MANUFACTURING CHEMISTS' ASSOCIATION, INC., Subject: Senate bill 1197. Hon. WARREN G. MAGNUSON, Chairman, Senate Commerce Committee, Washington, D.C. MY DEAR SENATOR MAGNUSON: The Manufacturing Chemists' Association, Inc., wishes to express its opposition to the adoption of the legislation proposed in Senate bill 1197, hearings on which have been scheduled to begin before your committee on May 11, 1961. It is respectfully requested that our views be entered in the permanent record of these proceedings. The association is a voluntary, nonprofit trade group, organized in 1872, and its members represent over 90 percent of the productive capacity of the chemical industry in the United States. The members of the association have more than 1,000 plants located throughout the Nation, with representation in almost every State. The members of the association believe that Senate bill 1197, with respect to the rule of ratemaking provided in section 15a (3) of the Interstate Commerce Act, is not in the interest of sound, efficient, and economic transportation, and if enacted, would be detrimental to the commerce of the United States. The obvious purpose of this bill is to reverse the congresssional policy in the Transportation Act of 1958 of more freedom and responsibility for carrier management in competitive ratemaking, which policy was evolved only after lengthy hearings and full consideration. The new standards proposed would eliminate rate competition under the guise of preventing destructive competition and would favor certain modes of transportation to the detriment of other modes. Adequate rateregulation should permit all modes of transportation to assert their full economic capabilities and advantages in the public interest rather than require the rates of one mode to serve as an umbrella over the rates of other modes. The proposed bill would require more regulation and we subscribe wholeheartedly to the belief that less regulation, not more, and more competitive freedom, not less is desirable. Since the enactment of section 15a (3) in 1958, the Interstate Commerce Commission has applied its provisions in a number of situations where rate adjustments motivated by intermode competition were under consideration. In these situations, the Commission has properly refused to condemn the compensatory rates of carriers even though they were reduced below the prevailing level of the rates of competing modes, in the absence of a showing of unlawfulness under the Interstate Commerce Act. (See, for example, Paint and Related Articles in Official Territory, 308 I.C.C. 439). The association believes that the interpretation of the present section 15a (c) by the Commission is a proper and lawful interpretation and such ratemaking freedom should not be repudiated. Shippers who comprise our membership use all modes of transportation-particularly rail, motor carrier, and water, and are interested in preserving a sound basis for régulation in ratemaking. It is the position of our association that the present provisions of the Interstate Commerce Act, in section 15a (3). are eminently fair, just, and reasonable, not only for shippers but for all modes of transportation, and such provisions should not be discarded for other elusive standards which would deprive shippers of the important bentfit of rate competition in transportation. Accordingly, we do not believe this proposal, as contained in S. 1197, should be approved. Sincerely, J. E. HULL WRIGHT MOTOR LINES, INC., Hon. JOHN A. CARROLL, Senator, Senate Office Building, Washington, D.C. DEAR SENATOR: I am very much interested in the passage of Senate bill 1197 which is designed to correct the inequities that the railroads and Interstate Commerce Commission are now interpreting in section 15(a)(3) of the Interstate Commerce Act. In August 1959 this interpretation came to almost a fatal blow to my little trucking operation. We are a certified carrier of sugar from the beetsugar factories in the Rocky Mountain States to the Middlewest. The rails, without any reason, slashed the sugar rates approximately 33% percent. Petitions were filed and proof was made that if the rails gained all the sugar traffic that was hauled by truck, they would still lose over $6 million in revenues. Since the railroads are always screaming "wolf," why would the Interstate Commerce Commission allow them to reduce their rates to a point where they will lose revenues on their overall tonnage. Apparently, the railroads had in mind to drive the trucks out of the business and after they had done so, then raise the rates. Proof of this fact is the general increase granted the railroads in October 1960. Another serious rate reduction in this area is the rates on new automobiles. The railroads have designed a new type of car which can haul 15 new cars. This is fine. This is competitive progress and no one can argue with better service to the public. However, the railroad slashed the rates so low that the trucks couldn't come close to meeting them and stay in business. As a consequence, there were hundreds of trucks taken off the road, employees laid off in the thousands and no one gained but General Motors, Ford, Chrysler, etc. We pay the same price for a new car as before and I'll wager that the added employees on the railroads were zero. Additionally, the President is asking for more taxes for the Federal highway system and full employment on the one hand, while on the other, he is letting some of the Commissions render decisions that causes thousands of men to join the unemployed ranks and untold amounts of taxes be completely wiped out. The way section 15(a) (3) is being allowed to be used is all wrong as many of the Senators and Congressmen have recognized. Therefore, I urge you to give Senate bill 1197 your fullest support as it will eliminate the complete destruction of thousands of small trucking operations throughout our Nation. Thanking you, I am Sincerely yours, E. B. ROGERS, Vice President. AMERICAN FARM BUREAU FEDERATION, Re S. 1197. Hon. WARREN G. MAGNUSON, Chairman, Senate Committee on Interstate and Foreign Commerce, DEAR SENATOR MAGNUSON: In 1958, after many months of study and consideration by the Senate and House Committees on Interstate and Foreign Commerce the Congress enacted legislation to revise section 15a (3) of the Interstate Commerce Act to insure that rates should not be held up to a particular level to protect the traffic of any other mode of transportation. S. 1197 would add new language to section 15a (3) to include as additional factors to be considered by the Interstate Commerce Commission in reviewing rates filed by carriers "the competitive necessity for the rate, its effect upon a lawful rate structure or adjustment, and its tendency, if any, to cast an unjust burden upon other traffic." While it is difficult or impossible to determine the exact impact of such new language until the Interstate Commerce Commission and the courts interpret it, the language would appear to mean the following: 1. If a carrier wished to reduce a rate, the question of whether or not such reduction is necessary for competitive reasons would become a question for ICC determination. 2. If a carrier wished to reduce a rate, the question of whether or not such reduction would have an adverse effect upon the existing rate structure would become a question for ICC determination. 3. If a carrier wished to reduce a rate, the question of whether or not such reduction would create an unjust burden on other modes of transportation would become a question for ICC determination. In our opinion these are not considerations that should be the subject of ICC determination. 314 Subject: Senate bi MY DEAR SENATO rather than of other mod The prop heartedly t freedom, no Since the mission ha ments mot situations rates of the rates the Inter Official tation interpr Ship partic sound that are e of tr star titi cor wwwman, Benate Commerce Committee, Renate Offer Building, Washington, D.C. MY DEAR BENATOR MAGNUSON: It is our understanding that hearings have heen resumed on bill 8. 1197, which contemplates making certain amendments to section 158 (3) of the Interstate Commerce Act (the rule of ratemaking). The board of directors of the Dallas Chamber of Commerce, upon recom mendation of its transportation committee, recently voted opposition to S. 1191. It might be of interest to the members of the Committee on Commerce to know a group of industrial traffic managers whose day-to-day duties consist of dealthat this implies a strong indication, from a standpoint of the shipping public, mendation to the chamber's board that this legislation be opposed. We suggest fng with transportation in all its phases were unanimous in their recom Thy can of this will be and from the standpoint of the pad been carriers themselves in sevent of the undesirability of what is proposed by S. 1197. du sad Judgmennent on the question of whether decem Commission to substitute its ot a particular rate reduction was required as a competitive necessity; carwould find themselves compelled to prove the competitive necessity for a reduction, regardless of relative costs, whenever that rate was protested by mpetitor: the Commission would be required to consider the effect of a prod rate upon the rate structure of another mode of transportation, thus the mission could prohibit rates being reduced by one mode if such rates were →r than a maximum reasonable rate maintained by a competing mode; furthere, the Commission would have the authority to hold to a high level the rates ne mode of transportation for the purpose of protecting another mode, if le additional considerations could be found which would tend to justify an er to that effect. No matter how desirable it may be from the standpoint of the motor carriers 1 water carriers, which openly support S. 1197, to have rail rates held up to evel which will protect truck and water carrier revenues-ignoring entirely > cost of providing the service it is obvious that such a philosophy of rateking accords no consideration to the producing and consuming public which imately foots the transportation bill, and for whose protection the original t to Regulate Commerce was enacted by the Congress. Senator Bartlett's statement accompanying the introduction of this bill indites his advocacy of adherence to the "value of service" theory of ratemaking, metimes more simply stated as "what the traffic will bear." Whatever value is concept may have once had under the near-monopolistic conditions which ice prevailed with respect to the railroads, it certainly assumes much less nportance in today's highly competitive transportation market, wherein the ublic transportation agencies find themselves confronted with not only intrand inter-modal competition, but also the private fleets of trucks and barges wned by the shippers themselves. The owner of a private truck fleet has very ittle interest in the "value of service" concept of ratemaking. The decision to equire and utilize private transportation facilities is guided by the far more Oractical consideration of relative costs. Unless the carriers are permitted a certain flexibility in their ratemaking procedures which will enable them to meet this competition when and where it exists, there is little hope of recapturing traffic which has been lost to proprietary transportation, or to prevent further erosion of traffic into that channel. Amendments to the rule of ratemaking accomplished through the Transportation Act of 1958 afforded the carriers a certain degree of flexibility in their ratemaking procedures which granted them some measure of relief in meeting competitive situations. It is our view that the 1958 amendments were both necessary and desirable. In our opinion, the enactment of S. 1197 would be a backward step, and would set up new, narrow, and untested freight rate standards which would seriously hamper the carriers in their efforts to retain business which they now transport, and to recapture traffic which has been lost to private transportation. We must sincerely and respectfully urge that the committee not approve or recommend the enactment of bill S. 1197. Respectfully submitted. KENNETH P. TUBBS, Manager, Transportation Department. AMERICAN RETAIL FEDERATION, Mr. WARREN G. MAGNUSON, Chairman, Committee on Commerce, U.S. Senate, Washington, D.C. DEAR SENATOR MAGNUSON: In behalf of the transportation committee of the American Retail Federation, I would like to express opposition to Senate bill No. 1197, which provides amendments to section 15a (3) of the Interstate Commerce Act. The basis for this opposition can be found in our support of the existing section of the act, which was changed by Senate bill No. 3778 and entitled "Transportation Act of 1958." Twenty-nine national and thirty-eight statewide retail associations of the Federation membership supported the liberalization of the ratemaking rule before your committee as contained in section 5 of S. 3778 because it was believed 73155-62-pt. 1-21 |