly a railroad body, laid most stress on improvement of competitive conditions, largely at the expense of railroad competitors. It also emphasized greater freedom in increasing rates and relief from various burdens. In minimized more efficient and economical railroad operation. The so-called Committee of Three, however, which was strictly a public body, emphasized the integration of transportation facilities and greater efficiency and economy in operation.

The declaration as finally adopted was substantially as drafted by the railroad group.

The legislative history indicates that the declaration of policy is intended not only to guide the Commission, but also the courts. This has been recognized by the Supreme Court in a number of cases, the following of which are representative:

22. McLean Trucking Co. v. United States (321 U. S. 67).

23. Eastern-Central Motor Carriers Ass'n v. United States (321 U. S. 194; 48 Fed. Supp. 432).

24. United States v. Pennsylvania R. Co. (323 U. S. 612, 55 Fed. Supp. 473); Hoboken Mfrs. R. Co. v. Abilene & S. Ry. Co. (248 I. C. C. 109).

26. Acme Fast Freight, Inc. v. United States (338 U. S. 855); Lifschultz Fast Freight Extension-West and Midwest (265 I. C. C. 431).

It may be mentioned that in the Eastern-Central Motor Carrier Association case, the Supreme Court indicated that orders of the Commission shall not be sustained if not supported by affirmative evidence that it has considered the provisions of the act involved in any given case before it in a manner consistent with the national transportation policy. The fact that the present declaration of transportation policy has been in effect for over 15 years, and meanwhile, decisions of the Commission implementing the provisions of the policy and review by the courts have helped to clarify and establish the meaning of the language contained in the policy. It is contended by some that under the present language of the policy the Commission is apportioning traffic between the competing carriers.

It has been declared by the courts that the Commission does not intend to apportion traffic between competing carriers but merely to equalize the prospects or opportunities for procuring the traffic. This is obviously necessary to guard against destructive competitive practices. On this point in the Eastern-Central case (321 U. S. 194), the United States Supreme Court at page 206 stated: "But with the evaluation of other forms of carriage, particularly motor carriage, and the Commission's acquisition of control over their rates and operations, a new situation arose. The Commission's task no longer was merely the regulation of a single form of transport, to secure reasonable and nondiscriminatory rates and service. It became, not merely the regulator, but to some extent the coordinator of different modes of transportation. With the addition of motor and water carriage to its previous jurisdiction over rails, it was charged not only with seeing that the rates and services of each are reasonable and not unduly discriminatory, but that they are coordinated in accordance with the National Transportation Policy, as declared by the later legislation. This, while intended to secure the lowest rates consistent with adequate and efficient service and to preserve within the limits of the policy the inherent advantages of each mode of transportation, at the same time was designed to eliminate destructive competition not only within each form but also between or among the different forms of carriage."

While some improvement in the policy may be made, the proposals contained in H. R. 6141 introduce phraseology that is indefinite and confusing and among other things, would sanction what could well become destructive competition, if increased reliance on competitive forces of transportation ratemaking would be given effect and, particularly, where the present provisions of the policy, such as "to encourage the establishment and maintenance of reasonable charges for transportation services without *** the unfair or destructive competitive practices" would be repealed.

We oppose the amendment of the national transportation policy as proposed. Amendment of section 4

Section 4 of the bill proposes to amend the present section 4 by adding a proviso that a common carrier may charge less for a longer than for a shorter distance if the charge established to or from the more distant point(a) is necessary to meet actual competition of another carrier or carriers; and

(b) is not less than a just and reasonable minimum charge. Furthermore, the amendment repeals two very important provisions viz:

1. That carriers be authorized to establish such lower rates to a more distant point only upon application to the Commission and upon proof that such lower rates are justified; and

2. The repeal of the aggregate of intermediate clause.

The fourth section in its present form, gives the shippers a protection not afforded by other sections of the act. A lower rate to a more distant point than to an intermediate point via the same route is prima facie unjust, unreasonable, unduly preferential and unduly discriminatory.

Mere existence of competition should not be permitted to be used as a cloak of immunity on practices that are prima facie discriminatory. That is expressly why Congress, under section 4 of the act permitted the Commission to authorize departures from the long- and short-haul clause, it nevertheless placed the burden of justifying such departures on the railroads a requirement to be met before the rates go into effect and not after.

The proposal to make competition the magic password to avoid prior justification of lower rates for longer than for shorter distances over the same route practically amounts to an outright repeal. We oppose the amendment of section

4.

Shippers have been given the protection of the aggregate of intermediate clause by paragraph (c) of rule 56 of the Commission's Tariff Circular No. 20, under which the rail carriers are authorized to reduce on 1 day's notice to the public and to the Commission to reduce any higher rate by a given route to the actual sum of the intermediate rates from and to the same points. This fundamental principle has been recognized for many years. It is very important to many shippers and involves substantial amount of money. Elimination of it would cast unnecessary procedural burdens on both shippers and carriers and in all probability would result in much costly and extensive litigation before the Commission and the courts.

There was more controversy about the long- and short-haul clause prior to the time the act was passed in 1887, and since that time than any other provision.

Highly organized and strenuous efforts of railroad and certain shipper interests to repeal the long- and short-haul clause have failed.

Its retention in the act is of vital concern to many areas of the country and important segments of our economy.

Therefore even any modification of it designed to meet present-day conditions merits careful consideration.

We oppose the amendment of the fourth section as proposed. Amendment of section 15

Under section 7 of H. R. 6141, a number of amendments to section 15 of the act are proposed. Section 7 (a) would take away the power of the Commission to prescribe maximum and minimum, or precise rates, so that the Commission could only prescribe either maximum or minimum rates, but not maximum and minimum rates. It appears that in the majority of outstanding rate orders, the Commission has prescribed maximum rates or minimum rates. In doing this, the Commission recognized that it was undesirable to make its orders more restrictive than necessary.

While the exercise of the power to prescribe specific rates has been used to a relatively lesser degree, it is a necessary power to be used; in some cases involving the removal of undue discrimination or undue preference or prejudice; in the determination of joint rates (particularly in event of refusal by a carrier, or where carriers are unable to agree on the rate); in the establishment of competitive rates in specific situations involving either competition between carriers or competition between shippers, and also in the administration of the fourth section of the act.

We strongly urge that the power of the Commission to prescribe maximum and minimum or precise rates be retained and oppose section 7 (a) and all similar amendments.

Amendment of section 15 (7), suspension of rates and charges

We oppose the provisions of paragraph (c), section 7 of the bill relating to the suspension of rates and charges proposed to amend paragraph (7) of section 15 of the act.

The proposed amendment reduces the suspension period from 7 to 3 months and would impose drastic and burdensome requirements as a prerequisite in obtaining a suspension of a tariff containing changes in rates or charges.

Briefly stated, changes in rates could be suspended only if the Commission determined on the basis of proof by a complainant or as a result of its own investigation that (a) the rate, charge, etc., is probably unlawful; (b) that it would result in injury; and (c) that other available remedies are inadequate. Generally, changes in rates are filed 30 days before they become effective. The rules of the Commission require that protests be filed 12 days prior to the effective date; this would allow a complaining shipper only 18 days in which to conform with the proposed requirements that in many instances would be impossible to comply with within the limited time.

We contend that section 15 (7) be not changed as proposed.

Procedural requirement incident to suspension should be left to the discretion of the Commission.