If there is to be any change in the ratemaking rule, the coal industry would recommend that the present language should be changed to read as follows: "In the exercise of its power to prescribe just and reasonable rates, the Commission shall give due consideration, among other factors, to the effect of rates on the movement of traffic by the carrier or carriers for which the rates are prescribed, including but not limited to, the effect of such rates on the market competition encountered by shippers and receivers; to the need, in the public interest, of adequate and efficient railway transportation service at the lowest cost consistent with the furnishing of such service, and to the need of revenues sufficient to enable the carriers under honest, economical, and efficient management to provide such service. In all proceedings involving general rate increases, the burden shall be upon the carriers to prove that their operations are economical and efficient and that additional revenues sought are required to maintain or improve such service at those standards, and, prior to the granting of any such increases, the Commission must so find." (g) Volume rates.-There is nothing in the present act that either requires or precludes the railroads from establishing trainload or volume rates for commodities that move in large volume. The railroads have established some such rates in a few instances; and inasmuch as coal moves to destination in trainload volume which involves less operating costs in transporting such traffic, the coal industry feels that everything possible should be done to encourage the establishment by the railroads of volume rates. The establishment of such rates is comparable to the normal differential in the mercantile and other industries between wholesale and retail prices. The passing on of the savings effected by the railroads in the movement of coal in large volume would substantially help the coal producers in meeting the competition so prevalent at all times with competitive fuels, which latter fuels in many, if not most, instances, are not transported by the rail carriers. (h) Transportation excise taxes.—While not coming within the direct purview of this committee, it would seem germane in this investigation to make brief comment upon the onerous and inequitable taxes on the transportation of property and passengers which the users of transportation service are still required to pay, even today, some 11 years after the end of World War II. The excise tax collected on property amounts to 3 percent on general freight charges, and 4 cents per net ton on coal. There has been no change in the rate of this tax since it was initially imposed in 1942. The tax on passengers, which was previously 15 percent, was lowered to 10 percent in 1954, and other slight concessions were made with respect to maximum fare exemption. Similar taxes which were imposed during World War I were repealed some 3 years after the war, and a 15-percent World War passenger tax in Canada was repealed in March 1949. The 4-cent net ton tax on bituminous coal is passed on in its entirety to, and paid by, the coal consumer. The repeal of this tax on the rail movement would mean a saving in the annual fuel bill of coal users of some 15 or 16 million dollars. The railroads in effect act as tax collectors for the Federal Government in exacting these taxes from the payers of transportation charges, and, therefore, removal of that burden would substantially reduce the expenses of the railroads. This subcommittee could perform a real service to the welfare and economy of the Nation, to a more equitable transportation policy, and a more equitable and fair competition between the shippers and receivers of freight by advocating the immediate repeal of these transportation taxes, both on property and passenger traffic-and more particularly on the transportation of property. STATEMENT OF ALVIN SHAPIRO, VICE PRESIDENT, AMERICAN MERCHANT MARINE INSTITUTE My name is Alvin Shapiro. I am vice president of the American Merchant Marine Institute, a trade association representing the owners of a substantial majority of the United States-flag merchant shipping operating in both the domestic and foreign trades of the United States. Many of our member companies operate in the domestic trade and are therefore in competition with other domestic carriers. Some of these members are certificated by the ICC in our domestic offshore trade. We, therefore, have a substantial interest in the current proceeding. We state at the outset that the water carriers believe in healthy competition between all forms of transportation. Also, subscribe to the reasonable support of the railroad industry. We believe it is to the best interest of the country that all forms of domestic transportation be maintained in a healthy state. This proceeding is for the purpose of examining problems of the railroads. As an industry they are currently in a depressed state. Offshore water carriers in the nontanker area, too, know the meaning of hard times. For example, they have seen their own coastwise and intercoastal fleets cut from 409 vessels to 93 vessels in the short span of two decades.1 Many proposals have been made and are being considered as means of aiding the railroads, and because of their own problems the water carriers are not unsympathetic. However, one of the measures is particularly objectionable because it strikes at a major protection which has been placed in the Interstate Commerce Act to insure reasonable rate competition between all domestic interstate transportation services. In aiding one, we should not destroy others. As this committee is well aware, the railroads in previous legislative endeavors have attempted to obtain ratemaking solutions which have become known as the shall-not provisions. We thought that this matter had been settled but find again in section 5 of the bill currently before this committee (H. R. 12488) the proposed amendment of section 15a of the ICC Act to incorporate the following provision: "(3) In a proceeding involving competition with another mode of transportation, the Commission, in determining whether a rail rate is lower than a reasonable minimum rate, shall consider the facts and circumstances attending the movement of the traffic by railroad and not by such other mode." Under any system of reasonable competition restrictive rate practices cannot be tolerated. The railroads plead financial trouble as an industry, but seek a one-sided solution. They would ask that in determining a reasonable minimum competitive rate the ICC should consider only its effect upon the railroads, and not its effect upon any other mode of transportation. These stated intentions are forthright, but it is for just such considerations that the present law is needed. The offshore water carriers, as a mode of transportation, are in a poor position to compete with railroads without the rate protection granted to them under the ICC Act. It is our firm belief that the removal of such rate protection by granting of the railroads' proposals will redound to the detriment of the national security and preclude the maintenance of balanced domestic transportation services in the public interest. Mr. ROBERTS. That concludes the hearing for today, and the committee will adjourn until 10 a. m. tomorrow. (Whereupon, at 4:15 p. m. the subcommittee was adjourned, to reconvene at 10 a. m., Wednesday, May 21, 1958.) 1 Oceangoing vessels of 1,000 gross tons and over in coastwise and intercoastal trade: RAILROAD PROBLEMS WEDNESDAY, MAY 21, 1958 HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, SUBCOMMITTEE ON TRANSPORTATION AND COMMUNICATIONS, Washington, D. C. The subcommittee met at 10 a. m., pursuant to adjournment, in room 1334, House Office Building, Washington, D. C., Representative Kenneth A. Roberts presiding. Mr. ROBERTS. The subcommittee will please come to order. Mr. George P. Baker, president of the Transportation Association of America, will be our first witness this morning. You may proceed with your statement, Mr. Baker. Mr. BAKER. I should like to request that the full statement I have here be put in the record, sir. Actually, I will just read what is on the green sheets here, which is a summary, and ask that the whole thing be put in the record. Mr. ROBERTS. The statement will be included in the record in full. Mr. BAKER. Thank you. STATEMENT OF GEORGE P. BAKER, PRESIDENT, TRANSPORTATION ASSOCIATION OF AMERICA Mr. BAKER. My name is George P. Baker. I am professor of transportation at the Harvard Graduate School of Business Administration, Boston, Mass. I am appearing today as president of the Transportation Association of America, a national transport policy organization made up of all types of users, investors, and carriers. My statement today covers 2 of the 4 subjects listed for consideration at these hearings. I should like to urge favorable consideration by your subcommittee of two proposals that call for greater authority of the ICC over (1) the abandonment of unprofitable rail services and (2) the adjustment of intrastate rates. Our association has not taken a position on the other two subjects; namely, construction reserve and competitive rates. While these two TAA proposals are designed primarily to solve or ease railroad problems, I should like to remind the members of the subcommittee that our association has also urged favorable consideration by Congress of other proposals that deal with problems of our publicly regulated carriers in general. Last month, I appeared before this subcommittee in support of specific statutory language to outlaw illegal for-hire carriage in the motor-transport field, following a reaffirmation by the ICC that it needed clarifying language. Earlier, TAA spokesmen appeared before other congressional com 28621-58--14 203 mittees to urge favorable consideration of a number of policy proposals, including one to support repeal of the Federal excise taxes on transportation. At present, our cooperative project has under very active consideration the agricultural commodity exemption problem. We are hopeful of developing a proposal on this subject in the immediate future. Individual statements on the two proposals to be covered at these hearings are attached, together with background statements showing action taken on each within the association. (The attachments referred to are as follows:) EXHIBIT 1.—Examples of current railroad applications with State commissions for authority to discontinue unprofitable services, February 1958 |