increasing emphasis upon the concept of inherent advantages or economic fitness of each mode and the desirability of more refined policies designed to realize the potentialities of a coordinated transportation system. This statement of national transportation policy clearly recognizes this principle of relative advantage of each mode, which of course changes as technology and user preference changes, but the statement includes qualifications which had a degree of validity at that time which they do not have today. After a statement that recognizes the principle of inherent advantage of each mode, the statement of policy goes on to assume that this can be attained by regulation which promotes safe, adequate, economical, and efficient service; and * * * fosters sound economic conditions in transportation and among the several carriers. *** In practice the term "several carriers" has not been interpreted as a reference to the carrier industries or modes but rather to the protection of the business stability of individual carriers of a mode. Further, the policy goes on to state that the regulation of rates should not only be such as to prevent "unjust discrimination, undue preferences or advantages," but also, so as to prevent "unfair or destructive competitive practices." This again has been interpreted to mean that any competition which threatens the traffic or financial position of a carrier is undesirable. In some cases in the record the rates proposed, while shown to be compensatory and not unduly discriminatory, have been held to be "destructive competition."

This statement of policy, at least as it has been interpreted, has not gone beyond the frame of reference of promoting the stability of each mode as a basic requirement for a healthy and satisfactory national transportation system. The protection of individual carriers from competition within and without the mode appears to have been a paramount objective that seemed to be justified by the reference in the statement of policy regarding "the several carriers" and "unfair or destructive practices." Such emphasis has run directly counter to the development of a national transportation system that fully recognizes inherent advantages of each mode and which will make possible the development of a coordinate national transportation system for the overall benefit of the country as set forth in the concluding clause of the statement of policy.

What then is specifically wrong with the policy statement in terms of attaining the general objective, which it sets forth; namely, of developing a coordinated national transportation system within which each mode realizes its inherent advantages? In the first place, the assumption that this objective can be obtained through an equitable program respecting regulated carriers is no longer valid, if it ever was. The rapid growth of private and exempt transportation has been encouraged and fostered by the straitjacket of protective and restrictive regulation of the regulated carriers. As we show elsewhere in this report, this growth is going on at a rate which threatens the position of the regulated carriers as the basic element in the transportation system of the country.

In the second place, an adequate statement of national transportation policy must incorporate both the promotional and regulatory activities of the Government so that they will be coordinated to foster the best possible development.

In the third place, the realization of this objective requires flexibility and must exclude any rigidity that would arise from preserving and freezing the present structure of the transportation system and its method of operations. The words "preserve" and "preserving" are better left out if we desire to orient our policy to the true objective. The reference to the several carriers which in the name of consistency presumably should have been interpreted to be synonymous with carrier industries or modes of transportation, has been interpreted to refer to individual carriers. For that reason this phraseology should be deleted, leaving to the discretion of regulatory bodies the administration of equity among the individual carriers.

In the fourth place, the reference to destructive competitive practices has been interpreted as a directive to the regulatory body to prevent a carrier of one mode from realizing its inherent advantage in competition with a carrier of another mode, although Congress more likely may have intended this phrase to mean that no mode of transportation should be denied the chance to prove its inherent advantage because of unfair or predatory competitive practices. Although some correction of the Commission's interpretation was made by the rule of ratemaking in the act of 1958, the scheme of regulation, as a whole has not been consistent with the primary objective.

We conclude that the framework of the present regulatory policy, which includes such things as arbitrarily limiting certificates; failing to resolve the question of single ownership of several modes; permitting a high-cost carrier to meet the rate of the low-cost carrier, allowing the objections of competing railroads and other self-interest groups to prevent consolidation of rail carriers to the betterment of the railroad system and national service has produced a general program of preserving the status quo which is in direct opposition to the overall objective of a dynamic transportation system which can best serve the economy and defense of the country. In very recent years this program of preserving status quo appears to be giving the regulated carriers the opportunity to go down further and further in their income position and to be enlarging the threat of their being overwhelmed by private and exempt transportation. There is general agreement that the common carriers of the various modes should remain the backbone of our national transportation system. It is safe to assume that it is not the desire and purpose of Congress or the Nation that we pursue a regulatory policy which can only result in giving the common carriers of the several modes an equal chance to starve and thus to be unable to maintain their predominance and their ability to improve as technology permits.

It is therefore clear that we are ready for a third orientation of national policy in respect to transportation. It is suggested then that a brief, clear-cut and all-embracing statement of transporation policy to replace that which we have in the Interstate Commerce Act should read as follows:

NATIONAL TRANSPORTATION POLICY

It is hereby declared to be the national transportation policy to provide for flexible, coordinated, and impartial promotion and regulation of transportation in interstate commerce to the end that the needs of the commerce of the United States, of the postal service, and of national defense be met.

To attain this objective, promotional and regulatory programs in transportation shall:

1. Foster a safe, adequate, and coordinated national transportation system composed of all economically suitable modes operating singly and in combination and having as its nucleus privately owned and operated common carriers.

2. Recognize and fully develop the relative service and cost characteristics of each mode as a component part of a coordinated system.

3. Recognize the public interest in safe and economical transportation at just and reasonable charges therefor.

4. Be so administered in promotional programs as to identify national, regional, and local needs for transportation development and to satisfy these needs in the most economical manner through expenditures which consider the relative economic fitness and the characteristics of the several modes, to the end that the transportation resources of the Nation are efficiently allocated.

5. Be so administered in regulatory actions as to recognize cost relationships in the adjustment of rates and charges, without undue discrimination, preference, or advantages as between users of transportation or unfair competitive practices as between carriers.

6. Foster adjustments in the organization and structure of the transportation system and the component modes thereof, through consolidation and otherwise toward maximizing the efficiency of each.

7. Further coordination and cooperation with the several States and the authorized officials thereof toward the development of simplified and effective economic and safety regulation of transportation.

8. Give primary consideration to the national public interest in all cases of conflict with other more limited interests of persons or localities.

All actions of Federal agencies in matters affecting transportation shall be carried out in accordance with the above declaration of policy.

CHAPTER 3. NATIONAL SURVIVAL

It is Pearl Harbor Day 1960, as this is written, and news media are devoting a great deal of attention to that "day of infamy" of 19 years ago. Washington citizens calling radio WTOP on the show "Your Opinion, Please" have stated 8 to 1 that they believe another such sneak attack is possible.

Whether these opinions are right or wrong is far beyond the scope of this study. The billions we are spending for defense indicate that our policymakers believe they may be right or at least feel we cannot take the chance that they are wrong. It behooves us, then, to consider the state of transportation preparedness as it bears upon our national security. We will consider only the problems associated with the sneak nuclear attack. When we are confident of our ability to survive that emergency we can concentrate on the longer range problems of national mobilization subsequent to the initial reaction period. The recent report of the Committee on the Defense Establishment headed by Senator Stuart Symington has furnished the latest public recognition of the strategic value of time, a military fact already well known when written history began. Their comment contrasts the advance notice we had prior to World Wars I and II in which “*** our country had at least 18 months to build and mobilize its defenses ***" with their estimate of what might happen "[i]f there should ever be a world war III, we would be fortunate to have 18 minutes to react." The gentlemen who made up that committee have no reputation as alarmists.

Our planners in the Pentagon have long recognized that an entirely new concept of readiness and reaction time arrived with the era of the strategic bomber. Every new development in the lethal science since then has multiplied the value of time. It is now generally accepted that our reaction to attack must be with the people and equipment actually in being and in operation when the first notice is received

whether it be the few minutes warning that a satellite signal would give us or the first impact of an undetected missile. There can be no mobilization involved in this reaction.

Less generally understood, perhaps, is the fact that, today, any flaw in our ability to react immediately is a straitjacket upon our negotiators in the diplomatic arena to the same extent as lack of essential strength to win. If we possess the ability to react to emergency promptly, with force that assures success, our diplomats may proceed with confidence, secure in the knowledge that any concessions we make to compromise disputes will be respected for what they are a sincere effort to keep the peace-rather than meeting the contempt accorded to that acquiescence which results from weakness and fear.

But is this not a military problem? Most certainly it is not. War today, be it hot or cold, is a national problem involving every resident of our country, whether he realizes it or not. The most serious hoax which our people have ever perpetrated on themselves is the idea that simply putting up the cash for unprecedented security appropriations, including foreign military aid, is the extent of the citizen's share in the effort and that from there on, we can sit back and leave it to the professionals. It should be obvious that this is not just a military problem. It is a national effort to survive.

Recognition of the readiness requirements of our strategic and defense forces has resulted in major reorientation of these activities in recent years. There has been no comparable reorientation of our industrial readiness. We are still working under a mobilization concept.

We believe that there is no comparison between the degree of readiness desirable for industry in general and that required for communications and transportation. It is generally conceded that there are two actions that must start simultaneously, should we be subjected to a sneak attack. The first, of course, is the military effort to prevent further damage to our side by destroying the enemy's ability to attack us; the second is to minimize, to the extent possible, the losses and the suffering resulting from the attack and to insure our ability to win. This second task will require effective communications to transmit information and instruction, so that our efforts may be intelligently conceived and coordinated, and it will require prompt movement of people and supplies on a vast scale. The longer this movement is delayed, the greater the loss and the suffering, the less likely we are to win. This is no problem to be solved by individual efforts of carriers or even modes-this is a problem to test the maximum capability of a fully coordinated national transportation effort, employing all surviving facilities to their utmost limit.

It is essential that our transportation losses in that first attack be minimized. It is also essential that what is left be shifted immediately to the grim task at hand with a minimum of delay and confusion. To do either requires thorough prior planning, peacetime testing and continuing refinement of plans and the implementation thereof. Second only to those of the strategic and defense forces are the readiness requirements of our transport and communication systems. It will not be until later that industry generally or other military forces can or should swing into high gear to support the national

effort. If we fail in the initial period they will never have the chance. Important and complex as it is, communications readiness is a more simple problem than transportation readiness. In the first place, communications are less vulnerable overall. In the second place, an important part of the system is an integrated semimonopoly, welldisciplined and highly responsive to central control. In the third place, some elements of the system, telephone and broadcast radio for example, are accustomed to daily cooperative effort in the normal course of business. In the fourth place the American Telephone & Telegraph Co. is spending large sums to insure its ability to serve in emergency. For these reasons and because this is a transportation study we will concentrate from here out on transportation readiness for a sneak attack.

It should not be necessary to elaborate on the dependence of our country on transportation in peace or war. The remarks of the Kilday subcommittee of the House Armed Services Committee, quoted in part I, chapter 1, of this report, stress that dependence, if stress be needed. Here we assume that no further proof is required. It is our intention to examine the degree of readiness our transportation should attain, and why; some indications of how far we fall short of a satisfactory posture and to offer a few basic suggestions on what we can do about it.

It should be noted that, according to evidence available to the Office of Civil and Defense Mobilization (hereinafter OCDM), 15 months were required in World War I and 5 months from December 7, 1941, in World War II to set up the control recommended by the Kilday subcommittee when they reported:

There was demonstrated in these hearings an obvious urgent need for a national traffic control system, in being, staffed by officials in Government and in the transportation industry, who will work together and be ready to operate in time of emergency on a national and regional level.'

There is no such system in being or in the process of formation.

It should also be noted that recent military plans visualize an immediate traffic volume at the outset of a war 10 times that of the day after Pearl Harbor-a level not reached in World War II until 1943– a year and a half after war began.

1. The system

THE PRESENT SITUATION

Our national transportation system is a system in name only. It is composed of highly competitive and often antagontistic modes, each of which is made up of individualistic carriers ranging from ownerdrivers with a single truck to the sprawling giants of the railroad industry. A considerable portion of the total capacity, being unregulated, is not capable of quick integration into the total effort at this time.

It may be assumed that all of the men in control of these enterprises are partiotic citizens who, given time, would make every effort to do more than their share in a crisis. The points are: They do not normally work together. Some of them do not want to work together

U.S. Congress, House, Subcommittee of the Committee on Armed Services, hearings, "Adequacy of Transportation Systems in Support of the National Defense Effort in Event of Mobilization," July, August 1959, p. xx.