the risk and part of the loss, if any, to another, the importance of any form of leasing would be diminished and its economic advantage would accrue to the operator only under optimum circumstances. We are uncompromisingly opposed to changing this particular regulation one iota. It is the heart of the matter, deals a direct and telling blow to the practices of gypsying and leasing against the public interest, removes the private and unlawful gain sought thereby, and upon its retention stands the whole keystone of regulation of motor carriers in the public interest. If modified, emasculated, or removed, he keystone would crumble, the regulation fall. Sections 216 (c) and 216 (f) of part II of the Interstate Commerce Act reserve the division of through rates to certificated carriers maintaining and filing through rates with each other under tariffs lawfully on file with the Interstate Commerce Commission. Such privilege is exclusive and may not be lawfully extended to noncarriers. Rates and charges so filed must be lawful, just and otherwise reasonable. They must be established and maintained under honest, economical, and efficient management and must bear some relationship to legitimate costs. The proposal to continue the practices which the rule proposes to outlaw is the very antithesis of every one of these requirements of the law. We submit that every such arrangement is a violation of section 216 (c) or 216 (f), and must be discontinued. Examples of the way in which such arrangements serve to promote destructive competitive practices, violate the national transportation policy, and affect a reasonable level of rates and charges that are nondiscriminatory, that are mintained by carriers that do not engage in these practices, is to be found in a series of events and proceedings which have taken place, in which that practice was the direct cause of deterioration of transportation services and just and reasonable charges for motor-carrier service. It has promoted rate wars between motor carriers and between motor carriers, railroads, and other forms of transportation. In 1950, the rail carriers faced by increasing competition from this form of transportation, represented in rates that reflected a basis of payment to tripleased gypsies upon payment of a percentage of the revenues earned from the load instituted wholesale reductions in the rates on iron and steel articles. Motor carrier conferences and groups composed principally of operators owning their own equipment protested in vain. The rail carriers were able to point to tariffs in which the rates based on these trip-leased gypsies and payment to them upon a percentage of revenue could be found, and the reductions were not suspended. But this was not to be the end. By 1954, the struggle for this particular class of traffic had reached vast proportions and, recently, the Commission instituted a general investigation of all motor and rail rates on this class of traffic in No. MC-C-1510, 1629, and No. 31487, now pending. On March 26, 1954, the rail carriers were again able to institute still further reductions because of the inroads into their traffic that this type of arrangement had made. Motor carriers operating their own equipment stood by practically helpless, while they watched their iron and steel traffic nearly destroyed as rates gravitated almost daily to a lower level, and the use of trip-leased gypsies increased upon the percentage of revenue method of payment which made still further reductions possible. Some, in desperation, started so-called steel-hauling divisions of their own in which company-owned equipment was not used, but tripleased gypsies were employed and paid upon a percentage of revenue without regard to the level of the rate for whatever they would take, so long as that amount was less than the very low and completely noncompensatory rates established for that kind of service. Such gypsy equipment could be and was deliberately overloaded to produce a profit to both parties, and the practice of having the gypsy pay the fine when he was caught overloaded became general. The rates themselves were published upon a minimum weight far in excess of what could lawfully be loaded upon a single vehicle. New Jersey authorities arrested 1 such driver who was found to weight 120,000 pounds, twice the State limit. Indiana authorities have arrested such drivers transporting payloads of 70,000 pounds. Percentage of revenue payment, overloading practices, and unlawfulness all go hand in hand. Percentage of revenue method of payment creates unlawful combinations of motor carrier services in violation of section 5 of the Interstate Commerce Act, brokerage operations that are not licensed under part II of the act, introduces third parties into transportation transactions which the law contemplates be completed between two directly interested parties, namely, shipper and carrier. Payments of all kinds, that are questionable and may be rebates, are made for obtaining loads, brokering loads, arranging for equipment, leasing operating authorities without permission, splitting fees, and other devices to introduce parties to such a transaction that have no business in it, and whose activities are beyond the Commission's regulation. Truck stops or terminals often operated in conjunction with gasoline stations, exempt commodity shippers and carriers, and other types of highway or office depots have sprung up in which such transactions are arranged for a fee. Often the parties directly interested in the transportation never meet each other, and the arrangements are completed through a third party broker. As long as the total amount of such payments or percentages do not exceed 70, 80, or 90 percent of the revenue, as the case may be, the certificated carrier having a load to transport and availing himself of such services, has no further interest in the owner-operator. He shops the market with his load and, sometimes the other way around, he is solicited by the owner-operator who knows where the load is. The ceiling on the transaction is the rate the shipper will pay. At the one end is the carrier who holds a certificate but owns no transportation, at the other, the owner-operator who will accept much less than is paid for transporting it and, in between, the middleman who brokers the whole operation for a fee. We submit that transportation contemplated under part II of the Interstate Commerce Act does not contemplate that type of arrangement. Another example of the wrecking of a rate structure, first, on iron and steel articles, which so many gypsies handle because it is easy to take care of, moves only in straight loads and offers an opportunity to engage in unlimited one-way trip leasing, and then on other important commodities by the payment of a percentage of the revenue may be found in the transportation of canned goods. The Commission is now engaged in a general investigation, both truck and rail, on such commodities because of rate wars between motor carriers and with railroads for this class of traffic. Thirty-seven times in the past 5 years, the rail carriers have blitzed the truck rates on heavy volume loading traffic, which motor carriers engaging in trip leasing and payment of a percentage of the revenue have reduced to the point where they were no longer compensatory to carriers owning and operating their own equipment. Among the articles so treated to date have been included hard-surfaced floor coverings, candy, brass and bronze, aluminum, roofing and building materials, sugar, soap, lard compounds, cleaning compounds, and others. In each and every case, the motorcarrier bureaus seeking suspension of the reductions, which were substantially below the rates of their own members, have been faced with the defense of the rail carriers based on the lowest published tariff rates, without regard to the value of the service or the type of carrier handling it. In nearly every case, these wholesale and unwarranted reductions, which represent a continuing and mounting rate war between the motor carriers and railroads, have begun by the indiscriminate cutting of rates among the motor carriers and, in nearly all such cases, the proponents of these cuts have been engaged in the practices of trip leasing and payment to owner-operators upon a percentage of revenue. A combination of motor carriage was instituted during 1952 by a group of persons utilizing unlimited facilities of one-way trip leased owner-operators, without obtaining the Commission's approval under section 5, through an arrangement whereby 4 different persons holding certificates banded together and published rates on a lower basis than was generally established by carriers owning and operating equipment. One such certificate is the subject of revocation proceedings before the Public Utilities Commission of Ohio, another is the subject of investigation by the Interstate Commerce Commission as is the arrangement among them. Their headquarters is a small warehouse building in a western Pennsylvania city at which location not a single truck or tractor or any way of maintaining such equipment is to be found. The facilities consist solely of an office in which paperwork is done, settling accounts with the trip-leased owner-operators who are compensated on a percentage of revenue or a per ton basis, which is always lower than the rate charged. This carrier group has been cited for dozens of violations of certificate rights, unlawful operation, and has been convicted and fined for violations of the Interstate Commerce Act. Pressure from shippers to meet the rates on iron and steel articles set up by this group resulted in a loss of most of the business to it, before the carriers previously handling the business were forced to make an 8-cent-per-100-pounds reduction in their rates from Pittsburgh to New York which, among other things, helped to precipitate a rate war and resulted in the investigations now being conducted. The same pressures occurred in connection with the handling of this material at Baltimore, Md., and Buffalo, N. Y. Eastern Central Motor Carriers Association, Inc., traiff 15-J, containing commodity rates, is replete with examples of rate reductions on heavy-loading volume traffic designed to meet the competition of trip-leased operators, paying on a percentage of revenue, with heavy losses accruing to the motor-carrier participants in such tariffs, setting up pressures for still further reductions at other points as well. This tariff is a specific example of the direct effect of the use of trip-leased gypsies and payments to them related to the revenue for the load. This same group of carriers is now desperately seeking some way of recouping the losses incurred in handling such traffic by seeking substantial increases in their less-than-truckload class rates, thus setting up discriminations against smaller shippers. The pattern is repeated in many places. Tariffs of a similar nature may be found by referring to Central States Motor Freight Bureau tariff 280-D, Middle Atlantic Conference tariff S-60-D, and others too numerous to mention. There is a direct connection between payment to leased operators upon a percentage of the revenue to rate wars between the motor carriers, and between them and other forms of transportation, and which give rise to destructive competitive practices, deliberate discrimination and violations of the national transportation policy. Until the proposed rule is strengthened and enforced, until the compensation for leased equipment is completely divorced from any relationship to the revenues received by the carrier, these practices will continue and grow worse. The authorities charged with enforcing all of the provisions of the act will find it increasingly difficult, if not impossible, to perform their duties satisfactorily. No exemption of any kind for anyone, under any circumstances, deviation from or modification to the present rule in any form should be permitted. It goes to the heart of the gypsying problem, and without it the problem cannot be solved. COUNTY OF ALLEGHENY, VERIFICATION Commonwealth of Pennsylvania, ss: Alexander Markowitz, being duly sworn, deposes and says that he has read the foregoing statements, which constitute his testimony in this proceeding, that they are true as stated, except as to matters and things, if any, stated upon belief, and that as to those matters and things, he believes them to be true. ALEXANDER MARKOWITZ, Subscribed in my presence and sworn to before me by the affiant above-named this 1st day of May, 1954. PROPOSAL FOR NEW PARAGRAPH TO BE ADDED TO SECTION 207.4 (a) (3) oF THE RULES AND REGULATIONS PRESCRIBED BY THE COMMISSION'S ORDER OF MAY 8, 1951, IN THE ABOVE ENTITLED PROCEEDING. (New paragraph :) Provided, however, That equipment specified in may be utilized by authorized carriers under contracts, leases or other arrangements applying for one round-trip which may be completed in one or more days, and which is defined to mean that the vehicle and the driver shall continue to be the liability and responsibility of the leasing carrier, whether such vehicle is loaded or not until the return of the vehicle and the driver to the point of the beginning of the trip, or to a point in the commercial zone of such place, or within 10 miles thereof. Provided further, That equipment which is leased for a period of 30 days or more may be operated in the manner described in the section of these rules, under which a period of not less than 30 days is specified. Provided further, That nothing contained herein shall be construed as inconsistent with the provisions of the Commission's order of November 30, 1953, with respect to equipment specified in section 203 (b) 4 (a) (5) and (6) of the act, or in other exemptions or rules promulgated by the Commission in this proceeding. EXHIBIT B QUEENIE CAPAZOLLI APPLICATION, HEARD At Pittsburgh, Pa., NOVEMBER 16, 1953, MC-112450, SUB No. 1 Record, page 8: Q. Now will you tell the examiner just what services you are performing? A. Hauling butter from Fairmont Foods to Boston, Worcester, and New York under a trip-lease arrangement with Atlantic Freight Lines and Liberty Motor Freight Lines. Q. How long has your trip-lease been in existence with Atlantic Freight Lines hauling butter? A. It was made for one trip but I have been hauling it since March 31, 1949. Record, page 11: Q. You, yourself, hold no interstate commerce authority; do you? A. I do not. Q. When you haul these shipments eastbound to these New England States and to New York, what do you bring back? A. Exempt-products commodities, you know, produce for these brokers. Q. Now, Mr. Capazolli, does the Atlantic Freight Lines tell you when to spot your trailer at Fairmont Foods? A. No, sir. Q. Who does? A. I do. Q. You do what? A. I call them up and tell them there is a load of butter going, and I go and pick up my leases and go and pick up the load and deliver it. Record, page 13: Q. But who notifies you that the butter is available? A. Fairmont Foods. Record, page 20: Q. Do you know whether or not Liberty Motor Freight Lines has the right to serve Pittsburgh? A. They seem to be; they are leasing me. Q. (By the Examiner) Answer the question. A. I don't dig into their rights. They advertise service into the New England States. Q. Your answer is "No"-you don't know? A. I don't know. Record, page 21: Q. Is it a fact that you do not communicate with them any time whenever Fairmont calls you for a load? A. Communicate with whom? Q. You do not talk to Liberty at all? A. Only when the load goes. I call Liberty and tell them there is a load going to Boston. Q. Is it a fact that Fairmont calls you and not Liberty; is that not right? A. That is correct. Q. Is it a fact that Fairmont calls you and not Atlantic Freight Lines? A. That is correct. Record, page 22: Q. Except for payment to Liberty and Atlantic Freight Lines, do you take care of all the rest of the details in connection with the handling of these shipments? A. I do. Record, page 31: Q. When you lease to Atlantic and Liberty, how do you arrange to be paid? Do you get so much per mile? A. No; 75 percent of the revenue. EXAMINER. You get the full revenue on the exempt commodities? A. The brokers only take out 10 percent. don't chop it like those freight lines. Q. Who pays the turnpike charges? Some take out 7 percent. They EXHIBIT C The following was received from the Motor Carrier's Council, New Haven, Conn., and is reproduced for the information and guidance of our membership: FBI RELEASE D JANUARY 8, 1954. Re Herbert Frederick Link, with aliases-fugitive. Theft from interstate shipment On December 10, 1949, Herbert Frederick Link drove a tractor and trailer owned by others from Brooklyn, N. Y., to Hartford, Conn. The trailer contained furniture on consignment from New York to retail furniture stores in the Connecticut area. Link made some deliveries in Connecticut and collected 2 c. o. d. deliveries in cash, which totaled $193.36. In addition, Link disposed of $435.30 worth of the furniture and converted both sums to his own use. Link's only known occupation is that of truckdriver. He has been employed by numerous trucking concerns, always for short periods of time. During some of these employments, Link has either altered or forged signatures on numerous company expense checks. On several occasions he has abandoned trucks which were later recovered with the contents missing. A complaint was filed before a United States Commissioner at Hartford, Conn., on November 9, 1950, charging Link with a violation of title 18, United States Code, sections 659 and 660, the theft from interstate shipment statute. On September 4, 1952, an indictment was returned by a Federal grand jury at New Haven, Conn., charging Link with violating title 18, United States Code, sections 659 and 660, for having embezzled property and cash receipts from property constituting a shipment moving in interstate commerce. The following is a description of Link: Name: Herbert Frederick Link Aliases: Frank Carlson, A. Enzman, Frank Link, P. Herbert Link, Robert Alexander Link, W. F. Link, David W. Querry, John P. Ryan, Frank R. Williams, J. W. Williams, "Buster," "Fat Stuff." Race: White Age: 31 Date of birth: January 1, 1922 Place of birth: Somerville, Mass. Height and weight: 6 feet 11⁄2 inches, 192 to 235 pounds Complexion: Medium Hair and eyes: Light brown, blue Build: Heavy Scars and marks: 1-inch scar under right eye; appendix scar; 6-inch scar on right leg; scar on left index finger, right knee, and left leg Tattoos: Left forearm, "Mother," "Mary"; left bicep, "Dot"; right forearm, "Father"; right bicep, "June" Occupation: Truckdriver Characteristics: Left-handed; fast talker, loud and boisterous Social-security number: 016-12-6922 Please furnish any information which may assist in locating this individual to the Director, Federal Bureau of Investigation, Washington 25, D. C., or to the special agent in charge of the nearest FBI division as listed in your local phone directory. The CHAIRMAN. The next one is a statement of Angus McDonald, assistant legislative secretary of the National Farmers Union. (The statement submitted by Mr. Angus McDonald is as follows:) STATEMENT OF ANGUS MCDONALD, ASSISTANT LEGISLATIVE SECRETARY, NATIONAL FARMERS UNION Members of the committee, since my testimony in regard to E. R. 3203 has already been presented to this committee and since it is our desire to cooperate in every way possible by expediting these hearings, I will not introduce any material which is already either in the House or Senate records. I wish, however, to call the attention of the committee to certain changes which have come |