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subject to rate regulations or not be subject to rate regulations. I think that is the simple question before you.

We are simply saying that assuming the absence of regulations now existing under section 22, we find it works very well in our administrative processes and so far as we are concerned we are simply trying to bring to your attention the fact that we have earnestly followed this question and attempted to find if rates are being made which would be destructive, which would be too low and otherwise offend the national transportation policy.

We are simply saying that while we have searched diligently we have not found any that fall into that category.

In this Ex parte 192 there was considerable evidence introduced and we prepared a brief in which we analyzed all of the information that was submitted in that record as best we could. Some matters we could not identify, but to the extent we could and in every instance of a section 22 rate which somebody suggested in the record might be too low, in every case it turned out that so far as the earnings of the rate on a per-mile basis or in its relationship to other rates, all follow the pattern of commodity rates.

Mr. Harris. I can appreciate your position because you have the responsibility, that is, within economic principles and policies that you recognize that you are going to get transportation as cheaply as possible.

That is your duty in serving the general public, the people, the taxpayers of this country.

I do not think you are quite as concerned as to how sound the various modes of transportation, or the carriers, are as the Interstate Commerce Commission.

What I was trying to point out here is what seems to me to be a conflict in actual policy within our own Government that has been brought to us today by you as opposed to what the ICC says is necessary for a strong, sound transportation system which we must maintain.

Now, if this system is so good under section 22, works out so well for the shipper, and those who must administer it, what would you think about extending it to everybody else, the commercial shippers and let them see what they can do with it?

Mr. PETERS. Mr. Chairman, I would like to add just a few words.
Mr. HARRIS. Is it in answer to this question?
Mr. PETERS. I think it goes along the same line.

We are not asking for any special rates below what the commercial shipper would be entitled to on similar traffic.

The indication that we are getting something below the level of rates that commerce and industry would require is, I think, subject to a question that has been stated right here on this table today.

On some occasions that might be true. However, we make every effort to justify the proposed rates we ask for. We do not believe that the carriers have given us rates which were noncompensatory.

Mr. Harris. Why do you say, then, that the Government saves money by it?

Mr. PETERS. A compensatory rate does not mean that the Government does not save money. It means that the commodity would have moved on an excessively high rate, a more profitable rate, had we not negotiated.

Mr. HARRIS. Mr. Dolliver. Mr. DOLLIVER, Mr. Chairman, thank you for yielding. I would like to address this question to counsel. In view of the statement you just made a moment ago that the plan under section 22 works out satisfactorily, do you have any statistics or information to show what relationship to rates you have generally secured under section 22, what relation they have to normally charged rates for private shippers ?

Mr. DENNISTON. Again that requires locating a reasonably similar movement. It is not always possible to do that because of differences in mileage.

In other words, the best possible test, of course, would be to find a movement in the same general area with the identical mileage and all other conditions identical. It is true, of course, that all conditions do not always agree, I mean, they are not always identical conditions throughout.

But in this proceeding before the Commission which I referred to, a great many of those rates were analyzed in this brief and there are appendices to the brief and if it would be at all helpful to the committee, we would be glad to supply you with copies of this brief and analysis that are contained there which do show where we could find rates which appeared to be clearly comparable within the time limitations we had in preparing this.

We have shown those. Mr. DOLLIVER. What does that compilation show? Mr. DENNISTON. With all except 1 or perhaps 2 exceptions the rates were either comparable to or higher than the comparable commodity rates that we found.

For example, I will tell you one which I recall at the moment. There is a rate referred to in this record given to the Government under section 22 from, I believe it was, New York to Mechanicsburg, Pa. The rates had been reduced, the published tariff rate. It happened on the identical commodity.

There was a published commodity rate to a point which was 15 miles short of Mechanicsburg. I don't remember the name of the town in Pennsylvania. Pardon me, please, it was 15 miles beyond Mechanicsburg, it was a greater distance.

But the rate there was much lower than the published rate to Mechanicsburg and the section 22 rate actually was higher, a few cents higher than that published rate to the point beyond.

Mr. DOLLIVER. So it was roughly comparable to what the published rate would be?

Mr. DENNISTON. Yes. I believe there were perhaps 1 or 2 in a list of several hundred rates shown which might be questioned and even as to those, of about 3 rates, I believe on 2 of them it was indicated that they discovered they were simply published.

The rate did look low, but it was simply the published rate by the other forms of carriage.

Mr. DOLLIVER. Were you in the Government service during the period when the land-grant rates were in effect?

Mr. DENNISTON. Yes, sir.
Mr. DOLLIVER. That has all been abolished?

Mr. DENNISTON. Yes, sir.

Mr. DOLLIVER. Is there any relationship between the situation that existed then under the so-called land-grant rates and the situation under section 22?

Mr. DENNISTON. I don't see any difference.
Mr. DOLLIVER. You do not see any what?

Mr. DENNISTON. I don't see any difference. Do you mean in connection with the willingness of the carriers to use the quotation method, or just what way did you mean?

Mr. DOLLIVER. It occurs to me that perhaps section 22 is now being used by the Government as a substitute for the land-grant rates.

Mr. DENNISTON. No, sir; I would certainly say that is not true because these comparisons and these earnings studies and everything that have been prepared show to the contrary.

We don't attempt to use it that way.

Now, the section 22's, of course, were used during the land-grant period and when they were issued, of course, they contained a waiver of the land-grant in those quotations and the land-grant did not apply to the quotations when they were issued during that period between 1940 and 1946.

Mr. DOLLIVER. Is it fair to say that your conclusion and that of your associates is that the Government does not gain any undue advantage over other shippers by the use of section 22?

Mr. DENNISTON. Yes, sir; it is very definitely our opinion.
Mr. DOLLIVER. That is all.
Thank you, Mr. Chairman.

Mr. HARRIS. It is a fact, back to this other, that under section 6 of the Interstate Commerce Act, paragraph 3, rates may be published by special permission!

Mr. DENNISTON. Yes, sir.
Mr. HARRIS. In fact, with as little as 1 day's notice ?
Mr. DENNISTON. Yes, sir.

Of course, you first obtain an order from the Commission permitting it, and then it can be done on that short a period ? Mr. Harris. Thank you very much.

We have another witness we have to get to this afternoon. He cannot come back.

Mr. PETERS. Could I tie in that 1 day's notice? That would indicate that we could comply with that as it is.

You must realize, for example, that the Transcontinental Freight Bureau of the railroad only meets quarterly. The other railroad committees meet once a month. That means we just can't do these things overnight.

Mr. HARRIS. I realize your contention is that the Government cannot do business as the regular business people can.

Thank you very much. We are glad to have your interest in this subject.

Mr. George P. Baker, president, Transportation Association of America.


Mr. BAKER. Mr. Chairman, I have with me Harold Hammond, the esecutive vice president of Transportation Association, and Mr. Frank Smith, staff economist.

Mr. HARRIS. We are very glad to welcome you gentlemen. We are
glad to have your testimony.

Would you like the entire statement to be included in the record,
Mr. Baker?
Mr. BAKER. Yes, Mr. Chairman, if we may.
Mr. HARRIS. All right.

Mr. BAKER. My name is George P. Baker. I am professor of transportation of the Harvard Graduate School of Business Administration, Boston, Mass.

I am appearing today as president of the Transportation Association of America, with general offices in Chicago, Ill.

My statement deals with eight provisions in H. R. 6141, a bill containing in legislative language, the recommendations of the President's Cabinet Committee on Transportation Policy.

It also deals specifically with H. R. 525, a bill which advocates the repeal of provisions of section 22 of the Interstate Commerce Act that permit Government traffic to be handled at special, reduced rates that are beyond regulatory control.

It should be emphasized that my remarks should not be construed as an expression of a position on H. R. 6141, as a whole. TAA has felt from the time the published findings of the Cabinet Committee report were first released that the subjects covered therein should be considered on an individual basis, rather than in the omnibus form of this bill.

We have believed this desirable because we do not wish action on constructive and relatively uncontroversial issues held back by the lengthy consideration of very controversial issues. Therefore, our comments should be considered as restricted in application to each of the limited number of specific subjects on which we comment as if each were a separate piece of legislation. We take no position at this time on the other changes proposed in H. R. 6141.

The TAA has 14 policy, positions in addition to the 8 which we are presenting here. They do not deal directly with the specific proposals of H. R. 6141. They are set forth in the pamphlet How To Build a Better Transport System, which we have attached to our testimony solely for your general information.

For the information of the committee, TAA, which was organized in 1935, is a nonprofit research and educational institution, devoting its efforts to the development and implementation of sound national policies aimed at the creation of the strongest possible transportation system under private ownership.

It is an organization of transportation and general business interests of all kinds, including shippers, carriers, and investors, as well

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as individuals such as educators, lawyers, and professional men. As such, it is not concerned with the promotion of one form of transport against another, but seeks to represent what is best in the broad public interest.

In establishing basic policies to guide our overall efforts to strengthen the Nation's transportation system, we have set up a careful procedure to assure fair and thorough consideration of each subject before a final position is taken.

This provides that issues considered by TAA are initially considered by eight special panels of experts representing the following groups:

Users, investors, and air, freight forwarder, highway, pipeline, rail, and water carriers.

A coordinating committee made up of the chairmen and 3 or 4 representatives from each of the panels seeks to reconcile the differences between panel views.

The current makeup of the panels is set forth in the pamphlet TAA Blueprint, attached to our testimony.

Many of these subjects have been discussed over a good many years with us and naturally the panel makeup of the moment is not necessarily that over the past years.

The views of the panels are next reviewed by a noncarrier policy committee of the board, which makes its own recommendations to the board of directors. Before the board acts, however, an opportunity is normally given to the general membership of the association to express its views on any of the issues before it.

The board, which represents a balanced cross section of our general economic system, consisting of approximately 100 members from industry, finance, and agriculture, as well as transportation, then takes final action.

This general procedure was followed in establishing positions on subjects covered in this statement. The careful consideration by the panels of many of the matters dealt with runs back over many years.

In order to give the committee the benefit of the careful study made of these various issues, you will note that we are submitting a record of the action taken. It includes a discussion of the nature of the subject, a description of the action of the various panels on the proposal, the comments of the board's policy committee, or its predecessor policy board, and the final action taken by the board of directors. We have then compared our positions with provisions in H. R. 6141 and in the case of section 22 with H. R. 525 as well.

I will now pass to the first one of the specific positions which is on section 22 that you have just been discussing.

TAA position: The board of directors of the Transportation Association of America, after careful consideration of views of its eight permanent policy formulating panels and policy group, approved the following recommendation:

Provisions of section 22 and related provisions in parts II, III, and IV of the Interstate Commerce Act permitting carriage of Government passengers and property free or at reduced rates be repealed.

As an interpretation of this policy, the board has also approved the following:

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