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to do with the depression of the freight rate structure which governs the movement of such commodities.

The Commission, which is an arm of Congress, has assumed that it is the will of Congress for us to enforce the provisions of the Interstate Commerce Act so as to preserve these rate structures that underwrite the economy of regulated carriers. If it is an evil for rates on agricultural commodities to be reasonable, just, nonprejudicial and nonpreferential, that evil, we believe, should be corrected under the rate-making provisions of the Interstate Commerce Act and not indirectly by allowing serious inroads to be made on such rate structures by large areas of exempt movement. It seems to us to be a greater evil to continue the drift toward such indirect deregulation than to impose a Commission trip-lease rule on itinerant truckers who imperil the rate structure and the safety of our citizens.

Although these persons who are engaged in transportation of general commodities without certificates or permits sometimes haul agricultural commodities, exempt commodities, when not shipped by rail cr authorized motor carriers, are usually transported by carriers who specialize in such transportation. Such carriers, for economic reasons, usually do not trip-lease their trucks to authorized carriers. Reports from our field staff state that they usually either return empty, return with other exempt commodities, or carry property which they have purchased, as private carriers. The prohibition against an authorized carrier permitting such truckowners to transport under their certificate or permit for short terms will affect some of the exempt truckers. There is no doubt about it.

As I have stated, because of the lack of knowledge of the readjustments which would be required, and to allow time for such readjustments, we provided that trip leasing of agricultural trucks might continue for 6 months after it was forbidden for other owner-drivers.

I will interpolate and say if it can be represented to the Commission on a basis of a record of facts, such as we are required to entertain under the laws that the Congress has enacted, when these regulations become effective, that they do work an unwarranted hardship on transportation or upon a shipping community, the Commission will be glad to have another look at them at that time.

If experience should prove that agriculture is adversely affected to an unwarranted degree, we can modify the regulations. We believe this decision should be left in the hands of an expert Commission. Your committee has been engaged for several years in a study of the general transportation situation, with a view to determining what legislation, if any, is needed to place the Nation's transportation plan on a sounder basis. We made an investigation of one phase of the operations of one branch of transportation. We held extensive hearings and made extensive factual and statistical studies. We decided, from the evidence, that proper regulation required that certain practices be adopted by motor carriers which desired to use vehicles which they did not own. We decided that, in most cases, these practices could not or would not be observed where the transportation was turned over to owners of vehicles under arrangements for short periods, such as a single trip. The courts, including the Supreme Court, have sustained our right to make this determination under the evidence. We believe that enactment of this bill will be contrary to the objectives of your committee in the study on which you have spent so much time.

We can adopt, and have adopted, regulations which, if observed, will assure that transportation by authorized carriers will be in accordance with that found to be needed by the public. But it would take an army of inspectors to see that such regulations were observed, if authorized carriers are permitted, without limitation, to continue to turn over their transportation to owner-drivers for single trips. It is admittedly impossible for a carrier to assure itself of the condition of the vehicle, the ability of the driver, or the observance of its or our regulations during operation, in the case of a vehicle with driver hired for a single trip. No staff which has been or should be available to us is sufficiently large to obtain enforcements of necessary regulations if trip leasing, with its admitted evils, is permitted to continue unrestricted.

Before closing, I would like to call attention to one technical feature of the bill. Section 207.4 (a) (5) of our regulations provides that the compensation paid for leased vehicles shall not be computed on the basis of a division of the rate or the revenue earned by the vehicle during the lease. The reason for this is shown in the evidence and the report. The bill before you provides that the Commission shall not regulate the amount of compensation paid for use of a nonowned vehicle.

I suppose there was a feeling on the part of the proponents of this bill that the Commission might find some means of defeating the intent of the 30-day provision of the bill through this finance provision if it were not also inserted.

At the hearings before the House committee, the proponents of the bill stated that they had no objection to our regulation on this subject, but wanted to anticipate the possibility that the Commission might defeat trip leasing by limiting the amount of compensation.

Nevertheless, in the hearings and in the debate, it was stated by Members of Congress that the bill would prohibit this particular regulation. Although the Commission may, itself, desire to modify this regulation, it seems desirable to say that, if the present wording stands, the Commission will interpret it in accordance with its wording and the stated purpose of its proponents as not prohibiting the adoption of section 204.7 (a) (5).

In conclusion, I may state that the Commission recommends that this bill do not pass.

Senator GRISWOLD. Mr. Knudson, on page 3, at the close of the first paragraph, you refer to the fact that if the House bill passes, a great volume of traffic will thereby be released from the type of regulation which the Congress had in mind when it enacted the Motor Carrier Act of 1935.

Actually, if the House bill passes, it will operate under approximately the present conditions. It is the going into effect of this regulation that is going to change the present situation, is it not?

Mr. KNUDSON. No; I do not think I quite made my point clear. What I am suggesting is, if the House bill passes, it will be a green light, the way we view it, for the haulers of exempt commodities to expand their trip-leasing operations under present unregulated conditions.

It that happens, there will be a substantial diversion, in our opinion, of traffic that now moves by regulated carriers to these uncontrolled carriers to the economic detriment of the regulated carriers; and if

the trip-lease carriers are not put under some safety restraints, it will be to the detriment of the citizenry of this country, as far as safety, is concerned. That is what I meant to say.

Senator GRISWOLD. On page 5, the second paragraph, you refer to the fact that, "We have steadfastly refused to extend this same exemption to itinerant haulers of agricultural," and so forth. Actually, they have had this exemption that we are discussing, have they not? They have been able to trip lease on the back haul?

Mr. KNUDSON. That, of course, refers to our refusal under the leasing regulations in the course that they have taken through the Commission and through the courts and back to the Commission on petitions for reconsideration. The Commission has reviewed all of the arguments, and takes a solid stand in that respect.

Senator GRISWOLD. Thank you; that is all.

Mr. KNUDSON. Thank you, Mr. Senator. If I am wanted back, I will come at a moment's notice. We have an argument going at which I should be in attendance. I am going to excuse myself at this time, if I may

Senator GRISWOLD. Thank you very much. I believe the next witness is Mr. Howell Ellis.

STATEMENT OF HOWELL ELLIS, ON BEHALF OF MOTOR CARRIERS LEASING CONFERENCE

Mr. ELLIS. My name is Howell Ellis. I am an attorney at law. I reside in Indianapolis, Ind. I was, for approximately 10 years, a member and chairman of the public service commission of my State, a regulatory body similar to that in other States of the country having to do with transportation and utility problems. For the past 20 years I have been in the private practice of law, principally representing motor carriers in proceedings before the Interstate Commerce Commission and in the Federal courts.

I, also during that period of time, have been called upon as a transportation consultant by the State legislatures in a number of States, recently in the State of Illinois, where a new bit of legislation regulating motor carriers was adopted.

In those capacities, I have not been representing clients, but was invited by members of the Illinois State Senate to appear.

I make reference to this not to recount my experiences but to supplement what has been said by the gentlemen of agriculture in regard to the practices of the several States in regard to this leasing situation.

If the attitude of the States, as expressed by their lawmaking bodies through the United States, has any bearing upon this situation, I may say, from my own personal knowledge, an effort has been made in the last few years in virtually every State in the Union to obtain legislative fiat, by law in the several States, similar to the regulations of the Interstate Commerce Commission applicable to interstate commerce, and in each instance, to my knowledge, the question has fallen upon deaf ears and the State legislatures have refused to adopt any such legislation.

I have prepared a statement, a portion of which would be somewhat repetitious.

Senator GRISWOLD. You are not inferring, Mr. Ellis, that the members of the legislature are more intelligent than the Members of the Congress?

Mr. ELLIS. No, sir, Your Honor, I do not believe that. We believe they will pass the present bill. That is our hope.

Senator GRISWOLD. I have served more time in the legislature than I have in Congress, so you can say whatever you want to.

Mr. ELLIS. I have prepared a statement to which I want to make reference. Some portions of it might be repetitious of some of the matters that the agricultural gentlemen have presented, and in that event, I will omit it.

The proposed legislation authorizes the Interstate Commerce Commission to regulate the leasing of motor-vehicle equipment by authorized motor carriers, but limits the powers granted in connection with matters involving managerial discretion.

While the original bill was satisfactory to the Motor Carriers Leasing Conference, and is supported by it, we now respectfully request the Senate committee to approve the measure in the form in which it was passed by the House, without any change or amendment whatsoever thereto, because the measure, as approved by the House, completely remedies the situation which the legislation is designed to

correct.

This conference, by its counsel, appeared and participated in the hearings before the House committee by the testimony of Howell Ellis, of Indianapolis, Ind., and Milton E. Diehl, of Washington, D. C., and by a supplemental statement filed at the conclusion of the hearings with the permission of the committee. The supplemental statement discusses and, we believe, completely refutes arguments made against the proposed legislation before the House committee.

The statement cites the reference to our participation in the House proceedings, and request that the Senate committee give such consideration as it sees fit to those records made there.

The Motor Carriers Leasing Conference is an organization composed of 21 class I motor-vehicle common carriers engaged in transporting property in interstate and foreign commerce under certificates of public convenience and necessity heretofore granted to such carriers by the Interstate Commerce Commission.

The members of said conference are as follows:

A. C. E. Transportation Co., Inc., Akron, Ohio.

The Akron-Chicago Transportation Co., Inc., Akron, Ohio.
All States Freight, Inc., Akron, Ohio.

Chicago Express, Inc., New York. N. Y.

Continental Transportation Lines, Inc., Pittsburgh, Pa.
Cooper-Jarrett, Inc., Chicago, Ill.

Dixie Ohio Express Co., Akron, Ohio.

Eastern Motor Express, Inc., Terre Haute, Ind.

Interstate Motor Freight System, Grand Rapids, Mich.
Kelleher Motor Freight Lines, Inc., St. Louis, Mo.

Kramer Bros. Freight Lines, Inc., Detroit, Mich.

Liberty Motor Freight Lines, Inc., Secaucus, N. J.

Long Transportation Co., Detroit, Mich.

Mid-States Freight Lines, Inc., Topeka, Kans.
Midwest Freight Forwarding Co., Chicago, Ill.

Motor Cargo, Inc., Akron, Ohio.

Roadway Express, Inc., Akron, Ohio.

Spector Motor Service, Inc., Chicago, Ill.

Summit Fast Freight, Inc., Akron, Ohio.

Transamerican Freight Lines, Inc., Detroit, Mich.
Yankee Lines, Inc., Akron, Ohio.

The members of this conference operate in 31 States and the District of Columbia, as follows: Alabama, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin, serving all of the principal cities and towns and most of the smaller ones in said territory. While their operations are conducted over all of the territory authorized by the Interstate Commerce Commission, the major portion of the operations of most of the members of this conference are East-West, between the Atlantic seaboard on the one hand, and the Midwest and intermediate territory north of the Ohio and Potomac Rivers, on the other hand.

These carriers have an investment in excess of $61 million in motorvehicle equipment, terminals, and other properties dedicated to the public use and necessary for the conduct of their businesses. They serve thousands of shippers at thousands of points, including the most highly industrialized sections of the United States.

The conference was organized in July 1951, with its present membership, and has actively engaged itself in consideration of the problems of leasing motor-vehicle equipment continuously since. The officers of this conference are: D. P. Kipp, Detroit, Mich., chairman; Owen Orr, Akron, Ohio, treasurer; and Milton E. Harris, Pittsburgh, Pa., secretary, all of whom are also executives of large trucking companies. The conference has an executive committee of 6, 3 of such members being the officers of said conference and serving as members of the executive committee ex officio. A responsible executive of each of the 21 members of said conference has been named as the regular representative of said carriers to participate in and attend meetings of said conference.

While the members of this conference own a substantial portion of the equipment operated by them, they engage in the practice of leasing motor-vehicle equipment for both long and short periods of time and certain of the members of this conference at times interchange equipment with other certificated motor carriers. Many of the lease agreements, both long- and short-term, provide for payment of the lease rental on the basis of a percentage of the revenue earned by the vehicle while under lease, a long-established practice of the industry, and highly beneficial to all concerned.

I want to pause a moment to refer to something that I understood to be said by Commissioner Knudson a moment ago. It is no place here, I assume, to debate the intent or meaning of this bill, but it is our belief that it prohibits the Interstate Commerce Commission from making the regulation in regard to the method of compensation in the lease, which I understand their representative now to say they propose to continue to do, anyway.

That regulation not only applies to trip leasing, but to all of these long-term leases, and as I say later in my statement, if this bill is not passed, leasing on both long-term and short-term will be a thing of

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