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Eighteen years of issuing certificates without accurate knowledge of the quantum and extent of existing rights is quite enough. A complete survey of existing authorities should be made. Dependable tests to determine whether existing service is adequate should be devised. The statutory phrase, "public convenience and necessity," should be invested with a definite meaning. The time has come, in my opinion, when we must take a good hard look at what has been done and, possibly with the aid or under the compulsion of additional legislation, we must establish a solid policy for the future.

Important loopholes in the present act require the attention of Congress. The first is the lack of a proper delineation of the place and status of the private carrier. Congress has been advised of the effects of private transportation running rampant. There is an immediate need for a careful study of what can be done about illegitimate operations in this field.

The next important loophole is leasing. The Commission has been attempting to plug this hole. The effects of carriers' and shippers' policy of drift, of exchanging temporary for long-term advantages, and lack of a constructive interest in transportation as a whole are well illustrated in the divided viewpoints of common carriers before the Commission and Congress on this subject. The need for curbing trip leasing is abundantly clear, but we find selfish seeking of private gain put above the needs of the public as a whole. In saying this I do not minimize the fact that there are lives at stake as well as matters of good transportation economics.

The third major loophole is exempt transportation. The Commission, prodded in some instances by court decisions, has given the exemption provisions of the motor carrier part of the act about as broad an interpretation as the most determined advocate could hope for. The linkage between exempt transportation, leasing, and private transportation is making a veritable hodgepodge out of our transportation system. If regulated carriers believe something should be done about the motor exemptions, they must appreciate at the outset that changes in the statute will come only after the most convincing proof of where the public interest lies. If there were now a united front among common carriers on these problems, the job of effectively placing the problem and possible solutions before Congress would be vastly simplified.

Now, I don't want what I have said here today to be misunderstood. The common carriers of this country have available and have acquired to the extent possible the finest mechanical facilities and equipment in the world. They have demonstrated a real and definite interest and confidence in the future. There is much to praise in the progress made by them, especially during the past several years.

Donald K. David, dean of the Harvard School of Business Administration, said recently that we shall not be able to "preserve our form of enterprise over the next 30 years by simply praising it." He went on to say: "The public, educated in part by business itself, has come to expect private business to act in the public interest. * * * Wise regulation does not choke competition; it drives it into new channels."

Mr. David also properly observed that some managements have found the way to reconcile their self-interest and the national interest; and that in order to preserve and strengthen the system in which we believe, all industry, in addition to being soundly competitive, must produce a satisfactory social entity and a constructive entity in the national whole.

In my judgment, to achieve such an objective not only should each element of our transportation system unselfishly dedicate itself to that end, but there must be a climate of cooperation and understanding by every segment of the public to foster it.

This is the business philosophy which the transportation industry needs. Insofar as you yourselves play a part in bringing it about, you will have made a great contribution not only to your industry but to the Nation.

The CHAIRMAN. We will adjourn at this time until 10 a. m. on Monday, June 7, 1954, in this same room.

(Whereupon, at 12:25 p. m., the committee recessed until 10 a. m., Monday, June 7, 1954.)

AMENDMENT TO INTERSTATE COMMERCE ACT

(Trip Leasing)

MONDAY, JUNE 7, 1954

UNITED STATES SENATE,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C. The committee met at 10 a. m., pursuant to recess, in room G-16 of the Capitol, Senator John W. Bricker, chairman, presiding. Present: Senators Bricker (chairman), Duff, Payne, Bowring and Monroney.

Also present: Bertram O. Wissman, chief clerk; and E. R. Jelsma, transportation specialist.

The CHAIRMAN. The committee will come to order.

The first witness this morning we have on the list is Mr. Markowitz. He was here before.

Good morning.

Mr. MARKOWITZ. Good morning.

The CHAIRMAN. You may proceed.

STATEMENT OF ALEXANDER MARKOWITZ, VICE PRESIDENT AND GENERAL TRAFFIC MANAGER, HELM'S NEW YORK-PITTSBURGH MOTOR EXPRESS, INC., PITTSBURGH, PA.

Mr. MARKOWITZ. Thank you.

My name is Alexander Markowitz, and I reside at Pittsburgh, Pa. I am vice president and general manager of a large class I motor common carrier subject to the jurisdiction of the Interstate Commerce Commission.

In making my presentation here today before your committee, I speak for a number of additional carriers of the same type whose names are of record in your proceeding, and I have served on this committee already several written statements. Copies of such statements will be furnished to all parties who appear here orally, and I have some copies with me for those who may care to receive one.

We are strongly and seriously opposed to the bill because it appears to us that 18 years of stabilizing influence of the Motor Carrier Act, part II of the Interstate Commerce Act, would be disregarded and conditions set back to where they were before 1935, that is, before the regulations began.

The for-hire motor carrier common industry is not a subordinate endeavor. It is an economic factor in the welfare of the American people. It is the second or third largest employer of labor in America. It is an important lifeline in the commerce and industry of the country.

We are sorry to observe that our agricultural friends have wrongly identified this measure before you with their interests.

Although I have read the bill and reread it, I can't find any single passage in it, any part of it or the whole of it, which would in any way benefit any farmer, farm organization or cooperative in any possible fashion.

We believe the Interstate Commerce Commission has done all it can to pursue the interests of the farm organizations and our agricultural friends in their further orders in the leasing investigation under date of November 30. We believe that is all the agricultural interests, as good American citizens and a part of our form of government, can reasonably expect to receive. We think they are wrong in attempting to force this legislation down our throats-and by "our throats" I mean the legitimate motor, common and contract, carriers with investments, which investments have been made in the public interest, under certificates granted by the Interstate Commerce Commission, or permits, as the case may be, after proof of public convenience and necessity, or for public interest.

The for-hire motor industry does not support this bill.

No one has appeared before you yet which can state that the position of the for-hire motor industry favors this legislation.

The American Trucking Association abandoned its position before the Interstate Commerce Commission after the Supreme Court ruling that leasing was a satisfactory undertaking. The contract carriers opposed it entirely.

I have before me a clipping which shows that the common carriers will now ask for time to appear before you to oppose this legislation. Without referring to the merits of it, they will simply contend, as I read the article before me, that the place for this particular dispute or discussion is before the Interstate Commerce Commission and not before the Congress of the United States, that this kind of legislation is against the public interest.

The small group of for-hire carriers who have favored this measure do not speak for our industry.

Private carriers appear to wish to further breach the line between private and for-hire transportation. They believe that this may be à device to reduce their cost of operation, permitting them to compete further with motor common carriers and increase their opportunities for profit on their supposedly private operation-in other words, the piggy back on the for-hire carrier-and I refer you specifically to the statement which was submitted to you at your last meeting, which I attended, and was distributed here by Mr. C. B. Culpepper, secretary and general manager of the Atlanta Freight Bureau, and also appearing for the Atlanta Paper Co., a shipper. Mr. Culpepper frankly admitted the private operations of his company were unprofitable and couldn't be maintained without the right to trip-lease for hire carriers on the return.

I believe one of the Senators, possibly yourself, Mr. Chairman, commented that this bill could not be treated as an exemption for regulation for all kinds of interests.

I believe there was some discussion, too, that the bill might have to be limited to agricultural interests in order to prevent that type of operation.

If a paper company can operate a private truck on the theory that after the operation begins privately it can be turned into something else for the purpose of promoting it or making a profit from it, then the transportation regulation pattern is certainly receiving a very severe setback in this bill; and I see nothing in the bill that would prevent a paper company or a shipper of anything, whether he was an agricultural shipper or not, from engaging in private transportation partly and fastening himself to the for-hire industry in an effort to make such operations profitable on return hauls.

This bill has a demoralizing influence.

Trip leasing, if it were legalized, would fasten the door at the heart of the for-hire industry that would eventually serve to destroy it. Revenue methods of payment have caused great discrimination, and if legalized the Commission would be powerless to deal with them or make other provisions of the act work.

In our opinion, the Supreme Court decision did outlaw one-way trip leasing. It stated clearly that the agricultural exemption was not intended to be used as a device to promote that practice by relying upon return loads from certificated carriers. We have specific suggestions to make to the Interstate Commerce Commission at the hearings which will begin next Monday morning, and this committee has been supplied with advance copies of my direct testimony, which includes specific suggestions as to how bona fide trip leasing can be made to work and one-way trip leasing, which is the thing we are condemning, can be used to destroy the certificating provisions of the act; and if you will refer to copies of that direct testimony which, as I say, has been distributed to members of your committee, you will find the specific example.

The CHAIRMAN. Has it been made a part of the record?

Mr. MARKOWITZ. Yes; it has been made a part of the record. It was introduced here the last time I appeared.

If you want to know what kind of arrangements between lease operators and shippers may be unlawful and would result in the destruction about which I am telling you, you are respectfully referred to an Interstate Commerce Commission decision, docket No. MCC-1188, known and identified as Abbott Truck Line, Inc., and others, investigations of operations.

If you are interested in the difficulties of enforcing the other provisions of the act, it is suggested that the members of the Florida Railroad and Public Utilities Commission have sought the assistance of the Interstate Commerce Commission to prevent, and at a conference on December 10, 1953, here in Washington, tried to deal with, the method of brokers making arrangements between shippers and leased operators to circumvent provisions of both the State and the Interstate Commerce Acts.

I understand the Florida area is the source of much of the agitation for the present bill.

I wouldn't care to warn you to this effect, but I would state now if the bill were passed those conditions would grow much worse and the Florida Railroad Commission and the shippers in Florida who are interested in sound transportation policy would find their path that much harder.

If you wish to observe an example of the destruction, total destruction, of the rate structure, follow the Interstate Commerce Commis

sion's investigation now pending covering iron and steel rates throughout official territory, both rail and truck, in docket MCC-1510, and a number of cases that have been consolidated with it.

These cases and proceedings and investigations have nearly overwhelmed the Commission. They have set the railroads against the trucking industry and truckers against each other in a continuously mounting rate war.

Percentage-of-revenue payment is the heart of the gypsy method of operation. Without it, it can't exist.

The question is as to whether the Interstate Commerce Commission would be making a lawful move in abolishing it and prohibiting it. I respectfully refer you to an order of the Public Utilities Commission of Ohio, Administrative Order 144, issued February 1, 1953, specifically outlawing percentage-of-revenue payment.

If the sovereign State of Ohio can outlaw this method of paying gypsy operators, so can the Federal Government.

The Interstate Commerce Commission was within its rights in outlawing it, and this Congress should not under any conditions legislate an unlawful result into legal practice.

Such practices are possible only with the one-way trip lease.

The group of operators whom I represent have been in a desperate set of circumstances as this practice has grown over the period of years. Some of them have been compelled to set up so-called divisions. A division is a device now to make use of trip-leased operators. Where no other method of obtaining the traffic is satisfactory, where costs make it prohibitive to cut rates, where it is impossible to use company-owned equipment and where the traffic is getting away from us, we are going over to the gypsy and forming so-called divisions for the handling, for example, of iron and steel articles.

Many of the motor carriers in the Middle West now have so-called iron and steel divisions, which are nothing more than a special collection of gypsy trucks for the purpose of transporting that class of traffic, traffic which they cannot afford to transport on company-owned equipment.

My attention was recently called to a situation where a paint manufacturer at Wooster, Ohio, had a truck report to his dock asking for a load of paint to go to Clearwater, Fla. The shipper raised some questions as to whose truck it was and was told to mind his own business.

It became evident that there is a load of exempt material which moved to some point in the vicinity of Wooster and that this gypsy operator, whoever he was, was presenting himself with a load of paint under a guise of a so-called lease to the consignee at Clearwater, Fla. Rate wars between the different forms of transportation already begun will become worse.

In some respects this also creates a condition in the United States which the States themselves at least have been fighting against with the aid of the Federal Government and that is the development of what I will call a highway slum.

These gypsy trucks are contributing to the most monstrous conditions in the United States, and they are promoting highway slums all over the country.

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