are wasteful as well as "harmful to the very system upon which our future security and prosperity is based." 2. Excise taxes on transportation Excise taxes on transportation of persons and property should be repealed. These taxes include: 10 percent on passenger fares, 3 percent on freight or express shipments, 4 cents per ton on coal, 42 percent of the charge for products moved by pipeline. These taxes were for the most part designed to raise revenues for defense and other emergencies or to actually discourage travel in wartime. Repeal is urged by all transportation agencies, and organizations representing agriculture, labor, shippers, and others, largely because for-hire transportation services are vital to the economy of the country, and because those who use and operate these services are being unfairly penalized. 3. Regulatory appropriations and salaries The Interstate Commerce Commission and the Civil Aeronautics Board should be given sufficient funds to permit them to be adequately staffed and to carry out all of their functions and obligations. All panels supported this proposal. It is deemed important to the expeditious and efficient conduct of regulation and hence to the smooth functioning of the transportation industry. For many years the ICC because of insufficient budget has been unable to prevent widespread illegal operations that compete heavily with lawful carriers. Salaries of Interstate Commerce Commission, Civil Aeronautics Board, and Federal Maritime Board members should be increased to at least $21,000 per year. The proposal in regard to the ICC and CAB was supported by all panels except the waterway panel which did not oppose. The board of directors subsequently agreed with the recommendation from the water-carrier representatives to broaden the proposal to include the FMB. Purpose is to restore at least partially the relationship that prevailed before 1939 between these salaries and the compensation obtainable in private industry for executive positions, and to give effect to the decrease in value of the dollar and increase in Federal taxes. 4. Section 22 rates Those provisions of section 22 of the Interstate Commerce Act which permit the transportation of Government passengers and property free or at reduced rates should be repealed. All panels supported this proposal except the railroad and freight forwarder panels which took no position. (The waterway panel position referred to transportation of property only.) Purpose is to treat the Government like any other shipper when it is buying transportation service. Shippers particularly feel that they must now pay higher rates in order to make up for the special treatment accorded the Government. 5. Unprofitable railroad services The Interstate Commerce Commission should have the power on appeal from adverse orders of State authorities to authorize discontinuance of services which are a burden on interstate commerce because they are being carried on at a financial loss. The ICC should be authorized, where a carrier can show financial loss from continued operation of a line, to enter an order that the line may be abandoned. Six panels supported these proposals. No panel opposed. Purpose is to reduce the burden upon interstate freight shippers and upon investors of supporting unprofitable intrastate passenger operations where certain State commissions feel unable to withstand local pressures for continuing the service. 6. Adequate hearings Full opportunity should be given by committees of Congress for hearings by interested parties on matters which affect transportation. Transportation legislation is usually complicated and affects many interests. TAA believes all interests should be given a chance to be heard before a congressional committee makes its recommendations to Congress. 7. Parcel-post service Parcel-post rates shall be adequate to cover all costs of the service, and the annual parcel post ascertainment reports of the Post Office Department shall 78456-56-pt. 1-25 include all costs properly attributable to parcel-post service. At periodic intervals the Interstate Commerce Commission shall prescribe such parcel-post rates and practices as are necessary to put parcel-post service on a self-supporting basis. (The last sentence of this proposal applies only to surface parcél post.) No panel opposed this proposal. Along the same lines, the Hoover Commission report on business enterprises recommends that the Postmaster General should seek a further increase in rates charged the public if current rates do not cover all costs of the parcel-post service (including indirect costs). Purpose is to prevent unfair Government competition with private enterprise. 8. Government economy in transportation The Federal Government should, to the extent consistent with the national transportation policy, use every available means to bring about efficiency and economy in its use of transportation services, and as supplier of such services as remain necessary under the statement of policy on Government competition in the transportation field, or as buyer of services within the framework of the association's position on section 22 rates (see 4 above) approved by the Transportation Association of America's board of directors. Many methods for achieving economy and efficiency in the Government's transportation activities have been recommended by the Hoover Commission. In the light of those and other recommendations, the association's board of directors adopted the policy statement summarized above. 9. Statutes of limitations The period in which shippers can institute claims against common carriers subject to ICC jurisdiction in connection with reparations for "unreasonable" or "discriminatory" rates should be reduced from 2 years to 1 year. All panels approved this proposal. Purpose is to prevent unnecessarily long delays by injured parties in commencing reparation actions, while at the same time providing adequate time for such actions. 10. Nonscheduled airlines Exemptions in the Civil Aeronautics Act under which nonscheduled airlines are permitted to operate should be amended to require appropriate hearings and findings that the service is needed in the public interest, and that the applicant is fit and able to provide the proposed service. All panels approved this proposal. Purpose is more equitable regulation of air carriers performing essentially the same type of service. 11. General rate increases The time lag between carrier requests for, and regulatory authority approval of, general rate increases to cover increases in costs should be reduced. All panels approved the objective of this proposal. Difficulties subsequently developed in regard to the exact legislation to carry it out, but members of the board from all groups except the Waterway Panel finally concurred in a specific proposal for legislation. Purpose of the proposal is to expedite regulatory machinery. In the past, there have been numerous instances where the Interstate Commerce Commission has eventually allowed increases in rates to offset increased costs; however, since the rates cannot be made retroactive and the Commission has taken a long time to reach its decisions, the carriers have suffered unjustifiable losses. 21. Intrastate rates If, within 45 days after the ICC has authorized an interstate general rate increase, a State which has been requested to take similar action with respect to intrastate rates has not rendered a decision, then the ICC shall assume jurisdiction over the intrastate rates in question. In such proceedings the proof burden on the carriers shall be eased. This proposal received general panel support, except for the user panel's belief that its application to rates of motor carriers and freight forwarders should receive further consideration before recommending changes. Purpose of the proposal is to speed up action by certain State Commissions which may take no action on petitions on rate increases as an indirect means of maintaining the status quo in rates. 13. Railroad consolidations Part I of the Interstate Commerce Act should specifically state the desirability in the public interest of the economies, simplifications, operating efficiencies, and other advantages which may reasonably be predicted to result from the combinations or consolidations of carriers, and certain unnecessary restrictions in the present law should be removed or modified. The five specific items under this proposal were, for the most part, supported by the investor, railroad and user panels. None of the other panels opposed any of the proposals. Purpose of these proposals is to stimulate railroad unifications by removing procedural handicaps. 14. Public aid "In the United States, which stands before the world as the principal exponent and the principal exhibit of the benefits of free private enterprise, the aim in all forms of transport should be that user charges be paid by all classes of domestic users of Government transport facilities sufficient to cover their fair share of the costs of building and maintaining the facilities which they need to use." The above is the first paragraph and key statement in the board of directors' policy on public aid. It was supported by all panels except the waterway panel. The full statement of policy runs some 3 pages in length in Sound Transportation for the National Welfare published by the association in 1953 and advocates some special policies in applying user charges to airways, airports, and waterways such as the nonrecovery of Government investment in existing waterways. The railroad panel differed on the timing of the application of user charges to waterways. Purpose is to combat socialistic tendencies and to do away with preferential treatment by the Government of one form of transport over another. 15. Contract carriers Contract motor and water carriers subject to the Interstate Commerce Act should be required to file, adhere to and make public the rates they actually charge. Contract air carriers should be subject to the same kind of economic regulation as contract motor and water carriers. This proposal was approved by four panels. The waterway and pipeline panels, though they would not oppose extending regulation to air contract carriers, did oppose the change in contract carrier regulation embodied in the recommendation. The freight forwarder panel took no position while the highway panel presented conflicting recommendations from its common and contract carrier groups. Purpose of the proposal is to enable closely regulated common carriers to compete with contract carriers more equitably. 16. Rule of ratemaking Section 15a, the rule of ratemaking applicable to railroads and other carriers subject to part I of the Interstate Commerce Act should be amended by deleting the requirement that the ICC give consideration "to the effect of rates on the movement of traffic by the carrier or carriers for which the rates are prescribed," and by adding language to emphasize the intention of Congress to permit the maintenance of carrier credit and the attraction of equity capital. No panel opposed the additional language at some point in the Interstate Commerce Act. Deletion of the phrase noted above was designed to give more freedom to carrier management in the setting of rates. It was specifically understood that the recommendation was in no way to diminish the importance of the concept of "value of service" in the setting of rates. It was a midway position between the user and investor panels which had advocated the repeal of section 15a, and the highway and waterway panels which had opposed any change. 17. Suspension powers The present period of 7 months during which the ICC can suspend changes in rates should be cut to 3 months, plus a 3-month extension period when requested by any party of interest. In addition, the language found only in the suspension provisions applicable to carriers subject to part I of the Interstate Commerce Act, which authorizes the Commission to direct these carriers under certain circumstances to account for and refund rate increases, shall be repealed. This proposal had support from the user, investor, railroad and pipeline panels, was opposed by the waterway and highway panels, while the freight forwarder panel took no position. Purpose is to have Congress specifically indicate to the ICC that it should reduce the time during which rate applications are suspended and especially to discourage the Commission from seeking the agreement of applicants to extensions beyond the legal period. (In this respect see also policy 3 above.) 18. Bulk commodity exemption The exemption from regulation under which bulk commodities are transported by water should not be repealed. While the railroad and investor panels favored repeal, the other panels supported the proposal as stated or took no position, on the basis that repeal would mean an unnecessary extension of regulation. Purpose is to prevent extension of regulation where not vitally necessary. 19. Differential rail-water rates Those provisions of the Interstate Commerce Act which relate to the prescription of differential joint rail-water rates in connection with through routes between rail and water carriers shall be amended so that the Interstate Commerce Commission will consider all relevant factors, including costs of service, before prescribing such differential rates. The user, investor, railroad and freight forwarder panels had favored repeal of all provisions relating to compulsory through routes between railroads and water carriers, while the waterway panel opposed any change and other panels took no specific position. The Board's position is an intermediate one. Purpose is to give the ICC the right to consider cost when setting rates for rail-water routes. 20. Commodities clause The commodities clause, which prohibits railroads from transporting in interstate commerce commodities which they own, produce or in which they have an interest, should be repealed. All panels except the railroad, approved or did not oppose this proposal; while the railroad panel preferred extending the restriction to for-hire water and motor carriers. Purpose of the proposal is to repeal a legal restriction which is no longer necessary and which creates inequality in regulation. 21. Shippers' associations Congress should provide definite statutory standards for determining which shippers or shipper associations involved in consolidation or distribution of volume freight on a nonprofit basis for securing lower rates are entitled to exempt status. Five panels supported this proposal and the others indicated no objections. Purpose is to clarify the present law which has loopholes permitting abuses by certain types of associations under section 402 (c) of the Interstate Commerce Act. 22. Transfer of functions from regulatory agencies Proposals to transfer to the courts certain functions of the Interstate Commerce Commission and the Civil Aeronautics Board, and to limit the jurisdiction of these agencies over hearing examiners, should be opposed. Panels, except the waterways panel which took no position on the subject, supported the above position insofar as the ICC was concerned. As regards the CAB, the proposal was actively supported by the air transport board and not opposed by the remaining panels. Need for these proposals, which were included in the Hoover Commission report on Legal Services and Procedure and were part of recommendations involving many regulatory agencies, has not been demonstrated. The advantages are outweighed by the disadvantage of having transportation matters handled by men unfamiliar with the transportation industry. Mr. HARRIS. I notice you have here Information Memo Sheet, Why Section 22 of the Interstate Commerce Act Should Be Amended. Would you like that to be included in the record? Mr. BAKER. We would, sir. Mr. HARRIS. It may be received for the record at this point. (The information referred to is as follows:) CUT-RATE GOVERNMENT TRANSPORTATION AND WHY SECTION 22 OF THE INTERSTATE COMMERCE ACT SHOULD BE AMENDED (First of a series of information bulletins on Current Major Transportation Topics Covered by Policies of TAA) (Reading time: 6 minutes) CUT-RATE GOVERNMENT TRANSPORTATION The United States Govenment, the Nation's largest user of public transportation, in many instances is not paying its fair share for that service. Why? Because it can bargain for special, low rates, rather than pay the lawfully established rates that the rest of us are required to pay. Why bargain rates? How can this happen in the public transportation industry, where rates are regulated in the public interest so that all will be treated alike? Because a special provision of the Interstate Commerce Act permits the Government to obtain reduced rates from carriers on an exclusive basis. Sometimes the Government is given a "blanket special reduction" in rates. Example.-As late as June 1954, one Government agency was using a 1942 tariff for determining rates on shipments in the East, while commercial shippers were obliged to use current tariffs with rates 40 percent or more higher. Users don't like it The commercial users of these public carriers aren't happy about this special privilege for the Government. They point out that any losses the carriers face because of this inequity will eventaully be passed on to them. Example.-A 1952 Senate Commerce Committee report said: "this committee may not ignore convincing evidence presented by the household goods carriers *** wherein lost revenue suffered by the moving industry *** is being passed on to such members of the general public who employ the services of household goods carriers through lawfully filed tariffs." Carriers don't like it Practically every carrier group objects to the practice of exempting Government traffic from regulations applicable to commercial traffic. One danger they recognize is cut-throat competition for a larger share of the tremendous volume of Government business (the Government spent $3 billion for transportation in fiscal 1953). With such an inducement to make concessions, rates may even be quoted that are below the carriers' costs, just to keep the Government as a customer. While some individual carriers may gain in the short-run by competing for Government traffic with nonregulated rates, the carriers stand to lose as a whole. This is because only so much Government traffic is available. Rate reductions do not increase the total volume, but merely redistribute the traffic among different carriers-with an overall loss in revenues. ICC doesn't like it An ICC report to Congress last December on pending transport legislation, in reference to complaints about this Government exemption from rate regulation, said: "In our opinion that dissatisfaction is justified, and we are therefore in favor of amending this section." TAA doesn't like it TAA's Board, a cross section of executives in the agriculture, education, transport, and general business fields, voted in favor of repealing this Government privilege. This followed study of the problem by its 8 advisory panels, with 6 recommending repeal and 2 taking no position. Progressive reductions Since the Interstate Commerce Commission has no jurisdiction over competition for Government traffic, it is powerless to stop what can be called "progressive reductions" in rates such as shown below. Example.-On June 21, 1953, carriers quoted the Government a rate of 150 cents for 100 pounds to move wool and nylon shirts from Anderson, S. C., to |