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reason to believe that it might go further afield in matters of competitive regulation within transportation, and it was to one of those elements that I addressed myself.
Mr. HALE. I think that is all, Mr. Chairman.
Mr. DOLLIVER. Mr. Thompson, it is quite clear that you represent only the inland and not the coastal waterways.
Mr. THOMPSON. That is true.
Mr. DOLLIVER. Likewise, the concern you have about the Cabinet Committee report is that if this proposed legislation is enacted into law, it will open the door for destructive competition by the railroads as against the inland waterways. Is that correct?
Mr. THOMPSON. Yes, sir; on a selective basis.
Mr. DOLLIVER. You feel very apprehensive that this legislation, if it is enacted, will put a lot of your people out of business?
Mr. THOMPSON. Yes, sir; and I might add, Mr. Dolliver, that we have, in the inland waterways, felt the lash.
Felt the lash of rate cutting which has been even practiced under existing law where waterborne commerce has been dried up by or as a result of rate cutting, by rail carriers, and we think this legislation will give the rail carriers a legal license to go out and cut rates to the extent that water transportation in many sections of the country will be destroyed.
Mr. DOLLIVER. Well, of course, you are in direct competition with the railroads, yourself.
Mr. THOMPSON. Yes, sir.
Mr. THOMPSON. That is correct; all kinds of cargo; that is, of an unperishable nature.
Mr. DOLLIVER. You do not undertake to handle any passenger traffic?
Mr. THOMPSON. No, sir; none whatever.
Mr. THOMPSON. That is correct. The transportation of perishable commodities on the rivers is nil.
Mr. DOLLIVER. Suppose, for example, a rail carrier undertakes to reduce or bring the freight rates down to compete with your rates, parallel to the Ohio River. Do you have any recourse with respect to that at the present time?
Mr. THOMPSON. Well, if it involves a departure from the fourth section or if a water carrier, or a group of carriers think the rate is too low; that it is disruptive or discriminatory, that carrier or carriers can petition the Interstate Commerce Commission for a suspension of the rate and the Commission will, in its own discretion, either suspend it, suspend the rate, or hold it in abeyance pending an investigation and hearings, or will let the rate become effective. In most cases they become effective.
Mr. DOLLIVER. Is that suspension applicable in case the water carriers reduce their rates ?
Mr. THOMPSON. Yes, sir. That is on that traffic that is subject to regulation by the Commission.
Mr. DOLLIVER. The greater bulk of the traffic carried by the water carriers is not subject to regulation at all.
Mr. THOMPSON. A figure has been made that tonnagewise and revenuewise, about 90 percent is exempt.
Mr. DOLLIVER. Ninety percent of the inland waterways traffic?
Mr. THOMPSON. From the Commission's regulation; yes, sir; regulation by the Commission,
Mr. HARRIS. Will the gentleman yield?
Mr. DOLLIVER So the thing you are talking about here, undertaking to protect from constructive competitive, represents about 10 percent of the traffic on the inland waterways Does not that follow from what you have just said!
Mr. THOMPSON. Why, no, sir. I think that the rail competition could be, and is, just as effective against the unregulated water carriers as it is against the regulated carriers.
Mr. DOLLIVER. Please develop that point. I do not understand your comments.
Mr. THOMPSON. Well, let us take coal. For instance, if coal moves in substantial volume only on inland rivers, and in various sections of the country. If coal is transported in a solid tow, it is not subject to regulation by the Interstate Commerce Commission under the provisions of legislation enacted by the Congress; but if the rail carriers decide to cut the rate on coal between the two points, the mine and the consuming industry, or community, why, it has the effect of reducing the rate for the unregulated water carriers the same as though that coal or that particular commodity were handled by a regulated water carrier, and that exmple could be applied to petroleum, and its products; it could be applied to-sulfur is a good example.
Mr. DOLLIVER. Of course, the fact is that if such a situation should arise, the water carriers, inland water carriers, could at once meet that competition without any interference from the Interstate Commerce Commission. Is that not true?
Mr. THOMPSON. That is correct.
Mr. DOLLIVER. So, actually, the industry you represent is in a position to protect itself, ratewise; competitive ratewise, at once, without any intervening of any public body?
Mr. THOMPSON. That is true; but there is another all-controlling factor involved. As I pointed out, the extent of water transportation is limited by the availability of channels.
A water carrier, if he is obliged to reduce his rate to hold his business, to protect his traffic against inroads by the rail carrier, he has to reduce his rates, and he is through. He has no other areas where he can recoup his loss in noncompetitive sections of the country.
That is really why we are opposed to this bill, gentlemen of the committee. That is, we just cannot recoup anyplace. We do not have any off-line points where we can get back money. We have competition everyplace.
Now, that is not true of the dominant form of transportation. There are many areas in the country, affecting many commodities, where the
railroads have a monopoly. They are the only form of transportation that can provide the service and they can reduce at points where rail transportation is available. They can reduce their rates down to bare bones, and then they go back into the noncompetitive areas and recoup those losses. The water carriers do not have that opportunity. There are no points like that on their routes.
Mr. DOLLIVER. In your statement you have referred to situations where the railroads were asking for an increase in rates of 3 to 5 or 7 percent, whatever, at the very time they were reducing rates competitive to you. Would you be willing to specify some examples of that kind?
Mr. THOMPSON. I can't do it. Some of the attorneys that I have referred to will be prepared to do that. I know it is a fact. I don't say it facetiously, but it strikes us in the waterway industry that the railroads have two departments. They have the rate-increasing department and next door they have another department which is the rate reducing. They both function at the same time in competitive areas. That is what we object to.
Mr. DOLLIVER. You are in competition, for instance, on the Mississippi River with some of the north and south lines in the transportation of petroleum products, and you are in competition with pipelines with respect to the transport of petroleum products, are you not?
Mr. THOMPSON. That is true.
Mr. DOLLIVER. Is there a substantial movement by inland waterways of petroleum?
Mr. THOMPSON. Yes, sir; there is.
Mr. THOMPSON. I think on the Mississippi River system it is the second heaviest moving commodity, bituminous coal being No. 1.
Mr. DOLLIVER. Bituminous coal from what area?
Mr. THOMPSON. The heavy traffic in coal is concentrated in the Pittsburgh area, on the upper Ohio and Monongahela Rivers, but there is a substantial amount on the upper Mississippi and Illinois.
Mr. DOLLIVER. Do you have a substantial movement of grain on the Mississippi and Missouri Rivers?
Mr. THOMPSON. Yes, sir; a very substantial movement of grain coming out of the Missouri River up as far as Omaha. It is hoped that that service can be extended to Sioux City at a very early day. There is much grain movement up the upper Mississippi River all the way up.to Minneapolis and St. Paul from the small gathering elevators down in Iowa, Illinois, and Missouri. There is a very heavy movement of bulk grain on the Illinois River, moving both into Chicago and southbound to St. Louis and to export at New Orleans.
Mr. DOLLIVER. That is all, thank you.
Mr. HARRIS. Mr. Thompson, on page 31 of your statement before me, you mention that some mínor changes in regulatory law would be sufficient in your opinion. What changes did you have in mind?
Mr. THOMPSON. I may point out, Mr. Chairman, I am not an attorney, but it is our general conception that there ought to be a strengthening particularly of the fourth section of the Interstate Commerce Act which would set up more rigid standards from which no departures from the provisions of that law could be made. If I remember the figúres correctly, in 6 months in 1955 about 1,500 or 1,600 applications for fourth section departures were filed, and 1,400 or so of them became
effective without any hearing. We think that perhaps there ought to be a strengthening of that. That is one thing we had in mind particularly.
Mr. HARRIS. Are you familiar with H. R. 6208?
Mr. THOMPSON. Yes, sir, that is proposed amendment to the fourth section advocated by the Interstate Commerce Commission and relates to circuity.
Mr. HARRIS. Are you for that?
Mr. HARRIS. You may have some other suggestions for changes. However, time has slipped up on us. The bells have rung for the call of the calendar. I would like to ask you this question:
Are the water carriers, that is, the organization which you represent here, opposed to all sections which are included in H. R. 6141 or only to certain specific sections?
Mr. THOMPSON. The entire bill, sir, all sections.
Mr. HARRIS. Isn't it a fact that certain provisions of the bill would not affect the water carriers at all?
Mr. THOMPSON. That is true.
Mr. THOMPSON. We are opposed to these bills that you have enumerated as so-called package deals. We don't have any relationship, for instance, with the proposed amendments concerning abandonments of passenger services. We don't concern ourselves with that, but as a package deal we are opposed to the legislation.
Mr. HARRIS. It has been brought out during the course of the hearings that the national transportation policy of 1940 has been construed that even though one carrier might furnish transportation to the public at a reduced cost and that rate would be compensatory to that carrier, it might have some adverse economic effect on the competitive carrier and therefore before this carrier could reduce that rate, it would have to show the Interstate Commerce Commission that such reduction would not adversely affect another mode of carriage. Are you familiar with that?
Mr. THOMPSON. Generally, yes.
Mr. THOMPSON. I think that the present policy, which provides for the preservation and healthy growth of all forms of transportation to create an overall national transportation system, is sound. I don't think one form of charge should be permitted to follow a practice and a concept of selective rate cutting. The rate cutting should be across the board, just the same as anything else should be.
Mr. HARRIS. But for one carrier from the economic standpoint, or what is referred to as compensatory, be able to serve the public at a certain rate, do you think it is good policy for that carrier to have to assume the burden of showing that such rate would not economically affect another mode of carriage?
Mr. THOMPSON. I think so, yes.
(Whereupon, at 11:15 a. m. the committee was recessed, to reconvene at 10 a. m., Friday, May 4, 1956.)