I believe from St. Louis-I am not sure and one surely which came from Philadelphia, noting that all the train whistles had blown at the same moment and a period of mournful silence had fallen over the local area because of this bill introduced by Bartlett.

I wouldn't have minded that so much but both of these stories were published in Alaska.

The CHAIRMAN. Thank you, Mr. Zagri, for being here.

The committee will recess until 10 o'clock tomorrow morning. (Thereupon, at 12:05 p.m., the committee was recessed to reconvene at 10 a.m., Friday, May 19, 1961.)

(The following was received for the record:)

[Compiled by Bureau of Transport Economics and Statistics, Interstate Commerce

Rate of Return, 1960–
Rate of return, 1959.

Commission]

Percent

2.23

2.86

2.91

Rate of return, 1958_.

These figures are based on a computation of values after depreciation and amortization as shown in the annual report for class I railroads. In other words, value has been determined by the Bureau of Accounts, and value has been related to net railway operating income. These values will differ slightly from railroad figures as ours are based on the Commission publication entitled "Elements of Value of Property Used in Common Carrier Service as of December 31, 1959, for Class I Line Haul Railroads."

The committee met, pursuant to adjournment, at 10:15 a.m., in room 5110, New Senate Office Building, Hon. George A. Smathers presiding.

Senator SMATHERS. The meeting will come to order.

Senator Magnuson has asked me to announce that there has been objection to the holding of this hearing today while the proceedings of the Senate are underway. All of you know that we have before the Senate the Federal-aid-to-education bill, which is a very hotly contested bill.

The chairman wants to be here, and wants in addition for the other Senators to be here. The question arises as to until when should we postpone the hearing; when should we set the next hearing?

I understand that there is a witness here from out of town. Is he here?

Mr. GILLILAND. My name is Gilliland, from St. Louis, the Frisco Railway.

Mr. Langdon is here.

Mr. LANGDON. I am from Baltimore.

Senator SMATHERS. My own judgment is that we are going to be ensnarled in this Federal-aid-to-education bill right on through Monday. We will recess tonight-I think the agreement is about 6 o'clock-and we will not have disposed of all the amendments. It is the intention of the majority leader to bring them back in at 9 o'clock on Monday. So I'don't see any sense in setting a hearing for Monday. I think that we would be probably best advised to let you go on home and to recess this subject to the call of the Chair, Senator Magnuson.

Do you have any suggestions?

Mr. BAYNTON. That is about all that you can do.

(Discussion off the record.)

Senator SMATHERS. From the looks of the calendar, we had better postpone this, subject to the call of the Chair.

Mr. Gilliland, I presume that rather than wait here until Monday that you would rather go on back. What are your wishes?

Mr. GILLILAND. Senator, we feel that we would like an opportunity to return when most of this committee can be present to hear us. We have the answers, we believe, to a lot of questions that have been raised

by the individual members. So our whole desire is to provide to you the best opportunity to have a full questioning of us about anything on this. So I think we would respect your judgment as to when to

return.

Senator SMATHERS. It is obvious that the Senator who objected to the meeting today will object to one on Monday, because the Senate will be in session Monday; so that is out. Such being the case, I will recess this hearing, subject to the call of the chairman of the full committee.

Mr. GILLILAND. I may suggest, if you will give us about 24 hours notice, that will be ample notice.

Senator SMATHERS. We will. And you will be the first witness after we reconvene.

The committee stands in recess.

(Whereupon, at 10:20 a.m., the committee was adjourned, to reconvene subject to the call of the chairman of the committee.) (The following material was submitted for the record:)

Hon. CLAIR ENGLE,

U.S. Senate, Washington, D.C.:

SAN FRANCISCO, CALIF., May 10, 1961.

If intercoastal and Pacific coastwise water trades are to have a fair chance for survival, passage of S. 1197 is necessary.

This bureau acts as rate protection agency for five San Francisco area ports: namely, ports of Oakland, Sacramento, San Francisco, and Encinal and Howard terminals. In this capacity, we are constantly in rate negotiations with all modes of transport and participate in many competitive rate cases before ICC.

Our findings are that the ICC, since enactment of Transportation Act of 1958, relies on out-of-pocket costs, to the exclusion of other necessary factors in deciding lawfulness of rates. The factors enumerated in S. 1197 are just as important as cost. Why should not a carrier regardless of mode be required to tell the ICC what a contested rate will do to his earnings, why he wants to publish the rate, what it will do to existing rates, and who will pay for the losses incurred if the rate does not recover full costs? Without considering these factors in the public interest. The ICC cannot possibly regulate for the public benefit.

Situation now is that both Pacific coastwise and intercoastal water service dying and will be dead because above factors other than out-of-pocket cost currently unimportant. This causing hardship to ports and more important to public.

S. 1197 will provide relief and at same time will not provide arbitrary umbrella for any mode of transport. By requiring recognition of obvious and necessary criteria S. 1197 requires intermode competitive cases to be decided on true merit to public rather than cost accounting. Water carriers can survive on true merit basis. Appreciate your including this wire in hearing record.

J. H. McJUNKIN, General Manager, Northern California Ports & Terminals Bureau, Inc.

CHICAGO, ILL., May 10, 1961.

Hon. WARREN MAGNUSON,

Chairman, Senate Commerce Committee,
Senate Building, Washington, D.C.:

The Millers' National Federation is very much alarmed over the implications of S. 1089 and S. 1197 and wishes to go on record as opposing these and any other bills incorporating the same policies. A formal statement of objection will follow in a few days. We respectfully request that this telegram and the statement to follow be included in the official record of your committee hearings.

MILLERS' NATIONAL FEDERATION,

D. H. WILSON,

Chairman, Transportation Policy Committee.

NATIONAL LUMBER MANUFACTURERS ASSOCIATION,
Washington, D.C., May 15, 1961.

Hon. WARREN G. MAGNUSON,

Chairman, Senate Committee on Commerce,
U.S. Senate,

Washington, D.C.

DEAR SENATOR MAGNUSON: The American lumber industry, as one of the major users of each of the segments of our Nation's combined transportation system, has always been vitally interested in the implementation of an equitable transportation policy.

The members of the National Lumber Manufacturers Association, which is composed of 16 regional and species organizations of lumber manufacturers throughout the United States, are therefore seriously concerned about legislation currently pending before the Senate Committee on Commerce which would amend provisions of the Interstate Commerce Act relating to the rule of ratemaking where competition between carriers of different modes of transportation is involved. Specifically, the committee has before it for consideration a bill, S. 1197, introduced by Senator Bartlett and another bill, S. 1089, sponsored by Senator Yarborough.

We strongly urge that your committee not approve either of these measures, as their enactment would definitely reduce competition in the nation's transportation industry, thus increasing costs to lumbermen, to all American businesses, especially at a time when many of them are trying to cope with serious economic reverses.

This is particularly serious to our industry in the forested areas of the West and the South where forest products operations are a key factor in the economic fabric of these regions.

S. 1197 would in effect repeal a portion of the Transportation Act of 1958now section 15a (3) of the Interstate Commerce Act-which provides that in the determination of whether or not a minimum rate charged by a carrier is unreasonable, the Commission will leave to the judgment of the proposing carriers the question of whether the rates at issue are justifiable from a revenue standpoint, and will not insist on the retention of a high rate level for one carrier to protect the traffic of another mode of transportation. Experience has shown that Congress acted wisely in enacting this provision as it was a step toward permitting various modes of transportation to become more competitive and thus ultimately benefiting the shipping public. S. 1089 would amend other provisions of the Interstate Commerce Act for purposes similar to those of S. 1197.

Section 15a (3) of the Interstate Commerce Act has undoubtedly encouraged tariff rate competition, and rightfully so, as such competition results in lower transportation and distribution costs for the general public and shippers. Many segments of our own industry have benefited significantly by the passage of section 15a (3) as it has enabled our transportation facilities to provide better service at lower costs. In effect, repeal of this provision would be at the expense of many shippers, and would unfairly penalize them in the area of transportation economics.

If section 15a (3) as presently existing in the act is weakened or repealed, those who ship predominately by rail will find that tariff rates on their products will be substantially increased and that the resultant volume of traffic for the railroads would be adversely affected. If this provision is changed at this particular time, as proposed in the legislation before your committee, the economic position of the lumber industry which depends in large measure on rail transportation would be seriously affected.

Under an ideal national transportation policy, management of the various modes of transportation, rather than any regulatory authority, would assume primary responsibility for setting rates which they felt would achieve maximum revenues as long as such rates did not violate the basic concepts of fair play as understood by our society. Congress, however, has determined that it is in the public interest to have the determination of transport rates regulated, and has so provided. In endorsing the principle of regulation, Congress has clearly indicated that the controls which develop from such laws are to be carried out equitably in the interest of the public, shippers, and the competing modes of transportation. The measures proposed by Senator Bartlett and Senator Yarborough would not achieve this goal but would reinstate an unjustified rigidity into the ratemaking structure of America's transportation systems, and, as a practical matter, place some carriers at a serious competitive disadvantage.