Mr. HARRIS. Those will be included in the record.

(The tables are as follows:)

TABLE I.-Estimated ton-mile distribution of intercity freight traffic, public and private, in the United States, by kinds of transport agency, 1939–551

1 Excludes coastwise and intercoastal traffic.

2 Steam and electric railroads, including mail and express.

Highway ton-miles include movements between cities and between rural areas and urban areas; ruralto-rural movements, city deliveries and city movements to contiguous suburbs are omitted.

4 United States domestic traffic only.

Excludes 6.4 billion ton-miles in 1953 and 13.1 billion ton-miles in 1954 reported for Atlantic and Gulf Coast rivers not previously covered to maintain comparability with years prior to 1953.

• Preliminary.

7 Estimated by Association of American Railroads on basis of presently available information for each kind of transportation.

Sources: Interstate Commerce Commission, Bureau of Transport Economics and Statistics, Statement No. 544, March 1954; 68th and 69th ICC Annual Reports.

Waterways traffic data are from annual reports of the Chief of Engineers, Department of the Army. Data for 1953 and 1954 are from Corps of Engineers, Waterborne Commerce of the United States, pt. 5.

TABLE II.-Estimated percentage distribution of intercity freight ton-miles, public and private, in the United States, by kinds of transport agency, 1939-55

Estimated by Association of American Railroads on basis of presently available information for each kind of transportation.

Mr. FORT. Table 1 shows in terms of ton-miles the estimated distribution of total intercity freight traffic in this country in each of the years 1939-55. The sources of the figures are indicated in footnotes appearing at the bottom of the table and are, for the most part, publications of the Interstate Commerce Commission and the Chief of Engineers, Department of the Army.

Table II is derived from table 1. It shows the percentage of total traffic carried by each form of transport for each year. I think for a quick glance it is a more significant table than table 1. You will see that during the postwar period, the railroads' share of the total traffic has shown a decrease in every year, falling from 67.3 percent in 1946 to 50 percent in 1955. During the same period the motortruck share of the total traffic has shown a steady and marked increase, rising from 9.1 percent in 1946 to 19.5 percent in 1955. Likewise the share of water carriers on rivers and canals has shown an increase in every year of the 10-year period, moving from 3.1 percent in 1946 to 6.8 percent in 1955.

In other words, the percentage of the trucks has doubled during that period. That is also true of the percentage of the inland water carriers.

Thus the railroads, common-carrier backbone of the national transportation system, are losing in the competitive race for traffic to forms of transportation that are made up predominantly of unregulated private and exempt carriers and that include, in addition, substantial elements of contract carriage that is only partially regulated.

The point I am trying to make, Mr. Chairman, is merely this: I am trying to show you the inroads that private carriage and unregulated carriage are making on common carriage, and one strong indication is that the business of those modes of transportation which include a large percentage of private and unregulated carriage have gained steadily over this period of time in their share of the total traffic, while the railroads which are the primary common carrier have lost.

I used figures very much like this last year for another purpose, but I am trying to show here the inroads of the private and the exempt carriers.

PRIVATE CARRIAGE

Much for-hire transportation is performed under the guise of private carriage and in that way escapes economic regulation. The report of the Presidential Advisory Committee recognizes that—

A primary problem in transportation at present concerns the infringement of private carriers upon the field of common carriage and the need for remedial action in the form of more effective regulation of private carriers or enactment of legislation to delineate more adequately the proper place and status of such carriers.

and that

The problem is created by those practices of private carriers which undermine the common carrier transportation system which must bear the main burden of the Nation's transportation requirements in peace and war.

The problem to which the Advisory Committee refers is not created by what may be called bona fide private carriage. The report makes it quite clear that

Legitimate private carriage is not in issue. The practice of shippers handling their own merchandise is sanctioned legally and is frequently sound economically. But the report emphasizes that

Where so-called private carriage is a subterfuge for engaging in public transportation, it constitutes a growing menace to shippers and carriers alike; is injurious to sound public transportation; promotes discrimination between shippers; and threatens existing rate structures.

The subterfuges employed and the destructive effect of pseudo-private carriage on the common-carrier segment of the transportation industry have been clearly described by the Interstate Commerce Commission. Rather than state facts as being of my own knowledge, I believe I could serve the committee better by calling the commitee's attention to these facts that the Interstate Commerce Commission sets forth in its report. In its 67th annual report, 1953, the Commission said at page 55:

ENCROACHMENT ON PUBLIC TRANSPORTATION ("BUY AND SELL" ACTIVITIES BY PRIVATE CARRIERS)

Merchandising by motortruck, whether actual or pretended, over long distances is increasing to such an extent that it is becoming a major factor in the transportation of freight between distant points. Manufacturers and mercantile establishments, which deliver in their own trucks articles which they manufacture or sell, are increasingly purchasing merchandise at or near their point of delivery and transporting such articles to their own terminal for sale to others. Such transportation is performed for the purpose of receiving compensation for the otherwise empty return of their trucks. Sometimes the purchase and sale is a bona fide merchandising venture. In other cases, arrangements are made with the consignee of such merchandise for the "buy and sell" arrangement in order that the consignee may receive transportation at a reduced cost.

- To an even greater extent, drivers of trucks engaged in transporting exempt commodities in one direction engage in similar transporting of general freight on the return trips. There are also a number of truckowners engaged in such so-called merchandising exclusively, transporting, in both directions, freight which they have purchased for sale at destination. Generally, the "sale" price of the merchandise is the cost at origin plus an amount equal to or slightly below the transportation charges of authorized carriers, either rail or motor. Usually it is difficult, if not impossible, for the Commission to determine whether such transportation is a bona fide merchandising venture or is a subterfuge intended to provide transportation for hire without the required certificate or permit and, of course, without payment of the transportaion tax.

Not only do they escape regulation when they perform public carriage under the guise of private carriage, but they escape the payment of the transportation excise tax.

A large amount of freight which would otherwise move by rail or authorized motor carriers is now being transported by motortruck over long distances under the "buy and sell" arrangements. The Commission has received informal complaints from shippers and authorized carriers concerning such transportation of canned goods from the South to the Midwest and the west coast and from the North to Florida; transportation of meat and meat products from the Midwest to all parts of the country; of fertilizer from Massachusetts to Maine; of various manufactured products from Denver to Cleveland, New York to Detroit, and between numerous other producing and consuming points. Investigations of such complaints rarely produce evidence that would establish in a formal proceeding before the Commission or the courts that the present provisions of the Interstate Commerce Act are being violated.

The existence and expansion of this method of transportation is here called to the attention of Congress because of its possible impact on the national transportation policy to "foster sound economic conditions in transportation and among the several carriers; *** to the end of developing, coordinating, and preserving a national transportation system by water, highway, and rail, as well

as other means, adequate to meet the needs of the commerce of the United States, of the United States, of the postal service, and of the national defense." In instances where this so-called private carriage is a subterfuge for engaging in public transportation, it constitutes a growing menace to shippers and to carriers alike. It is injurious to sound public transportation. It promotes discrimination between shippers and threatens existing rate structures. It was to curb such practices that part II of the Interstate Commerce Act was enacted.

The Commission again referred to this situation in its 68th annual report (1954) saying at page 97 that one of the long-range problems involving regulation of the Nation's motor carriers

** involves the increase in transportation being performed by shippers in equipment which they lease from vehicle owners, and by use of the "buy and sell" method of operation. The latter method involves execution of a bill of sale intended to establish that the property being transported belongs to the owner of the vehicle transporting it and that the transportation, therefore, is private carriage. This method has caused much concern within the regulated transportation industry, and presents a difficult question for us. In fact, both of the methods result in the performance of unlawful for-hire transportation by the vehicle owners, in many cases.

In its latest annual report (69th Annual Report of the Interstate Commerce Commission, November 1, 1955) the Commission spoke again of this matter, as follows:

There are also * many private motor and water carriers, and the competition of such carriers creates increasingly difficult problems for regulated carriers. Because of the lack of effective legislation and adequate means of enforcing present statutes, practices of persons who operate unlawfully in forhire service, such as the "buy and sell" operations discussed in our last report and mentioned later herein, add further to the difficulties of regulated carriers (p. 7).

The "buy and sell" method of operation whereby bills of sale, invoices, et cetera, are issued to make the goods being transported appear to be those of the vehicle owner is *** growing to the extent that a very real enforcement problem exists. In most cases, these * * * practices appear to be only subterfuges whereby vehicle owners perform transportation for compensation without the required operating authority (p. 99).

In its report the Presidential Advisory Committee reached the conclusion that the legitimate role and proper place of private carriage by motor vehicle should be more adequately delineated. The recommendation of the Advisory Committee is stated as follows:

Redefine a private carrier by motor vehicle as any person not included in definition of a common or a contract carrier who transports property of which he is the owner, provided that the property was not acquired for the purpose of such transportation.

The railroads endorse and support the purposes and objectives of this recommendation, as tending toward some measure of relief for regulated common carriers from the destructive competition of various types of unregulated "private carriage" that is actually for-hire transportation and that ought to be recognized as such.

It seems clear, however, that the provisions of H. R. 6141 purporting to accomplish the result intended by the Advisory Committee would not in fact do so. Section 10 (c) of those bills would amend section 203 (a) (17) of the Interstate Commerce Act in such a way as to redefine the term "private carrier of property by motor vehicle" along the lines proposed in the report; but redefinition of the term "private carrier of property by motor vehicle" would not appear to accomplish

regulation of fictitious or pseudo-private carriage. Private carriers do not appear to be exempt from economic regulations under present law because they fall within this definition, but rather because they do not fall within the definition of either common or contract carrier in section 203 (a) (14) and (15). The term "private carrier" seems to be defined in the present law only for the purpose of describing those carriers, other than common and contract carriers, whose operations may be controlled by the Interstate Commerce Commission as to safety, hours of service, and related matters referred to in section 204 (a) (3) of the act.

Hence the new definition of a private carrier contained in the pending bills, so far as we can see, would not serve to extend economic regulation to any carriers not now subject thereto. Its only effect would be in matters of safety regulation.

The Interstate Commerce Commission has also taken occasion to remark on this, saying in its written comments on H. R. 6141, sent to the chairman of the House Committee on Interstate and Foreign Commerce under date of December 22, 1955, that—

** the amendments, as proposed, would not accomplish the objectives the draftsman had in mind **

The Commission, in its written comments on the bill, discussed at some length the

problems involved in this matter of unauthorized transportation for compensation by persons claiming to be private carriers

and expressed itself as being in general agreement with the purposes of the amendments proposed in that regard in H. R. 6141. It came forward, however, with certain amendatory language of its own— as a means of tightening up the interpretation and the administering of the act with respect to persons who, under the guise of operating as private carriers, or pretending not to be carriers of any kind, actually are transporting for compensation.

We agree with the Interstate Commerce Commission, as we do with the Advisory Committee, that for-hire carriage performed under the guise of subterfuge of private carriage ought to be restrained or regulated.

CONTRACT CARRIERS

Contract carriers are defined in the Interstate Commerce Act as persons, other than common carriers, which, under individual contracts or agreements, engage in interstate transportation by motor vehicle or water for compensation. Because of less restrictive requirements for entry into the transportation field and of the relative ease with which their operations may subsequently be expanded and enlarged, many of them have become competitors of and substitutes for common carriers.

The report of the Presidential Advisory Committee recognizes that: These contract carriers are taking substantial blocks of traffic in their service areas through excessive numbers of shipper contracts constituting in effect common carriage

and makes reference to the development of

an area of conflict between certain motor contract carriers and competing motor and rail common carriers over whether the contract carriers are not, in many instances, actually performing a common carrier service.