Norton, Lilly & Co., 208 South La Salle Kerr Steamship Co., 208 South La Salle LaSalle St., Chicago 4, Ill., R. L. Kohl. Fabre Line, care of James W. Elwell & Montship Lines Ltd., care of Great Senator WILEY. I might say at this time that any person who wishes copies of this hearing may obtain them by writing to the Senate Foreign Relations Committee, United States Capitol, Washington, D. C. The next witness is Herbert H. Naujoks, counsel, Great Lakes Harbors Association. (No response.) Senator WILEY. All right, George H. Weiss, chairman, Great Lakes Overseas Freight Conferences. Mr. COHEN. Mr. Senator, Mr. Weiss' secretary came down and stated that it would be impossible for him to testify today. Senator WILEY. Has he a written statement? Mr. COHEN. He didn't leave any, sir. Senator WILEY. If he has, he may send it in for the record. Mr. Chartrand, of the Chicago Board of Trade, who was called yesterday but was not here, is now present and would like to present his statement. All right, Mr. Chartrand. STATEMENT OF J. S. CHARTRAND, MANAGER, TRANSPORTATION DEPARTMENT, BOARD OF TRADE OF THE CITY OF CHICAGO Mr. CHARTRAND. Gentlemen, following the suggestion of Senator Mansfield, since my presentation went almost entirely to the discrimination by the Interstate Commerce Commission under the issuance of service order 914, I assume you would just like to have the statement read into the record. It follows pretty much what has been said before. Senator WILEY. You are very accommodating, sir. That is very kind of you. If you will hand the statement, sir, to the reporter, it will be incorporated in the record. Mr. CHARTRAND. Yes, sir. Senator MANSFIELD. May I say, Mr. Chartrand, all these statements which are in their record will be given thorough and complete study by the committee itself, and the staff as well; and, speaking personally, I have been very much impressed this morning by all of the witnesses. I think collectively they have given us a pretty good picture of the situation here. They have mentioned nice things about the seaway, and they have also brought up difficulties which they foresee, not only at the present time but in the future as well, so we are indebted to all the witnesses for the time and effort they put in their testimony and presented to the committee this morning. Mr. CHARTRAND. Thank you, sir. Senator WILEY. I want to join in that statement, that we are very grateful for the sense of cooperation that has been manifested here. (Mr. Chartrand's prepared statement is as follows:) STATEMENT OF J. S. CHARTRAnd, Manager, TRANSPORTATION DEPARTMENT, Board OF TRADE OF THE CITY OF CHICAGO Gentlemen, the Board of Trade of the City of Chicago, as the largest grain market in the world, has a vital interest in the free-time allowances that might be accorded by the carriers on export traffic. By the end of 1956, there will be in operation 10 elevators located on the water with an aggregate capacity of over 55 million bushels. The potential of the port of Chicago as a grain exporting center might be gaged by the success of the port of New Orleans in com parison. The public grain elevator at the port of New Orleans, for the fiscal year ending June 30, 1956, handled a record movement of grain for export. A total of over 90 million bushels was exported in 420 outgoing vessels-an average of 35 ships per month, all through a single 5 million bushel house-or a turnover of 18 times its capacity. If Chicago did half this business at each elevator, a half billion bushels would be handled requiring the unloading of over 250,000 boxcars-tripling the total grain receipts at this market. The port of Chicago will serve an agricultural producing area stretching from Oklahoma to the Canadian border, and as far west as the State of Idaho. This segment of our agriculture yields about 72 percent of the Nation's grain-producing ability. Thus the advantages offered by the St. Lawrence seaway and the efficiency of Chicago as a first-class port will have far-reaching benefits. It would be amiss to create a vast connecting link between the Midwest and the rest of the world and then hamper in any way the free flow of foreign commerce through the lake ports. Investments are being made by industry here running into the hundreds of millions of dollars expecting a fluid port position in the free movement of all commodities. The rail carriers are willing and the need present. There is no reason why a stumbling block should be put in the way of reasonable free time on export traffic. Insofar as the present controversy is concerned we respectfully submit that the rail carriers originally issued tariffs to become effective on April 20, 1956, providing for 7 days' free time on export traffic at the port of Chicago on all commodities. The tariffs were suspended by the Interstate Commerce Commission under docket No. 6568. Due to the apparent objection by the Commission to bulk commodities inclusion in these tariffs, the rail carriers withdrew them and reissued the items in another supplement providing for 6 days' free time on export of general commodities, effective June 15, 1956, similar to the maximum allowed under service order 912 effective April 23, 1956. Our friends here in Chicago had urged upon us to permit the reissuance of the tariff provision without the inclusion of bulk commodities in order to facilitate the publication of necessary free time on the exportation of general commodities. In the spirit of cooperation, we agreed to such a procedure, but not without a feeling that the interstate Commerce Commission had prejudged, ex parte, the free-time requirements that should be accorded bulk commodities, including grain. We had no quarrel with the free-time allowances at other ports and did not want to stir up any unpleasantries. That same feeling is carried forward regarding the manner in which the Commission rejected the reissued supplements involving free-time allowance on general commodities. It might be said at this point, that the grain trade is vitally interested in the treatment accorded general commodities since grain furnishes the bottom cargo or ballast for higher revenue general commodities that might be utilized in completing the cargo, to our mutual advantage. On 1 day prior to the effective date of the reissued supplement, June 15, 1956, the Interstate Commerce Commission issued its service order 914 limiting the maximum free time to 2 days at the Great Lakes ports. The reissued supplement was rejected since it allegedly contravened the provisions of this service order. Service order 914 was issued under the emergency powers enumerated in section 1 (15) of the Interstate Commerce Act which contemplates that: "Emergency requiring immediate action exists" and "will best promote the service in the interest of the public and the commerce of the people ***." The effect of an exercise of such emergency power is to "suspend the operation of any or all rules, regulations, or practices *** for such time as may be determined by the Commission ***" In our opinion, it is not to be used for the rejection of tariffs filed with the Commission in full compliance with the law, but can suspend the operation of those tariffs for the period of the emergency. The carriers had no opportunity to justify the tariffs as provided by the act. this amounts to an arbitrary exercise of administrative power in rejecting a tariff filed in full compliance with the law because it runs contra to an emergency order. The emergency may cease to exist tomorrow. If so, the port of Chicago is still without reasonable free-time allowance on export traffic and the carriers must again file an exact replica of the reissued supplement which will become effective on statutory notice, if uncontested. To us, The foregoing is without regard to the discriminatory manner in which the service order was issued; namely, directed solely to the Great Lakes ports. The preamble of the service order states "in the opinion of the Commission, an emergency exists at all ports of the country requiring immediate action to promote car service ***." [Italics ours.] Yet the mandatory provisions directed to the rail carriers were: "No common carrier or carriers by railroad * * * shall allow, grant, or permit more than 2 days' free time on any car loaded with freight for export *** held for unloading at any Great Lakes port ***.” If there were delays in unloading freight for export throughout the country, how could the national situation be corrected by directing an ultimatum against the Great Lakes ports alone? In our opinion, the correction of this matter is not by legislative action. The Interstate Commerce Commission has and should have adequate powers to regulate commerce, including control over car supply and distribution but those powers should be exercised equitably and after full hearing as required by the act and the due process clause of the Constitution of the United States. As the matter now stands, a formal complaint has been filed with the Interstate Commerce Commission alleging that rail carriers have unlawfully discriminated against the port of Chicago. Realistically, that is not the situation at all. The carriers, realizing the need for adequate free time at the port of Chicago, filed tariffs with the Commission fulfilling that need. The complaint, in effect, is directed against the Interstate Commerce Commission who must hear complaints properly filed by members of the shipping public. Unfortunately it brings into focus free-time allowances at ports throughout the Nation. In the ultimate end, the due process requirements of the Constitution of the United States will be met, but at a much later date and with a shift of the burden of proof upon the shipper complainant and interveners in their behalf. If the reissued tariffs had been properly suspended and proceeded to hearing, the rail carriers would have gone forward to justify the additional free time found necessary by them in the beginning. It is unfortunate indeed that this matter was handled in this manner, and we hope that opportunity will be presented to submit our full story as to why the Great Lakes ports should have reasonable free time on export traffic. We thank you for the opportunity of appearing and presenting our views on this subject. Senator WILEY. Mr. Naujoks, how long a statement do you have? STATEMENT OF HERBERT H. NAUJOKS, COUNSEL, GREAT LAKES HARBORS ASSOCIATION Mr. NAUJOKS. It is very short, two pages, but I would be very happy to just put it into the record. It is on behalf of John C. Beukema, who was unable to come. But I would just like to add one thing of importance. Senator WILEY. Proceed. Mr. NAUJOKS. Thank you. Senator MANSFIELD. Sit down, Mr. Naujoks. OPPOSITION TO INCREASED DIVERSION FROM GREAT LAKES Mr. NAUJOKS. Thank you. The Great Lakes Harbors Association wants to reaffirm its unalterable opposition to increased diversion from the Great Lakes to the Chicago drainage canal over and above the amount fixed by the United States Supreme Court decree of April 21, 1930. Mr. Beukema wanted me to add that to the statement. NEEDS OF SMALL PORTS I also want to say I have been asked by F. Ward Just, chairman of the Waukegan Port District, to represent him in his absence, and simply to make this statement: That he would like to have this committee give consideration to the needs and wants of the small ports as well as to the large ports such as Chicago, Detroit, Toledo, Buffalo, and others. In other words, he feels that the small ports bear the same relationship to the big ports as small business does to the big corporate busi ness. That is all. Thank you. Senator WILEY. I thank you very much. Senator MANSFIELD. May I ask a question? Senator MANSFIELD. This statement you are presenting is in behalf of Mr. John C. Beukema, is it? Mr. NAUJOKS. Yes, sir. Senator MANSFIELD. Isn't there a Beukema on the seaway commission? Mr. NAUJOKS. It is the same gentleman. Senator MANSFIELD. Thank you. ISSUE OF DIVERSION OF WATER FROM GREAT LAKES Senator DIRKSEN. Mr. Chairman, before Mr. Naujoks leaves, I simply should observe that I heard all of his testimony before the Public Works Committee— Mr. NAUJOKS. Yes, sir; you did, sir. Senator DIRKSEN. On the diversion issue at the time I testified, but notwithstanding the statement of Mr. Naujoks, the subcommittee and the full committee did report the bill, and it was passed by the Congress. Mr. NAUJOKS. And vetoed by the President. Senator DIRKSEN. That is right. Mr. NAUJOKS. That is right. Senator WILEY. I will order this statement into the record. (The statement referred to is as follows:) STATEMENT OF JOHN C. BEUKEMA, PRESIDENT, GREAT LAKES HARBORS ASSOCIATION The Great Lakes Harbors Association is an organization of municipalities, port commissions, and private marine interests located on the Great Lakes. Its primary function is the development of the several ports on the Great Lakes and the maritime commerce thereof. The association was organized in 1921 and has had a continuing existence since then. The association by its executive committee respectfully presents the following recommendations on legislation to your honorable committee. I. SEAWAY CONSTRUCTION The construction program to open the Great Lakes and the several ports thereof to world trade has been logically divided into three segments, as follows: (1) Construction of the St. Lawrence seaway. (2) Deepening of connecting channels in the Detroit, St. Clair, and St. Marys Rivers and Lake St. Clair to a uniform depth of 27 feet-the standard St. Lawrence seaway depth. (3) Improvement of harbors and channels. Congress has made provisions for the first two. The present need is continuing appropriations during the progress of construction. This hearing will undoubtedly develop testimony as to need for further authorization of funds for the seaway project due to increased construction costs. Work on the connecting channels in the upper Great Lakes is scheduled for completion by 1962. Inasmuch as the seaway will be completed in the fall of 1958 this schedule should be rigidly adhered to, if not advanced, in order that our major ports on the |