ownership of a tank transport truck in which instance these jobbers. purchase their product from the supplier on a delivered basis, the supplier using a contract or public hauler who is certificated by either ICC or a State commission which supervises intrastate hauling

transactions.

In the case of the jobber who operates his own transport for picking up his purchases from the supplier's terminal the supplier pays the jobber a hauling allowance which is usually related to the ICC or State rate for the route, distance, and volume of the load transported.

Many jobbers make a slight profit (a fraction of a cent per gallon) on this haul from the supplier's terminal, while others may break even and some few lose money, dependent on whether or not the jobber's volume of business is adequate to make maximum or not the jobber's volume of business is adequate to make maximum use of the large tank transport facilities. As a matter of fact, were it not for the slight profit made by jobbers on the hauling allowance many of them would have been in serious finanical difficulty as a result of the gasoline price wars which have been plaguing most sections of the Nation for the past 18 months, in which price wars the jobber at best is lucky to be breaking even on the sales end of his business.

With this background in mind, let us now relate the implications of the bill before this committee to the jobber's operation. The bill, among other things, provides that authority for establishing minimum rates on the transportation of liquid commodities in bulk will be removed from the Interstate Commerce Commission.

We are advised that the principal proponents of this bill are the Nation's railroads. It is our opinion that if the authority to estab lish minimum rates is removed the inevitable result will be a rash of transportation rate wars for hauling petroleum products.

How will this affect the jobber? In the first place the jobber does not have enough profit margin on his hauling allowance to start a rate war, much less stay alive in the midst of one if started by competing haulers. We believe that the pressure from shippers of petroleum products on certificated carriers will be such that the transportation rate dike will rapidly erode and crumble and rate wars as between these carriers will become rampant.

Those carriers with less resources will be driven to the wall by those with greater resources, thus minimizing competition in the field of petroleum transportation. As the rates of certificated carriers go down, as a result of the price wars, jobbers' suppliers will in turn ask them to haul the product for the lowest available rate and if the jobber is unwilling or unable to do this the supplier will then begin to sell to the jobber on a delivered basis, leaving the jobber with tank transport facilities which he cannot utilize, or at least for which he has only a limited usage which is insufficient to economically amortize the investment in such facilities.

Those jobbers who are certificated carriers are small as related to the larger transporters and they would find themselves, like other smaller transporters, forced to the wall by competition with resources large enough to ride out a prolonged rate war in transportation.

Thus these jobbers too would find themselves with thousands of dollars' worth of transport equipment which they could not economically justify.

Now, how would the railroads profit from the oil jobber or small certicated hauler being driven out of this phase of petroleum transportation? The answer in our opinion is that they would profit but little, if anything at all. The reason for this is quite simple. The supply terminals of the large suppliers of petroleum products have in recent years been located adjacent to water or pipeline transportation points and no longer are the railroads utilized to a significant degree for primary transportation of these finished products.

Likewise the jobbers' storage facilities are no longer located on railroad sidings but to the contrary have been located with a view for utilizing truck transportation both to and from the jobbers' storage facilities. Certainly the jobber cannot afford to move these facilities again to a railroad siding or if such became necessary the jobber would have to reflect these added costs both from relocation and from increased costs for redistribution in the ultimate selling price charged the consumer.

For some types of transportation of petroleum products maybe the railroads would pick up some business but it would not be the tributary type of transportation which is not performed by the jobber. The railroads would at best pick up some primary transportation-and by primary I mean the transportation to the supplier's terminal as contrasted to the secondary transportation now performed by the jobber or certificated haulers from the supplier's terminal to the jobber's storage facility.

The committee might properly ask this question: If transportation rate wars on petroleum products developed, would it not result in lower costs for such products to the consumer to the extent of the decrease in transportation costs?

In my opinion the answer to that question is a definite no. The reason for that answer is this. In my judgment whatever savings might be effected in transportation rates as a result of a price war would be taken by those companies supplying petroleum products and the delivered price to the jobber and the ultimate consumer would remain unchanged.

In brief, the savings effected would be added to the profits of the supplier and not passed on to a consumer of petroleum products. At this point I would like to point out that when I refer to supplier there, I am talking about the major oil companies and the refineries who produce petroleum products.

There are approximately 12,000 independent petroleum jobbers in the United States. Slightly over 50 percent of this number own one or more tank transport units. Each of these units costs several thousands of dollars. If transportation rate wars break out as a result of the passage of S. 1061, I do not believe there is a single one of these jobber-owners of transport units that could continue to economically justify running those transports if the rate dropped as much as 10 percent and many of them could not stand any reduction whatsoever. I would further estimate that less than 20 percent of the jobbers' tank transport units are completely paid for with the balance due on purchase prices being secured by conditional sales contracts or chattel mortgages. The end result of driving the jobber out of that relatively small part of petroleum transportation that he engages in would produce one of the greatest mass sales sales of tank transport units that the

Nation has ever seen and the courthouse steps of the county seats of this Nation will be cluttered with auctioneers selling these units to satisfy the unpaid balance of the purchase price.

I am unaware of anyone who is getting rich in the business of tank transport transportation of petroleum products. The ICC minimum rates serve as a floor which tends to protect the small from the predatory practices of the large.

The existence of these minimum rates also provides a maximum of competition which in turn precludes excessive rates being charged. I find it difficult to see where any good which would be produced from the passage of this bill, as related to tank transportation of petroleum products, would in any measure offset the adverse results, both for the consumer and those engaged in this type of transportation.

I would like to add to this statement. There has been considerable testimony in this and the record in the House about the proposition of bringing railroads and truckers under the jurisdiction of the antitrust laws, Robinson-Patman Act and all of the other laws purportedly designed to keep the weak from being consumed by the predatory practices of the large.

In the petroleum industry we know more about the way the antitrust laws operate and particularly from the standpoint of the jurisdiction of FTC, than possibly any other industry. In the case of FTC vs. Standard Oil Co. of Indiana, it took approximately 15 years to get a final decision.

In some of the more recent cases, involving the Pure Oil Co., arising at Birmingham, Ala., the Sun Oil case, arising in Jacksonville, Fla., and many other cases that have arisen as a result of the price war situations in the past few years, 4, 5, 6, 7 years have passed and in only one case, the Sun Oil case, has any final determination been made and in the Sun Oil case, that is now under subject to a petition for rehearing.

Now, if the only protection we are going to get is the operation of the antitrust laws, and I don't care whether it is administered by existing people such as Department of Justice or Federal Trade Commission, of the Interstate Commerce Commission, of our only source of protection is from any one of those agencies, then may the Lord help the jobber, because we can't live long enough, we don't have the money to stay in court long enough to protect our interests. Thank you, Mr. Chairman, for your time.

Senator THURMOND. I believe you stated hauling costs are based upon the ICC minimal rate.

Mr. ELLIS. Either that or a State rate, whichever might be applicable to the particular haul.

Senator THURMOND. Is it usually the same rate or slightly higher or lower?

Mr. ELLIS. It is usually the same rate. Our suppliers will tell a jobber for example you either take this rate or you don't get the haul. Senator THURMOND. Would your jobbers be afforded any protection in their intrastate operations by State minimum rates?

Mr. ELLIS. Well, some States do have regulated rates, but in most instances they are related to ICC rates, so it is about the same. And what we would fail to see is how, if we had State-regulated rates, but no regulation on Federal rates, in so many instances the routes

overlap, that the ICC rate would really be the controlling factor of what the State rate was.

There is the added proposition of who knows where interstate commerce begins and ends? Over in ICC they have one interpretation as applied to a jobber for example picking up products from a supplier's terminal in Charleston, S.C., and hauling it to say Columbia, and the Department of Labor has another interpretation of where interstate commerce begins and ends, and FTC still has another interpretation. So we are confused as to what has happened insofar as knowing when we are in interstate commerce and when we are not. Senator THURMOND. I guess it is very difficult now, under the decisions of the courts, to tell just what the law is, and where you stand. Mr. ELLIS. It is in such a mess. What has been done to the interstate commerce clause of the Constitution of the United States shouldn't have been done to a dog, much less the citizens of the country.

Senator THURMOND. It has been stretched to a great extent.

Mr. ELLIS. It is just as elastic as a girdle that will fit all backsides. Senator THURMOND. Of course there is a lot of evidence here that the public will be benefitted by the passage of this minimum rate bill. The Committee has to take into consideration what is best for the public as a whole. I am just wondering this: do you have any suggestions as to an amendment which could be added to this bill to protect the independent oil jobbers?

Mr. ELLIS. Mr. Chairman, I am aware of your concern about this proposition and I have strained, pushed, and done everything I possibly could to conceive of some possible amendment. The only thing I could possibly conceive of, and I am not authorized to suggest it at this time, I merely mention it as a personal observation. It might possibly be that the removal of the authority for the establishment of minimum rates be eliminated to hauls in excess of, say, 300 miles, 350 miles or so, distance. That would take it beyond the haul, let us say, from the boundary of one State to the boundary of the same State, from the extreme points.

Now, I don't know whether that would work or not. And I am very much afraid that even there the rates so established would find themselves related to the rates which resulted from the price wars that we predict will result, even on the long-haul rates by trucks.

When we speak of the public, and I have tried to point out in here, whatever differences are going to be saved on lower transportation rates will be in my judgment absorbed by the big oil companies. That has been the history. Whenever a rate change was made, on transportation in trucks of petroleum products, the price of the product did not drop either to my jobber, to the dealer who sold at the service station, or to the customer.

The major oil company absorbed the advantage in the rate savings. So, now where the public is going to benefit from that, I fail to see, unless we are thinking in terms of the stockholders of the major oil companies and I assume the chairman has reference more to the consumer than the stockholders.

Now this is a problem for us. We are the people who provide the credit for the farmers. We carry farmers for 6 months, 8 months, until a crop is sold. You don't get that from the major oil companies. We

are the people who carry the little dealers. We are the people who came up here and fought to get a special exemption to the wage and hour laws, that would enable us to hold our truck drivers and give them year-round employment, rather than have to discharge the fuel oil truck drivers at the end of the heating season.

Thanks to the assistance of the chairman of this committee, and some others, we were fortunate in getting it. There are many truck drivers that are our employees today that would be out of work right now were it not for that amendment to the wage and hour laws.

Now, we look at people who drive trucks as human beings. These jobbers are close to them, it is almost a part of the family. When they are sick, in the hospital, they are helped. We look at these gentlemen as people that you can't think about in terms of statistics or pins on a map. And we look at jobbers the same way.

This organization I represent, Mr. Chairman, has never been before a congressional committee seeking an advantage over any competitor in the 13 years that I have represented them. And I defy any small business trade association to walk in here and truthfully and justifiably make that assertion. If I honestly thought this would result in a savings to the consumer, I could not sit here and say what I am saying. Senator THURMOND. You are speaking now from the oil standpoint! Mr. ELLIS. From the oil standpoint alone.

Senator THURMOND. The thing that disturbs me, though, is from other standpoints, other commodities.

Mr. ELLIS. I can see the seriousness of that. I, of course, am not as familiar with the transportation of farm products. I happen to own a farm, and I operate one. I ship cattle. I buy cattle that are shipped. Senator THURMOND. If you have any other suggestion, please pass it on to us.

Mr. ELLIS. I will be glad to do so, Mr. Chairman.

Senator THURMOND. The Senator from Nevada?

Senator CANNON. Thank you, Mr. Chairman. I appreciate the witness' concern, and also his statement that the organization has never been here trying to get an unfair advantage over any other form of transportation. I would simply add that they do have an unfair advantage now, or what in my opinion is an unfair advantage, or an unequal advantage, and I think that is the thing we are trying to get

out.

Also, while I can appreciate your statement here, I don't want to subscribe to your theory that suppliers will swallow any decreases that are made in transportation costs. I don't know that that is necessarily true. That is an argument, of course, that is made in connection with reduction in anything.

I remember in connection with the transportation tax, when the tax reduction was up, this same argument was made, it would never get to benefit the public, the people who actually pay it. The same argument was made in connection with excise taxes and so on, that these are matters that the supplier will swallow, rather than the public getting the advantage of it.

I don't attribute a general motive of that nature to any kind of a supplier, unless we have specific evidence to that effect. I would certainly prefer to believe that suppliers of any kind of products, if they are given advantage in connection with reduction of costs of