The project was long delayed because of the bitter and effective opposition of the eastern trunkline railroads, and eastern and southern ports, and their allied maritime interests.

Gratified though we are by the approaching completion of the seaway project, any realistic appraisal indicates that traffic moving over the St. Lawrence seaway will be confronted with vigorous competition from the same sources who so long opposed the project from its very inception.

In particular, we anticipate that every competitive device available to the eastern trunkline railroads will be employed to thwart the full development of the St. Lawrence seaway, and to divert or destroy the traffic which it will generate, particularly the high-grade general cargo traffic for which ports and carriers vigorously compete.

The Government of the United States will have a vital interest in maintaining a fair and equitable competitive situation between the various groups affected by the opening of the St. Lawrence seaway. The Government will be interested in its governmental capacity, and also in a proprietary capacity, as the owner and operator of the seaway navigation works, with the congressional mandate that the seaway project shall be self-liquidating by the assessment of reasonable tolls on ships and cargo which use the waterway.

Vigorous competition is in the American tradition, but it must be fair and equitable competition. All traffic which may naturally and freely move via the St. Lawrence seaway should and must be permitted to move without artificial impediment, undue discrimination, or destructive rate competition.

INTERSTATE COMMERCE COMMISSION SERVICE ORDER NO. 914

As an example of the problems which may beset the seaway and Great Lakes ports, we refer to Service Order No. 914 of the Interstate Commerce Commission issued June 14, 1956.

Since 1950, the city of Milwaukee and other Lake Michigan groups have tried to persuade western trunkline railroads to grant to Lake Michigan ports free time on railroad cars carrying export_traffic, comparable to the demurrage allowances granted the seaboard ports. For many years past, Atlantic and gulf ports have enjoyed 7 days free time on rail cars carrying export freight for interchange with ocean carriers. On the Pacific coast, 10 days free time has been allowed by rail carriers, with up to 20 days free time allowed on certain categories of bulk traffic.

In contrast, all lake ports have been rigidly held to the domestic demurrage basis, with only 2 days free time allowed, and with heavy demurrage penalties on export cars after the second day.

After more than 6 years of effort, western rail lines serving Chicago, Milwaukee and Green Bay areas, in 1956 agreed to liberalize their demurrage tariffs to provide 7 days free time on export cars at west bank Lake Michigan ports. This action was taken by the rail carriers in recognition of the growth of Lake Michigan ports as rising ocean ports of growing importance.

Agreeable to concurring with car conservation orders of the Interstate Commerce Commission, the western rail lines subsequently modified their tariffs to provide for 6 days free time at west bank Lake Michigan ports, a vast improvement over the 2-day limitation

previously in effect. The tariffs were published to take effect J 15, 1956.

Early in June 1956 eight eastern trunkline railroads petitioned Interstate Commerce Commission to suspend the liberalized dem rage tariffs published by the western railroads. The Interstate C merce Commission placed this petition on file.

However, the opposition of the eastern railroads obviously had effect on the Interstate Commerce Commission. Without adva notice, and without opportunity for hearing, the Interstate Comm Commission on the night of June 14 published Service Order No. 9 suspending the liberalized demurrage tariffs of the western railro and ordering that free time at Great Lakes ports be limited to 2 da The ICC stated that its action was taken in the interest of conse ing car supply. However, its Service Order No. 912 permitted rail carriers at Atlantic, gulf, and Pacific ports to allow 6 days f time on export cars.

We are asked to believe that the national car shortage is of suc magnitude that cars may be safely detained without penalty fo days at seaboard ports, but only for 2 days at lake ports. There is obvious fallacy, in that cars moving to lake ports ordinarily repres much shorter line hauls, and much more rapid car turnover, than long-haul traffic moving to seaboard.

We believe that ICC Service Order No. 914 is patently discrimi tory against lake ports. The city of Milwaukee and the State Wisconsin have petitioned the Interstate Commerce Commission reconsideration and public hearing of order 914.

We propose to seek all remedies available to us for the correcti of a ruling which we believe to be prejudicial, unfair and discrimi tory.

We have outlined this problem in some detail because it provides current and important example of the problems which may lie ahe in the keenly competitive atmosphere which the St. Lawrence seaw will intensify. The competition for trade between various sectio of the country may be keenly intensified with the opening of t

seaway.

The point is that the Great Lakes region expects, and is prepar to meet, keen, but fair, competition. Frankly, however, it did n expect to have the added burden of restrictive action by an agen of the United States Government, which is presumed to regulate, a not to create, competitive advantages between groups of intersta carriers.

If the commerce which would freely and naturally seek to move v St. Lawrence seaway is to be harassed by unfair competitive device and if equity cannot be secured from the agency created by the Co gress to regulate transportation competition, we shall have no r course except to lay the facts before Congress as they develop, an to seek appropriate legislation to correct competitive evils which ma lie over the horizon.

With this in mind, we are especially grateful to the distinguishe members of this subcommittee, and to the Senate Foreign Relation Committee, for having given to the Great Lakes region this sul stantial evidence of present and continuing interest of the Congre in the development of the Great Lakes region.

We hope and believe that the Congress will retain its interest, so encouragingly evidenced to us during the past several years by the enactment of the St. Lawrence seaway bill, the measure for deepening of Great Lakes connecting channels, the survey of lake harbors, and other allied legislation.

FUTURE OF GREAT LAKES REGION

It is almost exactly 100 years since iron ore began to flow from Lake Superior to the lower Great Lakes. The wedding of iron ore, limestone, coal, and water transportation, have made the Great Lakes region the most significant industrial area in the world.

Its industrial economy is immensely enriched by its proximity to the agricultural heartland of America. The cities of the lake region have been fittingly described as "urban islands in a sea of grain." With the opening of the St. Lawrence seaway and the completion of other great improvement projects authorized by Congress, we foresee for the Great Lakes region a brilliant economic future, with new opportunities and new responsibilities in the fields of agriculture, industry, and transportation.

With vastly improved transportation facilities, with rapid growth of population, and with the constant development of natural resources of the middle western region, north and south of the international boundary, we foresee for the lake region, a favorable industrial climate, with opportunities for industry and agriculture beyond our present comprehension.

We ask that Congress and the Federal Government follow these possibilities with the interest and sympathetic consideration shown by the present Congress, and in particular by the members of this subcommittee.

We hope that from time to time we may have the privilege of reviewing current problems and progress with committees of the Congress, as we have been privileged to do today. With the benevolent interest and assistance of the Congress, we are confident that public and private enterprise throughout the Great Lakes region and throughout the Middle West will work cooperatively and harmoniously to achieve the highest and best development of this significant region, the true destiny of which is only beginning to approach realization.

Senator WILEY. Thank you very much. Please give Harry our best regards, and tell him we enjoyed and profited from his statement. Miss MCCARTHY. Thank you, Mr. Chairman.

Senator MANSFIELD. Mr. Chairman, may I just compliment Miss McCarthy on the splendid statement and say I am glad to note in stating it that a prophet is not without honor in his own country.

Miss MCCARTHY. Thank you. I would be happy to answer questions, if you have any.

Senator DIRKSEN. I first conferred with my distinguished colleague from Wisconsin, because I was going to raise a question about the diversion issue, but he says that is rather irrelevant to this hearing and, besides, he thought it ought to be addressed to Mr. Brockel,

SO

Miss MCCARTHY. I had looked for one from you, Senator Dirksen, on diversion.

Senator DIRKSEN (continuing). So I thought I would defer i Senator WILEY. I would agree that the President made it rat irrelevant at this time to this hearing. [Laughter.]

The committee expects to carry on until 1 o'clock this afternoon necessary. We suggest that any long reports or statements wh could be shortened for oral presentation be put in their entirety i the record.

Many of the statements might be simply in confirmation of what have had before.

That is not said with any purpose of interfering with the rig of any witness, however.

Senator MANSFIELD. Mr. Chairman, again may I interrupt to st that this is the customary procedure before committees, and the w nesses can be assured that their full statements will be incorporat in the record and studied very seriously by the committee and staff.

Senator WILEY. Thank you, Senator.

Our next witness is Thomas H. Coulter, chief executive offic Chicago Association of Commerce and Industry. We are glad to see you, sir.

STATEMENT OF THOMAS H. COULTER, CHIEF EXECUTIVE OFFICE CHICAGO ASSOCIATION OF COMMERCE AND INDUSTRY

Mr. COULTER. Mr. Chairman, Senator Dirksen, Senator Mansfiel good morning.

My name is Thomas H. Coulter. My address is 1 North La Sal Street, Chicago, Ill. I am chief executive officer of the Chica Association of Commerce and Industry, and appear here today behalf of that organization.

CHICAGO ASSOCIATION OF COMMERCE AND INDUSTRY

The Chicago Association of Commerce and Industry is a volu tary organization of individuals, firms, and organizations organize and existing under the laws of the State of Illinois. It has mo than 5,000 members. The total number of individuals identified wit our association activities is 8,775.

Through committees and permanent staff, these individuals joi together to work in improving the city's commercial, industrial, an civic operations. While the name of my organization is the Chicag Association of Commerce and Industry, it functions as the chambe of commerce for the Chicago metropolitan area.

The association works to promote the business of the Chicago are and of its members by improving transportation services and rates for further developing Chicago's many advantages as a business lo cation and for improved business laws which form the framewor within which Chicago business operates.

The association works also, continuously and effectively, to mak Chicago a better place in which to live. Its range of civic activitie is wide, including carefully planned and executed programs for physi cal changes in the community, such as slum clearance and redevelop ment, street traffic, parking and zoning; for more efficient operations

methods and procedures in local and State government, and for improvement in social welfare, public education and safety.

The association was founded in 1904. Funds to carry on its operations come from membership dues paid by Chicago business firms and professional men and women. About 1,800 members serve on a wide variety of permanent or special committees. Each committee is composed of people chosen for their standing in the community and for their wide knowledge in some particular field of business or civic endeavor.

An example of this committee activity is the work of our harbors and waterways committee and our transportation committee to improve Chicago's transportation facilities by air, highway, railroad, and waterway.

EFFECT OF SEAWAY ON THE MIDWEST AND CHICAGO

I should like first to make a general statement on the St. Lawrence seaway; its effect on the Midwest and the Chicago metropolitan area. Construction of the St. Lawrence seaway, together with the deepening of the Great Lakes connecting channels, will be of great economic importance to the Midwest and the Chicago metropolitan area. Although small ships now used by exporters and importers through Chicago and other Great Lakes ports offer considerable savings in transportation costs, the use of larger vessels will make possible even greater economies.

These economies can and will be passed on to the shippers and receivers of freight in the form of lower transportation costs per ton. The net result of these lower transportation costs will be that Midwestern shippers will be in a better position than they are today to compete in the world market.

Because of this improved competitive position, the Midwest's export and import trade is expected to grow substantially. As this trade grows, Chicago's trade will also grow almost in direct proportion.

Even with the present 14-foot channel in the St. Lawrence River and the small ships now being used, Chicago's export and import traffic continues to grow rapidly. In 1950, 80 foreign ships called at the port of Chicago, transporting the total of 87,128 tons of import and export traffic.

In 1955 this had increased to 252 calls, and tonnage transported increased to 213,895 tons. It is estimated that within 5 years after the seaway has been completed, export and import tonnage through the port of Chicago will amount to 1.5 million tons annually.

Senator MANSFIELD. Mr. Coulter, in addition to the Canadian ships listed as foreign ships, what other foreign flags put in to Chicago? Mr. COULTER. Norway, Sweden, Denmark, Germany; I believe France and Britain this year. There are, I think

Senator MANSFIELD. That is a good indication of the prominence of the port of Chicago

Mr. COULTER. That is a very good cross section.

Senator MANSFIELD (continuing). In terms of tonnage, and it indicates a bright future, especially when the seaway is completed. Mr. COULTER. Yes, sir.

It is difficult to estimate the improvement to Chicago's economic and commercial growth from the St. Lawrence development consid