"In thus deliberately making provision for competition, *** Congress must be supposed to have done so because the public interest required it. That competition is the life of trade is one of the most generally accepted of maxims; among its principal benefits is the protection it gives against extortionate charges."

And in Pan American Bus Lines Operation, 1 M. C. C. 190, 208, the Commission said:

"Nor are we impressed with the idea that a monopoly of motor bus transportation in a section of the country such as this is necessarily desirable. Public regulation can enforce what may be called reasonable standards of safe, continuous, and adequate service, but it can hardly be expected to take the initiative in experimentation and the development of new types of service. In fact the carriers would probably resist regulation in the courts, if it did undertake to follow such a line, on the ground that it was an invasion of managerial prerogatives and discretion. Competition is the best-known spur to such an endeavor and we are not persuaded that Congress intended to eliminate it in the motor bus field any more than in the railroad field."

In Missouri Pacific Transportation Company Extension, 9 M. C. C. 712; 717, the Commission said:

"Turning to applicant's broad argument in behalf of competition. we believe it to be true that within reasonable bounds competition in transportation is in the public interest."

In Santa Fe Trail Stages, Inc., Common Carrier Application, 21 M. C. C. 725, 749, the Commission said:

"Both the courts and this Commission have long recognized that reasonable competition is clearly in the public interest."

The desirability of competition between the different modes of transportation has been clearly established. In Naval Stores From Mississippi to Gulf Ports, 235 I. C. C. 723, 733, the Commission said:

"Healthy competition between different agencies of transportation is undoubtedly in the public interest."

The Commission has shown no hesitancy in promoting competition beneficial to the railroads. Indeed, it is fair to say that the Commission has, as a matter of course, granted authority to and and all railroad applicants for the establishment of coordinated truck-rail service to better enable the railroads to meet truck competition. In Kansas City Southern Transport Co., Inc., Common Carrier Application, 10 M. C. C. 221, 237-238, the Commission said:

"Protestants now meet with the competition of the railway, but, in the case of the merchandise traffic handled in less-than-carload lots, that competition has not been particularly formidable. The railway now proposes to improve the handling of that traffic by establishing a coordinated truck-rail service in connection with applicant. As we have seen, the conclusion is warranted that there is a public need for this coordinated service, that it is a new and different character of service which neither the railroads nor the trucks alone can supply, and that it cannot be furnished effectively and well except through the use of applicants facilities. We do not believe that the development of this new form of service will seriously endanger the operations of protestants, but, in any event, the public ought not to be deprived of the benefit of an improved service merely because it may divert some traffic from other carriers." [Emphasis ours.]

See also Reading Transp. Co. Ext., 47 M. C. C. 225, 227.

And in Atlantic Coast Line Railroad Co. Extension, 30 M. C. C. 490, 492, the Commission said:

*** it may be, as contended, that existing motor-carrier service is adequate, but one competitive carrier or class of carriers has no vested right in the continuation by another of an inefficient method of operation. Rather, we believe it to be the policy of Congress and the proper function of this Commission to foster any form of progress in transportation which will serve the public interest."

The Supreme Court has pointed out that it is the duty of the Commission to guard against monopolies in transportation. In Interstate Commerce Commission v. Parker, 326 U. S. 60, 73, in which the court upheld the authority of the Commission to issue certificates of convenience and necessity to a railroad motor carrier subsidiary, it is stated:

"Protestants, the appellee motor carriers, point out that under this interpretation in every case of an application by a rail carrier or its wholly owned subsidiary, for a certificate of convenience and necessity to operate a motor line

to render service at way-stations, the Commission will have power, under facts and with limitations in the certificate, previously described, to grant the certificate. This is true. It must be expected, however, that the Commission will be as alert to perform its duty in protecting the public in the maintenance of an efficient motor transportation system as it is in protecting the same public in the successful operation of its rail system. The Commission is trusted by Congress to guard against the danger of the development of a transportation monopoly. * * * It has the duty to preserve the inherent advantages of each mode of transportation." [Emphasis ours.]

In its second report on reconsideration in Meiler Ext.-Crude Sulphur, 62 M. C. C. 143, the report of the Commission (148) states:

"Usually it is desirable from the viewpoint of the shipper and in the public interest that competition within reason be encouraged and that there be available to shippers competing modes of transportation, even competing carriers in the same field, but if sound economic conditions in transportation are to be fostered, the advantages of competition must in some instances yield to the needs of the existing carrier or carriers, depending upon the amount of the available traffic and the comparative adequacy of the existing services. *

We agree, of course, that there are many instances in which the existing service (whether rail, motor, or water) may be entirely adequate to fully satisfy a shipper's requirements for that particular form of transport. But does the Commission now intend to espouse the idea that certain shippers and receivers, not presently able to secure motor service, must be forever relegated to the use of rail service only, even though it may be reasonably adequate, while their competitors are able to enjoy the benefits of motor carrier service?

5. Commission Must Preserve Inherent Advantages of Motor Carrier Service

In motor carrier application proceedings such as this, the railroad protestants invariably ask the Commission to hold that their service is adequate to meet the shipper needs. To put it another way, they ask the Commission to find that the motor service proposed is not sufficiently superior to the existing rail service to justify the grant of authority sought. However, when these same railroads seek to reduce their rates below those of their motor competitors, they are the first to bewail the fact that the motor carriers have certain inherent advantages which, they allege, require the proposed reduced rail rates. To quote from a recent brief submitted on behalf of all Class I Railroads in the United States in Ex Parte No. 192-Reduced Rates Under Section 22-Special Filing Rule:

See,

****The railroads, because of service disabilities inherent in rail transportation cannot compete with the motor carriers in large areas of traffic on equal rates. This fact has been amply recognized by the Commission. e. g., Manufactured Tobacco, Va. and N. C. to Official Points, I. & S. 6172 (July 19, 1954). If the railroads are to participate in many types of traffic, they must be able to offer lower rates than the motor carriers so that the service advantages of the motor carriers may be offset. ***” (Rail Brief, p. 22).

The trucking industry is somewhat confused--we think justifiably-to find that in rate proceedings their rail competitors cannot extoll too greatly the inherent advantages which the motor carriers possess over their service, only to find, in application cases, that these same advantages, again according to their rail competitors, have apparently vanished into thin air.

One thing, however, is certain. The Commission is bound by the National Transportation Policy, to preserve the inherent advantages of motor carrier service. We are equally certain that such advantages can hardly be preserved by a refusal to authorize service which would make them available to shippers. Despite this, the trend of recent decisions indicates abandonment of the salutary principle that shippers are entitled to adequate service by motor vehicle, as well as rail. See, for example, the report and order of Division 5 dated December 15, 1954 (served January 11, 1955), in Docket No. MC-110420 (Sub-No. 61)— Quality Milk Service, Inc. Ext.-Molasses In Tank Vehicles (Michigan).

The trend toward protecting the railroads against motor-carrier competition has manifested itself in other recent proceedings. In Kenosha Auto Transport Corp., Extension, 52 M. C. C. 123, 126, the report of Division 5 states:

"We are aware that in connection with numerous applications for authority to operate as a motor carrier in interstate or foreign commerce, it has been found that a shipper is entitled to both motor and rail service. But in so finding, the basic issue has always been whether the public convenience and necessity require a proposed operation. We do not, however, believe that, as a matter of law, a finding of public convenience and necessity must necessarily

follow a showing that there is no existing motor service. Rather, the issue of public convenience and necessity is a question of fact which depends, among other things, on whether existing service is or is not adequate."

See also Hayes Freight Lines, Inc., Extension-Ball Clay, 52 M. C. C. 303, in which the Commission denied motor carrier authority on the ground, among others, that there was "no proof that the present rail service *** is in any manner inadequate," a complete about-face from its earlier holding in that proceeding exactly to the opposite.

We respectfully submit, that the decisions in the Kenosha and Hayes cases, and the Commission's report and order herein, contravene the National Transportation Policy. Analysis of the provisions of that Policy reveals no justification for the promotion or maintenance of a monopoly in favor of any form of transportation. If competition is indeed the "best-known spur" and "within reasonable bounds *** is in the public interest," then the Commission should reexamine and repudiate the doctrine of the last-cited cases.

6. The Commission's Decision Herein Contravenes the National Transportation: Policy

The report of Division 5 herein, we submit, accurately interprets the applicable law in stating that the question of whether a need has been established for the proposed operation "cannot be answered affirmatively if both rail and motorcarrier services are reasonably adequate" (sheet 19). With respect to the evidence adduced to establish a need for motor-carrier service, the Division's report goes on to state (sheets 19-20) that the record in this proceeding shows: (1) That rail service on small shipments has resulted in delay and damage;

(2) That the lack or insufficiency of rail sidings has hampered shippers and receivers of granite;

(3) That shippers have been unable to comply with customer requests for truck service in many instances;

(4) That shippers are faced with the disadvantage of having to compete with producers of granite at other locations which have truck service available;

(5) That the lack of truck service has impeded the shippers' ability to increase sales and expand service;

(6) That the lack of truck service prevents dealers from being able to maintain lower inventories, receive their shipments faster and more often, and meet erection deadlines, especially during peak seasons; and

(7) That the lack of truck service results in more crating than would otherwise be necessary, with resulting loss of both time and money. The Commission's report on reconsideration nowhere indicates that the Division erred in making the findings quoted above. Nevertheless, it concludes (sheet 18) "that the [rail] service presently available is reasonably adequate,” and that the "witnesses' main purpose in supporting the application is to obtain lower rates rather than improved service."

Nothing more need to be said respecting the fundamental error of the Commission's holding that if rail service is "reasonably adequate" motor service should not be authorized. We pass then to consideration of the Commission's conclusion that the witnesses' main purpose in supporting the application is to obtain lower rates.

The finding that the "witnesses' main purpose in supporting the application is to obtain lower rates rather than improved service" and the conclusion reached therefrom that "this is not a proper basis for a grant of authority and the application, therefore, must be denied" (sheets 18-19) are both untenable.

The Commission has a mandate, by virtue of the National Transportation Policy, to promote "adequate, economical, and efficient service and foster sound economic conditions in transportation and among the several carriers * * *.”, It ignored this mandate when it completely disregarded the seven compelling reasons set forth by Division 5 as justifying a grant of authority, and apparently substituted its desire to protect railroad revenues from motor carrier competition for the Congressional admonition referred to. The Commission's conclusion that the shippers supported the application to secure lower rates, is not supported by the record. It is true that the record shows that some shippers accumulate pool car shipments, rather than rely on rail 1-c-l service, for two reasons. One reason, cited at sheet 18 of the Commission's report, is to take advantage of the lower rate for carload shipments. But an equally compelling reason, noted at sheet 14, is that less-carload service is inadequate because of delays and damage to merchandise. The Commission's statement (sheet 18) that

the record warrants the conclusion that the only real fault with rail service is that it is too slow, seems to be based on facts not of record. The positive testimony of the shipper witnesses respecting the many unsatisfactory aspects of rail service were nowhere refuted of record by the rail protestants. In any event, the Commission has not statutory authority to deny shippers the benefit of fast and flexible truck service in order to protect rail revenues against the inroads of truck competition.

The record nowhere indicates that the supporting shippers desire lower rates, as such, as distinguished from cheaper and more adequate transportation service by virtue of lower truckload minimum weights, shipper to dealer movements without intervening loading and unloading, and split delivery service afforded by motor carriers. The Commission's statement that it is well established that a desire for lower rates is not a proper basis for a grant of authority is based on cases wherein the record showed that the applicant's supporting shipper witnesses had available the services of protesting motor carriers, which had not been shown to be inadequate, which is decidedly not the situation here. Thus the general rule cited by the Commission is completely beside the point since it cannot validly be applied herein.

The report in this proceeding demonstrates a mistaken impression as to the Commission's power, as well as its duty, under the Interstate Commerce Act. Where, as here, the inadequacy of existing rail service has been so clearly demonstrated, we think the Commission has a positive duty to grant the authority sought and thus make available to the shipping public the inherent advantages of motor-carrier service. And even if the rail service could more accurately be said to be "reasonably adequate" the National Transportation Policy requires that shippers have made available to them adequate motor vehicle, as well as rail, service. The report seems to indicate that there is something almost reprehensible in a shipper desiring cheaper and faster service; yet the National Transportation Policy, among other things, specifically requires the Commission to promote-not obstruct-“adequate, economical, and efficient service" by the several carriers subject to its jurisdiction.

In D. A. Stickell & Sons, Inc. v. Alton R. Co., 255 I. C. C. 333, 337, the Commission said:

"It is not the province of railroads to determine what markets shall be available to sellers or buyers, or, by the refusal to establish through routes or the maintenance of rate disadvantages, to restrict or circumscribe the opportunities of shippers located on other railroads to sell in markets served by them. It is their function to transport in the channels necessitated by trade conditions and not to fix limitations on commerce. The public interest demands that all shippers be accorded relatively equal opportunities to reach all reasonably available markets."

Paraphrasing the above in the light of the record in this proceeding, it is respectfully contended that it is not the province of the Commission to determine what modes of transportation shall be available to sellers or buyers, or by the refusal to authorize truck service, to restrict or circumscribe the opportunities of shippers to compete in markets by the use of such service. It is its function to see that reasonable competition between the different agencies of transportation is fostered and preserved and not to fix limitations on commerce. The public interest demands that all shippers be accorded relatively equal opportunities to reach all reasonably available markets through utilization of all available transportation agencies. The Commission, Division 4, put the matter succinctly in Leviso River R. Co. Construction, 257 I. C. C. 203, 218:

"Shippers in any territory should not be denied the widest possible choice of markets over the shortest and most economical routes if that can be avoided." The decision herein is contrary to the National Transportation Policy. It promotes inadequate and inefficient rail service, and fails to recognize and preserve the inherent advantages of truck service. It abandons the duty, set forth in Parker, supra, of "protecting the public in the maintenance of an efficient motor transportation system" and promotes, rather than guards against, a transportation monopoly. The Commission should reverse its report and order and affirm the decision of Division 5 herein.

Because of the great importance of the question involved herein, it is requested that this matter be assigned for oral argument before the full Commission.

Respectfully submitted.

AMERICAN TRUCKING ASSOCIATIONS, INC.,
PETER T. BEARDSLEY,
FRITZ R. KAHN,

WASHINGTON 6, D. C., March 9, 1955.

Attorneys.

CERTIFICATE OF SERVICE

I hereby certify that I have this day served the foregoing document upon all parties of record by mailing by first-class mail a copy thereof properly addressed to each party.

Dated at Washington, D. C., this 9th day of March, 1955.

PETER T. BEARDSLEY.

APPENDIX 25

PIERONI, PIERONI, HYNES & DIXON,
MUNCIE. IND., December 1, 1955.

Re ICC regulations governing leases among motor carriers.
Senator JOHN SPARKMAN,

Senate Office Building, Washington, D. C.

DEAR SENATOR: We are attorneys for a number of small motor carriers, among them Indiana Refrigerator Lines, Inc., which serves over 20 States in the transportation of meat and meat products from Muncie, Ind. You may be sure that the interest shown by your Subcommittee on Small Businesses in the discriminatory and devastating regulations recently imposed by the Interstate Commerce Commission on trip leasing and on the leasing of equipment is much appreciated by our clients and by all other carriers dependent upon the right to operate free from such regulations in order to continue rendering adequate service to the public.

For example, the efficient and economical service now rendered by Indiana Refrigerator Lines, Inc., to the meatpacking industry would certainly be jeopardized if the present regulations are permitted to become effective March 1, 1956. This company's present authority is limited to the transportation of packinghouse products from Muncie, Ind., to States in the South and East. including Alabama, incidentally. and is rendering excellent service. The company holds no authority from the ICC to transport any commodities en route back to Muncie, Ind., except certain exempt commodities such as agricultural products. Moreover, the transportation of packinghouse products is erratic, being dependent upon changing market conditions. In order that transportation equip ment and personnel be kept busy trip leasing is indispensable. Furthermore, the company has attempted to obtain additional rights complementary to those it holds but without success.

The situation faced by our client is typical of that in which so many other small carriers rendering excellent service at low cost to the shipper and the public find themselves. Imposition of the ICC regulations in question will not only adversely affect them, but the public will also suffer for lack of the quality of service which it now enjoys.

Accordingly we urge that your committee give this matter every consideration. Very truly yours,

MARIO PIERONI.