railroad transportation of freight and it is therefore proper to embrace them in these bills.

We contend that freight-forwarding companies should be stricken from both bills because they are in no sense carriers and in no sense engaged in interstate commerce, or subject to the Interstate Commerce Commission. Any services these companies perform is definite, and precedes the point where the railroad transportation begins and definitely follows the conclusion, the complete conclusion of that service. Now, to define or describe freight-forwarding companies: Freight forwarders are neither common carriers nor private carriers. They are not engaged in the business of carrying at all. Their business consists of assemblying all units of freight at their stations or loading platforms and forwarding such freight via various carriers in larger units such as carload lots, at the carload rate as the consignor or shipper thereof. Their relation to the carrier is that of consignor or consignee of the freight, just as much so as a lumber company would be in shipping a carload of lumber.

There are various types of freight forwarders. Some freight forwarders are engaged almost exclusively in export business. Other freight forwarders are engaged exclusively in assemblying merchandise for transportation by trucks; still others are engaged in assemblying freight exclusively for shipment by water carriers.

The freight forwarders who are members of the Domestic Freight Forwarders' Association ship approximately 40 percent of the freight collected and assembled by them by motor trucks, 5 percent by water, and the remaining 55 percent by railroads.

There are large organizations on the Pacific coast and in Florida. which are engaged exclusively in assemblying, packing, and shipping in carload lots fruit and vegetables. They are forwarding companies. There are a number of organizations in other parts of the country exclusively engaged in assemblying and shipping particular products, such as truck-farm products, live poultry, dairy products, candy, machinery, household goods, new furniture, and so forth. There are also forwarding companies engaged in direct shipping.

In general, the rates per 100 pounds of freight in carload lots is lower than the rates per 100 pounds of freight in less-than-carload lots. The ability of the forwarder to assemble freight in small units and ship that freight in larger units acting as the consignor or consignee results in a saving of transportation charges to the actual owner of the freight and in some profit to the forwarded, the profit being in the margin between the carload rate and the less-than-carload rate.

The carrier issues a bill of lading to the forwarding company, just as it does to any other shipper. The forwarder pays to the carrier whatever rate of transportation is applicable to the quantity and character of the freight delivered to the carrier for transportation.

Now, the freight forwarder has been in existence for a long period of time. In an early case, Schloss v. Wood (17 Pac. 910; 11 Colorado 287), the court defined a forwarder as follows:

A forwarder is a person who receives and forwards goods, taking on himself the expense of transportation, for which he receives a compensation from the 3797-35-7

Tucker on the Constitution, at page 380, sums up the argument as follows: "In the case of the lawmaker the question to be asked is, 'Have I a right under the Constitution to pass the act?' The onus is for him to show his authority. In the case of the judge the question is, 'Is the law clearly unconstitutional? In annulling the law in support of the Constitution will I transcend my judicial functions and usurp the legislative; or is the repugnancy so strong that I will only act judicially in annulling the effect of the law and not transcend the boundary of my power?' The burden shifts in the two cases. The legislator must show that he has the right; the judge must show the legislator was clearly wrong.

"Hence the lawmaker may not justify a vote for a measure which as judge he could not declare void; but, if the judiciary declares such an act unconstitutional, it should forbid the lawmaker to pass similar legislation. On the other hand, though the judiciary cannot declare a law unconstitutional becaust not clearly repugnant, it does not justify the lawmaker in voting for it."

A somewhat more complete exposition of this subject will be found in the remarks by the Honorable Henry St. George Tucker, Member of Congress, in the Congressional Record of August 17, 1922, at page 12555.

In the Congressional Record of April 13, 1933, at page 1632, appears the following statement by Senator Reed, of Pennsylvania:

"The oath that we take to uphold and support the Constitution of this country is not limited to times when no emergencies exist. It applies at all times."

Former President and Chief Justice Taft, in 1913, in communicating his veto of a bill to Congress, because he deemed it unconstitutional, said:

"But it is said that this is a question with which the Executive or Members of Congress should not burden themselves to consider or decide. It is said that it should be left to the Supreme Court to say whether this proposed act violates the Constitution. I dissent utterly from this proposition. * *

"The oath that the Chief Executive takes, and which each Member of Congress takes, does not bind him any less sacredly to observe the Constitution than the oaths which justices of the Supreme Court take. It is questionable whether the doubtful constitutionality of a bill ought not to furnish a greater reason for voting against the bill, or vetoing it, than for the Court to hold it invalid.

66

The Court will only declare a law invalid where its unconstitutionality is clear, while the lawmaker may very well hesitate to vote for a bill of doubtful constitutionality because of the wisdom of keeping clearly within the fundamental law.

"The custom of legislators, and executives having any legislative function, to remit to the courts entire and ultimate responsibility as to the constitutionality of the measures which they take part in passing is an abuse which tends to put the Court constantly in opposition to the Legislature and Executive, and, indeed, to the popular supporters of unconstitutional laws.

"If, however, the legislators and the Executive had attempted to do their duty, this burden of popular disapproval would have been lifted from the courts, or at least considerably lessened."

Mr. MILLER. Mr. Graham, I think, wishes to be heard for the forwarding companies.

Mr. CROSSER. We will hear Mr. Graham.

STATEMENT OF G. F. GRAHAM, REPRESENTING THE DOMESTIC FREIGHT FORWARDING ASSOCIATION

Mr. GRAHAM. My name is G. F. Graham. I am speaking for the Domestic Freight Forwarding Association, consisting of 32 member forwarding companies.

It is not my purpose to address any remarks to the proprieties or merits of the fundamental angles of this bill.

Both bills, H. R. 8651 and H. R. 8652, define the term "carrier" as including freight-forwarding companies.

Judge Krauthoff stated yetserday that the reason for the inclusion was that the forwarding companies are intimately connected with

railroad transportation of freight and it is therefore proper to embrace them in these bills.

We contend that freight-forwarding companies should be stricken from both bills because they are in no sense carriers and in no sense engaged in interstate commerce, or subject to the Interstate Commerce Commission. Any services these companies perform is definite, and precedes the point where the railroad transportation begins and definitely follows the conclusion, the complete conclusion of that service. Now, to define or describe freight-forwarding companies: Freight forwarders are neither common carriers nor private carriers. They are not engaged in the business of carrying at all. Their business consists of assemblying all units of freight at their stations or loading platforms and forwarding such freight via various carriers in larger units such as carload lots, at the carload rate as the consignor or shipper thereof. Their relation to the carrier is that of consignor or consignee of the freight, just as much so as a lumber company would be in shipping a carload of lumber.

There are various types of freight forwarders. Some freight forwarders are engaged almost exclusively in export business. Other freight forwarders are engaged exclusively in assemblying merchandise for transportation by trucks; still others are engaged in assemblying freight exclusively for shipment by water carriers.

The freight forwarders who are members of the Domestic Freight Forwarders' Association ship approximately 40 percent of the freight collected and assembled by them by motor trucks, 5 percent by water, and the remaining 55 percent by railroads.

There are large organizations on the Pacific coast and in Florida which are engaged exclusively in assemblying, packing, and shipping in carload lots fruit and vegetables. They are forwarding companies. There are a number of organizations in other parts of the country exclusively engaged in assemblying and shipping particular products, such as truck-farm products, live poultry, dairy products, candy, machinery, household goods, new furniture, and so forth. There are also forwarding companies engaged in direct shipping.

In general, the rates per 100 pounds of freight in carload lots is lower than the rates per 100 pounds of freight in less-than-carload lots. The ability of the forwarder to assemble freight in small units and ship that freight in larger units acting as the consignor or consignee results in a saving of transportation charges to the actual owner of the freight and in some profit to the forwarded, the profit being in the margin between the carload rate and the less-than-carload rate.

The carrier issues a bill of lading to the forwarding company, just as it does to any other shipper. The forwarder pays to the carrier whatever rate of transportation is applicable to the quantity and character of the freight delivered to the carrier for transportation.

Now, the freight forwarder has been in existence for a long period of time. In an early case, Schloss v. Wood (17 Pac. 910; 11 Colorado 287), the court defined a forwarder as follows:

A forwarder is a person who receives and forwards goods, taking on himself the expense of transportation, for which he receives a compensation from the 3797-35-7

owners, but who has no concern in the vessels or wagons by which they are transported, and no interest in the freight.

There are other decisions to the same effect.

The status of the freight forwarder under the Interstate Commerce Act came before the Interstate Commerce Commission in several proceedings more than 25 years ago in this way:

At that time the railroads adopted a rule designed to restrict the use of carload rates to the owner of the goods. The purpose of the rule was to exclude forwarding companies from the use of carload rates. They tried to limit it only to the owner of the goods. That rule was assailed by certain forwarding companies. The leading case dealing with this subject is California Commercial Association v. Wells Fargo Co. (14 I. C. C. 422) and Export Shipping Co. v. Wabash Railroad Co. (14 I. C. C. 437). That case was decided in June 1908.

The precise issue before the Commission in those cases was whether the rule of the carriers, which restricted the application of their carload rates to shippers who owned the freight constituted an unjust discrimination against forwarders who were shippers but not the owners of the freight.

The Commission condemned the rule as unjustly discriminatory. It held that ownership in property transported was not the proper test of the right of the shipper to the application of a particular rate, and held that inasmuch as the freight forwarder complied with all of the rules requisite to establish the carload status on a shipment, he was entitled to the carload rate, the same as any other shipper. The Commission also held in those cases that the relation of the freight forwarder to the carrier was that of a shipper. Those decisions were challenged by the railroads in the courts. They were sustained by the Supreme Court in I. C. C. v. D. L. & W. Co. (220 U. S. 235), on April 3, 1911.

Mr. MARTIN. How do you gather up your freight, by trucks and wagons?

Mr. GRAHAM. Yes, sir; some of it is brought into the loading stations by the shipping companies in their own trucks.

Mr. MARTIN. How wide a set-up do you have in a given place, in the way of a collecting agency, for collecting and delivering to the railroad?

Mr. GRAHAM. Some of the forwarding companies have receiving stations at a given point. They also have delivering stations. They may have connections with other than their own concentration points, for handling the goods.

Mr. MARTIN. I mean, are the companies limited to particular cities or localities?

Mr. GRAHAM. Well, they are mostly confined in the larger cities, of course.

Mr. MARTIN. All right.

Mr. GRAHAM. The business of the freight-forwarding agency has developed rapidly since 1911.

In the 48 years of its existence, the Interstate Commerce Commission has never held that a freight forwarder was a common carrier subject to the Interstate Commerce Act and has never asserted jurisdiction over a freight forwarder.

So far as we have been able to ascertain, Senate bill 3151 and the bill now before this committee, H. R. 8651, are the first bills introduced in any Congress, designed to regulate the affairs of common carriers subject to the Interstate Commerce Act, in which freightforwarding companies have been included.

The title to H. R. 8651 states its purpose to be "to establish a retirement system for employees of carriers subject to the Interstate Commerce Act."

Section 1 (a) of that bill, which defines the term "carrier ", also shows that it is restricted to the class of carriers subject to the Interstate Commerce Act. Freight-forwarding companies are not carriers and are not subject to the Interstate Commerce Act. It is, therefore, assumed that their inclusion in this bill and in other similar bills is based on the mistaken notion that they have been classified as carriers by the provisions of the Interstate Commerce Act.

Mr. MARTIN. Has there been any testimony in hearings before committees of either House on the question of the character of these forwarding companies?

Mr. GRAHAM. You mean as to the detail of the services they perform?

Mr. MARTIN. No; any testimony that causes them to be now included in the legislation proposed?

Mr. GRAHAM. None that I know of.

Mr. MARTIN. With respect to their character and functions.

Mr. GRAHAM. No, sir. I recall asking Mr. Shea the reasons for including them in the bill and he told me that he looked the term "carrier " up in a dictionary in the hotel. That is the only reason I have received so far. Are there any further questions? If not, I thank you.

Mr. CROSSER. Thank you.

Judge, you spoke of someone who wanted to be given a few minutes here.

Mr. FLETCHER. Mr. Seal is here. I hold no brief for him.

STATEMENT OF CARL R. SEAL, TRAFFIC DIRECTOR OF THE BALTIMORE ASSOCIATION OF COMMERCE, BALTIMORE, MD., APPEARING ON BEHALF OF THE NATIONAL INDUSTRIAL TRAFFIC LEAGUE, AS CHAIRMAN OF ITS LEGISLATIVE COMMITTEE

Mr. CROSSER. We shall be glad to hear Mr. Seal.

Mr. SEAL. Mr. Chairman, may it please the committee, my name is Carl R. Seal. My employment is that of traffic director of the Baltimore Association of Commerce, Baltimore, Md. I appear here, however, on behalf of the National Industrial Traffic League as chairman of its legislative committee.

The league, as its name implies, is an organization whose activities are devoted to the interest of the shipping public.

Mr. CROSSER. You are authorized to appear for them?

Mr. SEAL. I am authorized to appear for the league by action of its membership at a regular meeting.

Its object is to promote adequate national transportation.

The membership of the league represents all parts of the country, and includes persons, lines of business, and industry, as well as the