out hearings while the roads continued to suffer under increased operating costs without offsetting rate increases, and the railroads were still subject to the longand-short-haul provision. (b) Trucks.—As indicated above, common-carrier trucks have been operating at a disadvantage because they had to publish actual rates while private carriers were fully exempt (but in some instances competing) and contract carriers publish only minimum rates. (c) Water carriers.-As in the case of common carrier trucks and railroads, water common carriers are subject to many similar ratemaking abuses under present regulation. An additional inequity to common carriers is caused by the bulk-commodity exemptions. Under this provision of the ICC Act, if not more than three com modities are carried in the cargo space of a vessel the carriage comes under the bulk-commodity exemptions provision and exempts it from regulation, which means that the rate need not be published. By comparison, other common carriers must publish their rates on similar commodities being carried. This gives the bulk-commodity water carrier an advantage by enabling it to obtain competitive traffic by quoting lower than published rates. 2. Abandonment of service The railroads were losing hundreds of millions of dollars annually on passenger service, yet in many cases the State public service commissions and in some cases the Interstate Commerce Commission held up abandonment of service and/or mileage which was showing large deficits year after year. PRESENT SITUATION Present regulation of all types of common carriers and contract carriers and abuses of full exemption by private carriers has brought the following results: 1. Strict regulation of the rates of common carriers by the Interstate Commerce Commission makes common carriers unable to raise or lower rates quickly as their costs and competition require and therefore their earnings are seriously restricted. Long suspension periods on requested rates tend to greatly aggravate this situation. 2. The public suffers two ways under present conditions-it has to pay a higher transportation bill than it should and it gets poorer service than necessary. Had the common carriers shown an adequate return they would have supplied better plant and equipment which would have resulted in both lower cost and better service. Had they been able to adjust their rates (price their product) with greater freedom, there would have been greater use of inherent cost and/or operating advantages which in turn should have made for lower transportation cost. 3. Common carriers, particularly by rail, are unable to set bulk commodity rates. This has two disadvantages-in the first place they cannot offer the cheapest possible service to shippers on large shipments. Secondly, they cannot meet competition from water carriers operating under the bulk commodity exemptions provision. 4. The long- and short-haul provisions for railroads should be either elimi nated or amended so as to allow managements the ability to set rates to meet the competition. 5. Operations of private carriers are subject to such loose interpretation that many of them have entered the common-carrier field and have taken away common-carrier business unfairly-because they have not been competing on an equal basis of costs, regulations, and rates. 6. Loose definition and less regulation of contract carriers has caused practices unfair to common carriers with the result that the latter have again been hurt competitively. 7. Common-carrier railroads have been unable to abandon deficit operations of passenger service and mileage because local interests have brought pressure to bear, particularly on State public service commissions, by protesting strenu ously whenever such abandonment has been attempted. This phase of operations has caused losses on railroad passenger services amounting to hundreds of millions of dollars in all recent years (over $700 million in 1953). Had the roads been able to abandon such service as the managements requested, much of these multihundred million dollar anual losses could have been eliminated-the burden of the deficits would then not have ballen on freight revenues and the publie would have benefited overall by further improvement in rail service and lower freight costs. The goal of the legislation being proposed is to provide that each common carrier can compete on a basis which will allow greatest use of its particular cost and/or operating advantages so it may realize more fully on its earning power. This will make it possible for each to use increased earnings for equipment and property improvements which in turn will increase efficiency and service so overall transportation costs can be reduced and the country can depend on the strongest available common-carrier transportation system. In the opinion of the Equitable, H. R. 6141 provides for most of the changes required in the law to meet its present shortcomings and to help establish a transportation policy which would be to the great benefit of the Nation. It does so through a restatement of the national transportation policy, amendments to the ratemaking provisions, amendment of the provisions on abandonment of deficit services and redefinition of contract and private carriers. The result of these changes in the law should make for both higher earnings to all types of common carriers and better service to the public. We therefore urge strongly that this bill be recommended to and passed by the House of Representatives and the Congress and signed by the President, so that it may become law as early as possible. Data for class I railways alone were not available prior to 1911. NOTE.-Average, 1890-1910 (21 years), 4.67 percent; average, 1911-16 (6 years), 4.85 percent; average, 1921-55 (35 years), 3.68 percent. Source: 1890-1910, Moody's Transportation Manual, 1954 (figures from ICC Blue Book); 1911-20, Railroad Transportation, 1911-51, AAR: 1921-53, Railroad Transportation, 1921-53. AAR: 1954-55, Railway Revenues and Expenses, AAR Monthly Report: 35-year average, average net railway operating income in percent of average net investment. VERIFIED STATEMENT OF EUGENE E. MURPHY IN BEHALF OF THE NATIONAL ARMORED CAR ASSOCIATION, INC. My name is Eugene E. Murphy. I reside at 737 MacLean Avenue, Kenil worth, Ill. I am vice president, secretary, and general counsel of Brink's Inc., with general headquarters at 234 East 24th Street, Chicago 16, Ill. My statement is in behalf of the National Armored Car Association, Inc., which I shall refer to hereinafter as the association and of which I am general counsel. I have had 22 years of experience in the operations of the armored-car industry. For reasons to be given hereinafter, the association is opposed to the change in the definitions of common carriers and contract carriers by motor vehicle as embodied in section 10 of H. R. 6141; to the proposed requirements of section 12 (a) in respect to publication of rates and charges of contract carriers or of contracts covering such transportation; and to the election of the status of either common carrier or contract carrier required of the present contract carriers by section 24 (a). The association has 49 members, each of them an armored-car operator. By "armored-car operator" I mean a company which, in conducting its business of transferring and safeguarding valuables of every sort, customarily employs armored cars, constructed of bullet-resisting steel plate and bullet-proof glass and equipped with built-in safes and grilles and many protective and alarm devices, such as portholes from which gunfire can be directed from within, ignition cut-out switches, and alarm bells and sirens. Such armored cars are always manned by crews which are armed and distinctively uniformed. The personnel of all crews are carefully selected and specially trained and experienced in the use of firearms. Such operators maintain quarters wherein they have constructed vaults with various types of protective equipment for overnight storage and protection of the valuables entrusted to their care. Also the entire quarters are safeguarded and protected by various means and devices. Substantially all of the members of the association hold a permit from the Interstate Commerce Commission (hereinafter called the Commission) as contract carriers and operate as such in interstate commerce. The proposed amended definitions stem from the competitive struggle between contract carriers and common carriers for what may be described as "conventional" freight and out of the difficulty which the Commission has encountered in equitably distinguishing the one from the other, a difficulty which is said to be aggravated by a lack of definite and unambiguous standards in the law itself. Or, as stated by the Commission in its comments of December 22, 1955, on this bill, "The purpose of these changes [the amendment of the definitions of common, contract, and private carriers by motor vehicle] is to afford to common carriers some measure of relief from the competition of certain classes of unregulated private carriage and from the relatively less-regulated contract carriers by motor vehicle." It is apparently hoped by the sponsors of the bill to assign and confine each type of carrier to an adequately defined sphere of carriage and thus to end the Commission's difficulties in drawing a distinction. But we ask that it be borne in mind that the aforementioned competitive struggle between the conventional contract carriers and common carriers is entirely lacking in the armored-car industry. As aptly stated by the Commission in Contracts of Contract Carriers (11 M. C. C. 693), "The armored-car operator is not a competitor of the common carrier of general commodities or the ordinary contract carrier by motor vehicle." That this is true will become immedi ately apparent when we turn to a description of the type of operations conducted by the members of the association, a type of operation which the usual commoncarrier by motor vehicle does not hold itself out to conduct and is not equipped to conduct. As the statute now reads, a common carrier by motor vehicle is "any person which holds itself out to the general public ***", a definition which clearly negatives any thought that the members of our association could be deemed common carriers; but the definition of common carrier now proposed in section 10 (a), when considered in the light of the proposed requirements of section 24 (a), would leave the Commission in "appropriate proceedings" [presumably initiated by the present contract carrier's forced election to operate in the future as a contract carrier or as a common carrier] to determine whether the present contract carrier may not be instead a common carrier under the amended definition. For reasons to be given hereinafter, it seems incredible that the members of this association should be found to be common carriers, and yet, as indicated, the discretion is vested in the Commission to force that status upon us. This should not be. Section 217 of the Interstate Commerce Act requires that every common carrier by motor vehicle "shall file with the Commission, and print, and keep open to public inspection, tariffs showing all the rates, fares, and charges for transportation, and services in connection therewith ***." If the members of our association were forced to assume the status of common carriers they would be unable, obviously to avoid this requirement. But, as we shall demonstrate, as a matter of practical tariff publication (even if there were no other reason 1) they could not possibly meet the requirement; the impossibility of meeting it will become apparent as this statement unfolds. H. R. 6141 then goes on, in section 10 (b), to define a contract carrier by motor vehicle as "any person who engages in transportation by motor vehicle or passengers or property in interstate or foreign commerce for compensation (other than transportation referred to in paragraph (14) and the exception therein) on the basis of bilateral contracts for speciallized or individualized service or services equivalent to bona fide private carriage by motor vehicle." The members of our association do very definitely operate under "bilateral contracts for specialized or individualized service," but whether they conduct "services equivalent to bona fide private carriage by motor vehicle" is extremely difficult of ascertainment. This latter portion of the proposed definition is so nebulous that we confess ourselves at a loss to say whether we do or do not fall within its purview. There is no conceivable reason for leaving this important industry in such a state of perplexity—and particularly when, as we have already said, the proposed amended definitions have their roots in competitive conditions which are foreign to the armored-car industry. There is an utter lack of justification for forcing the armored-car industry to sacrifice its own welfare-and the weliare of the patrons which it serves-in order to ameliorate unhappy competitive conditions to which it has not contributed in the least and is not a party. The next of the proposed amendments to which the association takes exception is the aforementioned provision of section 12 (a) which so modifies section 218 (a) as to require contract carriers by motor vehicle to file, publish, and post actual, rather than minimum, rates, fares, or charges for transportation, or, in the alternative, to file, publish, and post contracts covering such transportation. Section 218 (a), as now phrased, requires only that the contract carrier file, publish, and post the minimum charges for the transportation furnished by it, and it contains a proviso that "any such carrier or carriers, or any class or group thereof, may apply to the Commission for relief from the provisions of this paragraph, and the Commission may, after hearing, grant such relief to such extent and for such time, and in such manner as in its judgment is consistent with the public interest and the national transportation policy declared in this act." We shall return to this subject following our explanation of the exact manner in which the members of our association operate, at the moment it seems sufficient to explain that under the quoted proviso the Commission has relieved the armored-car operators of the requirement that they file their contracts. The last of the proposed amendments to which the association objects is that found in section 24 (a), that a person holding a valid permit to operate as a contract carrier by motor vehicle, as defined by existing provisions of the act, must elect to operate hereinafter as a contract or common carrier-to be determined by the Commission after investigation and opportunity for hearing. That brings me to a description of the operations of the members of our association. Those operations consist of the transfer of moneys, securities, and other valuables in the ordinary channels of commerce by means of armored vehicles and the safeguarding and handling as bailee of moneys, securities, and other valuables under contract for selected customers. As will be seen, transportation is in a sense a mere incident of the service, the essence of which is protection against loss. Parenthetically, we may add, any limitation upon the number of such contracts,' with the consequent lessening of the broad protection afforded to the public, would be palpably contrary to the public interest. Preliminary, also, we should emphasize that our members have thousands of contracts with their customers. By reason of the differing circumstances sur 1 As I shall establish, however, other reasons do exist. We give this special emphasis because at sheets 42 and 43 of its aforementioned comments of December 22, 1955, on the bill, the Commission suggested a definition which would confine contract carriers to continuing contracts "with one person or a limited number of persons." We find no warrant whatsoever for such an abridging of the field of activity of the armored-car operators. rounding the service rendered, each contract differs somewhat in respect to both tangible and intangible factors upon which the charges are computed, such, for example, as distance, time, number of men required for reasons of security, the bulk or mass of the shipments (whether in silver, bills, securities, or valuable objects), the amount of insurance requisite, the terrain, accessibility, and risk to other shipments. The specific services may be divided into the following general groups: (1) Payroll work; (2) Bank work; (3) Department and chainstore service; (4) The servicing of currency exchanges; (5) Brokerage office work; and (6) Miscellaneous, such as the servicing of amusement places, ball parks, race tracks, and sporting events. (1) PAYROLL WORK Broadly speaking, this service falls into the following three major categories: (a) That in which our member actually draws the money from the bank, places it in the employees' individual pay envelopes in cash, and either delivers said filled pay envelopes to the customer to be distributed by its own representatives or itself distributes the filled pay envelopes to the customer's employees under armed guard. This type of service is rendered in countless instances in paying mine and mill employees, and munition and shipyard employees, where the mines or plants are in outlying districts and where payment of the workers by check would work inconvenience and hardship. There are almost endless ramifications to this type of service. Among such ramifications which require varying charges by our members are the use of special pay envelopes, some much more difficult of handling and filling than others; special inserts in the pay envelopes which require additional handling; the insistence by some customers upon use of larger or smaller denominations of bills, which necessitates a different degree of handling; the insistence by some customers that $2 bills be used or not used, as the case may be; and the insertion in some instances of social-security cards, some rather complicated, which consume additional time in the making up of pay envelopes. It must be manifest that it would be quite impossible to make provision in tariffs for such almost innumerable refinements. Not only is that true, but it would be equally impossible to make provision for the new payroll procedures which are of almost daily occurrence. (b) That in which the employees are paid by check but in which the armored car takes cash to the plant and, where desired, cashes the checks under armed guard. In many instances the employer makes no provision for the cashing of the checks, and our member cashes such checks for the employees at a nominal charge to each employee for the time spent in rendering the service. (c) That in which our member draws money from the bank that is denominated as to coin and currency so as to permit the customer to adequately fill pay envelopes to meet its cash payroll, which money is then delivered to the customer's place of business. (2) BANK WORK This phase of the business falls into numerous classifications such as (a) taking money and bonds to and from the Federal Reserve banks from and to member banks; (b) taking money and securities from bank to bank; (c) taking money and securities between main banks and branch banks; (d) taking money, checks, drafts, money orders, etc., from stores or other business establishments to banks; (e) taking "change" from banks to department and chainstores or to amusement places, etc.; (f) handling checks, drafts, cash letters, letters of transmittal, etc., between banks and clearinghouses; and (g) picking up or delivering registeredmail shipments. As a part of this service, our members install safes in the customer's places of business which can be opened only when both the member and the customer are present with their respective keys. Constructively, the money contained in these safes is at all times in the custody of our member. Through a slot in the top of the safe the receipts can be dropped by the customer from time to time during the day. |