REPORT OF THE

INTERSTATE COMMERCE COMMISSION

WASHINGTON, D.C., December 1, 1959.

To the Senate and IIouse of Representatives:

The Interstate Commerce Commission submits herewith its 73d annual report to the Congress. The period covered by this report extends from July 1, 1958, through June 30, 1959, except as otherwise noted.

A statement of appropriations and aggregate expenditures for the fiscal year ended June 30, 1959, is contained in appendix E to this report.

INTRODUCTION

This report follows the pattern of the previous two reports. Wherever practicable, the material is on a Government fiscal year basis, but certain statistics are on a calendar year basis because they can be compiled more readily that way, and because they facilitate comparisons with related information for past calendar years.

The report does, however, contain references to legislative actions during the last session of the Congress, which adjourned September 15, 1959, and legislative recommendations for consideration by the next Congress.

The report again includes a summary of the highlights of the year's activity in transportation and various factors affecting it. Detailed information on the various phases of this activity is provided in the subject chapters which follow.

TRANSPORTATION HIGHLIGHTS

The economy recovered and carrier revenues rebounded to an alltime high. After having declined nearly $1 billion in the 1957-58 recession, gross revenues of carriers subject to this Commission's jurisdiction climbed back to approximately $19.4 billion. This was an increase of about $181 million over the year ended June 30, 1957. The effect of the recession and the extent of recovery differed greatly among the various modes of transportation. Most of the billion-dollar loss was suffered by the railroads. They improved their revenues in the year ended June 30, 1959, but only to a point which was still some $500 million below their prerecession revenues.

Motor carriers of property, on the other hand, had revenues in the recession period which were very little below their prior year's rev

enues. And in this report year, their revenues increased 11 percent over 1958 to a peak of $6.8 billion.

Water-carrier revenues generally followed the pattern of rail revenues. They were down 13.5 percent to $419 million in the year ended June 30, 1958, and climbed back to $453 million in the current year. Oil pipeline revenues declined slightly in the fiscal year 1958 to $708 million, a decrease of 1 percent, but their revenues improved to $760 million in the current year. Bus company revenues were $604 million, compared with $599 million in the year ended June 30, 1958.

The pattern is illustrated clearly in the chart at page 18, which provides an index of the operating revenues of carriers subject to this Commission's jurisdiction. Based on 1947 as representing 100, the chart shows that revenues of motor carriers of property, oil pipelines, and water carriers climbed at a much faster pace from 1947 to 1958 than did the national income, whereas revenues of the railroads and buslines lagged far behind the increase in national income. The Pullman Co., the Railway Express Agency, Inc., and electric railways even dropped below the 1947 base of 100.

Revenues of motor carriers of property rose to an index figure of 277.0 in 1958, oil pipelines' revenues to 221.6, and those of water lines to 182.0, while the national income index figure went up to 184.8. Railroad revenues, however, increased only to an index figure of 110.6 and those of motor carriers of passengers only to 112.2. The other index figures, all below the 1947 base of 100, were: railway express, 82.3; Pullman Co., 59.9; and electric railways, 37.6.

A similar story, with only minor variations, was told by intercity ton-mile statistics. The railroads' ton-miles in the calendar year 1958 totaled 558,738 million, or 46.31 percent of the total, compared with 626,222 million ton-miles in 1957, 47.22 percent of the total. In 1939, the railroads' portion of the total was 62.4 percent.

Motor vehicles continued to increase their share of the total, climbing from 9.7 percent in 1939 to 18.47 percent in 1957 and to 20.47 percent in 1958. Inland waterways, which had 17.7 percent of the total in 1939, were down slightly to 17.48 in 1957 and in 1958 to 15.66 percent. Oil pipelines' ton-miles have increased from 10.2 percent in 1939 to 16.79 percent in 1957 and 17.51 percent in 1958.

The railroads, motor carriers of passengers, and airlines shared in only about 10 percent of the total intercity passenger travel, as the private automobile accounted for approximately 90 percent.

PASSENGER DEFICIT

The Commission's study of one of the railroads' most vexing problems-the deficit operation of passenger trains-was brought to a close by the issuance of a report in Railroad Passenger Train Deficit, 306 I.C.C. 417. We found that economic railroad passenger service is,

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and for the foreseeable future will be, an integral part of our national transportation system and essential for the Nation's well-being and defense.

In order that such service might be preserved, we recommended nine steps that could be taken by the Federal, State, and local governments, and by the railroads, toward alleviation of the problem, together with two additional areas which might be studied under Senate Resolution 29.

There has been at least partial implementation in connection with three of the nine recommendations. One was the reduction of the 10percent tax on passenger fares to 5 percent, effective July 1, 1960. The Commission recommended repeal of the tax. Another recommendation involved action by State and local governments to maintain necessary local or commuter service by paying the carrier the cost plus a reasonable profit where the carrier cannot maintain such service at a profit. Some type of aid was undertaken experimentally in at least three of the largest metropolitan areas in the country. The third involved revision of taxes on railroad property. In at least one State a plan was proposed to reimburse local governments granting such relief.

These few steps, however, have provided very little aid where much is needed.

TRANSPORTATION ACT OF 1958

The Transportation Act of 1958 was the culmination of various extensive studies by the Congress, the executive branch, and transportation organizations going back at least to the 1950 hearings under Senate Resolution 50 and including the report of the President's Advisory Committee in 1955.

After nearly a year of experience under the new act, the principal activity under it was in connection with discontinuance of unprofitable passenger trains, and applications for operating authority filed by forhire carriers transporting formerly exempt commodities.

Nineteen railroads filed notice to discontinue 75 interstate trains and ferry services, and 6 lines proposed to discontinue 40 intrastate trains. Investigations were ordered in connection with nearly all of the proposals.

About 950 applications for "grandfather" authority were filed by motor carriers whose operations were brought under Federal control for the first time, except as to safety, by the act's revision of the "exempt commodity" description.

In three cases of special importance, railroads based their justification for proposed reduced rates, at least in part, on the provisions of the new section 15(a)(3). These proceedings involved reduced rates on (1) lumber on the west coast, (2) sugar in the southeast, and (3) paint in the east. All three were pending.

Only a few railroads applied for a guaranty of loans as provided by part V of the act, added by the Transportation Act of 1958. The loan provision authorizes guaranties up to a total of $500 million, but applications totaled only $31.5 million until late in June 1959, when guaranties were sought on an additional $40.8 million. Of the nine applications filed, six were filed by eastern railroads.

It was generally recognized that many railroads eligible for loan guaranties considered it undesirable to incur additional obligations for capital expenditures, at least at this time, while others were apprehensive as to the effect which an application for a Federal guaranty might have upon their credit generally.

UNIFICATIONS

The recession brought an increased interest in railroad unifications because of the substantial operating economies and improvement in earnings that often can be achieved. Several plans to merge various major railroads were discussed publicly and their practicability was studied, but only a single proposal of this kind was submitted for approval.

Several eastern railroads were among those involved in merger discussions. Some of them were probably the hardest hit by the recession and still were operating at traffic and revenue levels below those of the prerecession years.

There was a reduction in the number of applications looking to unifications of motor-carrier properties and operating authorities. Applications under section 5, which involve more than 1 carrier and more than 20 vehicles, decreased from 322 to 292. Those under section 212(b), which involve transfer of rights to a noncarrier, or between carriers operating less than 21 vehicles, decreased from 1,053 to 1,025.

SERVICE

The railroads continued experiments with new types of equipment. and new service ideas in an effort to attract more passengers. But during the year, for the first time, the airlines moved ahead of the railroads in the number of revenue passenger-miles.

In the field of freight transportation, competition continued intense, in good times and bad, and all forms of transportation devoted a great deal of effort and money to improving their service. Better service was stressed particularly by the railroads as their competitors, especially the motor carriers of property, climbed to a better relative position and the railroads' portion of total transport business declined. The program of converting to electronic classification yards continued and promised substantial economies for the railroads in the years ahead. As a means of improving reliability of freight-car service, there was continued emphasis on eliminating the "hot box" prob

lem, but the record of trains delayed by "hot boxes" was worse last winter than in prior years, continuing a trend noted in the last report. There was some further progress in equipping main lines of certain railroads with central traffic control systems, which expedite train movements and reduce operating costs.

More immediate promise of increased traffic was seen in the continued and substantial growth of coordinated service by means of piggyback operations. There was an increase of 63.1 percent in the number of flatcars in such service, and 101 railroads were engaged in piggyback service. Sixty of them were class I line-haul carriers. In the first half of 1959, loadings totaled 208,578 flatcars compared with 128,409 for the corresponding half of 1958, for an increase of 62.4 percent.

Motor carriers of property and of passengers continued to expand their services. In the year ended June 30, 1959, the number of applications to institute new operations or to extend existing lines increased substantially. There were 3,893 such applications compared with 3,474 in the previous fiscal year, without counting the nearly 1,000 applications from carriers transporting once-exempt commodities or those filed by the Alaskan carriers.

Efforts to improve service among the water carriers included priucipally the development of containerization and better cargo handling methods. Improved navigational devices, including radar, reduced delays by 90 percent. Freight forwarders also made much progress in modernizing their freight handling methods.

EQUIPMENT TRENDS

There were no serious rail car shortages or major delays in rail service, although some local shortages developed as loadings began to improve from the recession levels. It was doubtful, however, that the railroads would be able to handle even a slight increase in traffic because of the decline in freight car ownership and the high number of cars being held in unserviceable condition. Serviceable freight car ownership of class I line-haul railroads and their controlled refrigerator lines declined to 1,635,475 cars on March 1, 1959, the lowest since 1940.

This deteriorating condition of the freight car fleet was called to the attention of the Association of American Railroads. Some improvement for the future can be seen in the fact that orders for new cars in the first 6 months of 1959 were 91.9 percent greater than in the 12 months of 1958, but even this apparent improvement was offset by an unusually high number of retirements.

Motor carriers added new equipment as their operations expanded and to the extent needed. Property carriers continued to emphasize lightweight materials in the equipment they bought so as to allow a