SEC. 25. Outstanding effective orders prescribing minimum, maximum, or maximum-and-minimum rates, fares, or charges, or issued under section 4 of the Interstate Commerce Act, as amended, prior to its amendment by this Act, shall not have any force and effect with respect to rates, fares, or charges filed one hundred and eighty days after the enactment hereof. SEC. 26. Sections 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16, 17, 20, 21, and 23 shall take effect one hundred and eighty days after the enactment hereof. All other sections hereof shall take effect upon enactment. II. NATIONAL TRANSPORTATION POLICY Provisions of Interstate Commerce Act The statement of national transportation policy preceding section 1 of the Interstate Commerce Act declares it to be the policy of the Congress (1) to provide for fair and impartial regulation of all modes of transportation subject to the act so as to recognize and preserve the inherent advantages of each; (2) to promote safe, adequate, economical, and efficient service and foster sound economic conditions in transportation; (3) to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; (4) to cooperate with the several States and duly authorized officials thereof; and (5) to encourage fair wages and equitable working conditions. The objective of the policy is the development, coordination, and preservation of a national transportation system by water, highway, and rail, and other means, adequate to meet the needs of the commerce of the United States, of the postal service, and of the national defense. The provisions of the act are to be administered and enforced with a view of carrying out the declaration of policy. Amendments proposed by H. R. 6141 and H. R. 6142 Section 2 of H. R. 6141 and H. R. 6142 would rewrite the statement of national transportation policy so as to declare it to be the policy of the Congress (1) to provide for and develop, under the free-enterprise system of dynamic competition, a strong, efficient, and financially sound national transportation industry which will at all times remain fully adequate for national defense, the postal service, and commerce; (2) to encourage and promote full competition between modes of transportation at not less than reasonable minimum charges nor more than reasonable maximum charges, so as to encourage technical innovations, the development of new rate and service techniques, and the increase of operating and managerial efficiency, full use of facilities and equipment, and the highest standards of service, safety, economy, efficiency and benefit to transportation users and customers, but without unjust discrimination, undue preference or advantage, or undue prejudice, and without excessive or unreasonable charges on noncompetitive traffic; (3) to cooperate with the States, and to encourage fair wages and equitable working conditions; (4) to reduce economic regulation of the transportation industry to the minimum consistent with the public interest and to the end that the inherent economic advantages, including cost and service advantages, of each mode of transportation may be fully realized in such a manner so as to reflect its full economic capabilities; and (5) to require that such minimum economic regulation be fair and impartial, without special restrictions, conditions, or limitations on individual modes of transport. The provisions of the act are to be construed, administered, and enforced with a view of carrying out the declaration of policy. Purpose of amendments The purpose of the amendments is to eliminate certain phrases which have been construed to prevent carriers from giving the public the benefit of cost and service advantages, and to conform the declaration of policy to the substantive changes being proposed in the act. Testimony DEPARTMENT OF COMMERCE (Sinclair Weeks, Secretary; Louis S. Rothschild, Under Secretary for Transportation) The Nation's common carriers must have the opportunity to match the economic growth of the country. This can be done within the framework of existing regulatory policy modified, however, to reduce certain competitive disadvantages imposed on regulated common carriers by statute, and to utilize competition among common carriers to greater advantage in the allocation of traffic. Greater participation of common carriers in the economic growth of the country will enable them to serve the public better and provide the capacity needed for national defense (R. 172). The public expects the common-carrier system to furnish good service at a low and nondiscriminatory price and to provide a reservoir of transport capacity for defense emergencies. But transportation policy should also permit the common-carrier industry to share in national prosperity in peacetime. These points are interrelated, for without sharing adequately in peacetime prosperity, common carriers cannot provide the vital reservoir of transport capacity that might be needed in time of war nor can they continue to provide the public with essential service under all conditions in accordance with traditional common-carrier responsibilities (R. 67). The basic concept underlying the committee's proposed revision in regulatory policy is that transportation operates today in the general atmosphere of pervasive competition. Pervasive competition as applied to transportation signifies that in every community there exists actual or potential competition that affects the movement of almost every passenger and commodity. It does not mean necessarily that competition exists in the same degree everywhere, but that it is an effective influence everywhere. In some markets and segments of the economy, it may be more effective than in others. There has been a historic trend for transport competition to become more widespread and effective. This concept of pervasive competition accords with the thinking of leading economists who have recognized that every industry displays varying degrees of relative competition or monopoly (R. 68). Regulatory policy was developed on the concept of monopoly in transportation and has continued in this pattern despite the evolu tion of the transportation industry from a situation of imperfect or limited competition to one of pervasive competition. There are some who insist that cutthroat competition, not transportation monopoly, was the reason for the enactment of the original act to regulate transportation. The actual terms of the original Act to Regulate Commerce of 1887, however, provided for the protection of the public against unjust discrimination, not the prohibition of competitive practices. There was no prohibition whatsoever against competition as such but against the discriminatory practices which characterized the type of competition existing at that time and which competition was entirely different than the type of competition prevailing today. The apparent cutthroat competition which sometimes characterized the supply of transportation in certain areas was one aspect of the discrimination between places and persons practiced by the transportation companies seeking control of the market. Pooling, rebates, and other typically monopolistic discriminations were other practices outlawed by the first Interstate Commerce Act. Conditions were especially ripe for discrimination when prior to the advent of antitrust legislation industrial companies with monopolistic tendencies sought to strengthen their hold on the market by bargaining for preferential treatment with railroads who were themselves seeking market supremacy in transportation. It is true that as time passed the Congress enlarged upon the economic powers of the ICC, particularly in the 1920 act which among other broad grants of authority vested complete authority over railroad rates in the ICC. In 1920, the railroads still largely held a monopoly in transportation; the extensive promotion of inland waterways was just getting underway, and trucking was in its infancy. As these latter forms grew in importance, the Congress brought them under regulation-regulation in the pattern of the 1920 act except for certain broad exemptions. Hence regulatory policy today retains all the substantive restraints originally designed to curb abuses inherent to monopoly (R. 68.69). A general atmosphere of pervasive competition in transportation can be demonstrated. Total transportation output has paralleled the general growth of the national economy, yet the distribution traffic among the various means of transport has altered greatly in the past 25 years. According to ton-mile figures released by the ICC, railroads, which as recently as the prosperous period of the late 1920's carried threefourths of all traffic, now carry only about one-half of the total. Inland waterways and petroleum pipelines have shown substantial increases but the most spectacular rise during the past 15 years has been in intercity motor freight transportation, including regulated, exempt, and private carriage. Trucks which in 1940 accounted for 10 percent of total ton-mile traffic have increased their share to about 20 percent today. The growth in capacity of the various transport agencies as traced through the years measures in some degree their respective abilities to compete and hence also is evidence of pervasive competition. The close relationship between the initial improvement of basic way facilities and the subsequent growth of competitive potential is aptly 85548-57- 3 illustrated in the inland waterway and motor transport industries. Improved water courses and paved highways have been followed by impressive growth in tonnage carried by inland barge and by trucks. Such developments also stimulate technological and service improve ments. The motor-trucking industry has grown rapidly from infancy to relative maturity. Motor carriers compete actively for almost all segments of traffic except heavy ores, and other bulk commodities. They have shown phenomenal progress in the movement of agricultural products, including fruits and vegetables, livestock, dairy and poultry products requiring refrigeration, and, in some instances, grain. They have extended actively into all branches of the manufacturing industry. As a result of these developments, shippers, since 1950, have been spending more for intercity motor transport than for rail service. In 1955 total expenditures for intercity motor truck service are estimated at over $13 billion compared to $8.5 for rail service. Meanwhile revenues of regulated motor carriers, as documented by the ICC, have equaled rail revenues from the carriage of manufactured goods. This is in contrast to their position in the prewar period when their revenues were but one-third of rail revenues from carload manufacturers, forwarder traffic, and less carload freight. Many basic economic factors will tend to favor motor freight transportation in the years ahead, such as dispersal of population and industry into suburban areas and small cities, improved control of inventories by business, and new assembly and production techniques in manufacturing. Undoubtedly, the proposed modernization of the Interstate Highway System will accelerate this trend (R. 71-73). Common carriers as a whole have not matched in growth the progress of the national economy. A disproportionate amount of the increasing transportation output has been going to private, exempt, or contract carriage. This tendency has affected nearly all forms of transportation-railroads, motor carriers, and coast wise and intercoastal carriers. Carriers on inland waterways, as nearly as can be estimated, are probably holding to their prewar share. Current trends indicate further losses by common carriers to private carriage (R. 73-171). The growth in transportation competition has taken place in the midst of a genuine "economic revolution" which has had a profound impact on all aspects of the Nation's life. The foremost characteristic of the expanding economy has been the changed composition of the national income. In the past 25 years manufacturing has assumed greater relative importance. Manufacturing which in 1929 accounted for 26 percent of the national income from private sources presently accounts for 36 percent. It is the only private sector which has shown a substantial increase, and thus may be termed the pace setter of the economy. All other private sectors such as agriculture, mining, construction, service industries, or finance, have declined or at best have remained constant in their proportionate contribution. It is clear that future dynamic growth of the common-carrier industry depends largely on increasing ability to serve and meet the needs of the manufacturing industry. The products of this industry lend themselves readily to transport competition, not only among kinds of common carriers but between common and private carriage. If the common carriers are to increase their service to manufacturing industry, they must have fair opportunity to offer competitive rates and services. The extent to which all common carriers depend increasingly on revenues from manufacturers may be illustrated by the experience of the railroads. During 1929 the railroads obtained 35 percent of their gross freight revenues from carload manufacturers. In recent years they have been obtaining approximately half of their gross freight revenues from this source in spite of the highly competitive nature of this traffic and their absolute increases in tonnage of other classes of commodities. Again, using the railroads as an example, products of mines have been declining in importance in relation to gross freight revenues, even in regions of large mineral production. The proportionate decline in revenues from products of mines has taken place in spite of the absolute increases in the movements of these commodities and the fact that great volumes use rail transportation exclusively. The decline in relative importance of these commodities is due to the declining share of mining enterprise in the total national income. As to the present transport conditions in the United States the following conclusions may be summarized as follows: There is virtually unanimous belief that the Nation needs a strong and progressive common carrier industry: The entire transportation industry has evolved from a situation of limited competition to one of pervasive competition; The present common carrier system is not matching the economic growth of the country; and The most competitive area of transportation is in the carriage of manufactured goods, the production of which is now pacing the Nation's economic growth. More specifically, however, the present statement of national transportation policy in the Interstate Commerce Act has been taken to justify regulatory restraints upon the exercise of managerial discretion in competitive activities. Particularly to be noticed are the provisions directing that the regulation of all modes of transportation be- so administered as to recognize and preserve the inherent advantages of each and foster sound economic conditions in transportation and among the several carriers * without ⚫ unfair or destructive competitive practices ⚫ ⚫ The foregoing language has been used, in conjunction with other sections of the act, as the basis of regulatory restraints upon competition when carriers have sought to give their customers the full advantage of cost and service superiority. The ICC, in effect, has been functioning as business manager imposing restraints in keeping with its prophecy of the effect that rate changes may have upon competitors, the carrier proposing the rate, and the public. The application of these criteria has resulted in the existence of a diversity of purpose in the application of regulatory standards leading to confusion among business managements as to the extent to which their competitive advantages might be utilized in the market place (R. 173). Thus under present laws the Commission has reserved the right to reject management's conclusions in favor of its own with respect to |