the law, in the manner, for example, suggested by the nots"-according to the railroads' own statement-they into a widespread program of reducing rates, so that would jump tremendously if you relax or take away from sion its power which it presently has to control compet portation. Mr. O'HARA. But that in a practical effect is what simply a carrier filing a tariff with a different rate, i Mr. PINKNEY. Yes; that exists today. But at the Commission has the power to step in and examine thos Mr. O'HARA. And to suspend them. Mr. PINKNEY. Yes; to suspend those rates. W see anything done that would take away from present power to suspend in a proper case these l' for competitive purposes and which might have tl us. Mr. O'HARA. I believe I have used my 5 minut Mr. ROBERTS. The gentleman from Californ Mr. YOUNGER. Mr. Pinkney, I do not und just what you object to in the proposal in the making provisions. Mr. PINKNEY. Mr. Younger, I set out o some of the effects that we believe that la Mr. YOUNGER. I know you set them ou set out are the right of decision of the have the ICC have complete control ove everything, including fully compensat You want everything to rest with the say, they have now. Where in the Sma away from the ICC? Mr. PINKNEY. You specifically ta1 language as it is written, the power all of the competitive facts in conside Mr. YOUNGER. Where does it say t Mr. PINKNEY. I have a copy of i from S. 3778, on page 7, which is amend section 15 (a), by stating: In a proceeding involving competiti the Commission, in determining wheth ble minimum rate, shall consider t movement of the traffic by railroad and Mr. YOUNGER. Well, they hav Mr. PINKNEY. I beg your pa . Mr. YOUNGER. I say they he it now as they see fit under the Mr. PINKNEY. We would a the present law, and I beli tempted to say that there circumstances attending the This would prohibit any co Mr. YOUNGER. Well, I that it is fair and reasonab the "eason point, but is worth. · top of page it in the trucking States, where the and I stated that as er reduction in their e than are our car railroads in the eastthing because they are But the fact that our e would indicate that eastern section of the point? has mentioned the longand other parts of the arse, we in the Midwest with the freight rates Ter if there has been any those freight rates comres in other parts of the Ste of Minnesota we have West shippers, shipping ous rate as compared to shippers. I realize that the vast volume of freight and as compared to the Midamage to the eastern section disadvantage to the Mid ice. ing with a factory located in Ohio, d if you wanted to make I recognize that there existed down through indicated before, I do structure, we have cerby setting up a system of o be a very logical one, but pment of our whole United as been placed in the position ete with the community that is rkets, and so that we might have. › interested in seeing nothing done } r freight-rate system. If that ever at are going to enjoy any great prosere the greatest degree of competition - of transportation. does your organization use to any great ck operations? he extent that the railroads have been willof the regulated motor carriers, the rails are s great problem it has often seemed to meat I am appearing in the role of a peacemakerthat we must have the rails, we must have the t have the water carriers in this complicated system ry hopeful that there would be more development of iggyback operation. It is quite obvious that many ations, like between Minneapolis and Chicago, I would il carrier can, generally speaking, carry heavy volumes of per than the trucks. Assuming that that is true, it would that a development of the piggyback operation between Minneapolis and Chicago, or other points, but merely pickout as a reference, that it could be used to the mutual advanboth the rail carrier and the motor carrier, if an earnest atwas made to do so. PINKNEY. Mr. O'Hara, I quite agree with you. Wherever e is a movement in trainload quantities, and it does not have to a tremendous trainload, quantities of freight on trailers, moving ween principal points, the piggyback type of service offers a great dvantage to both the rails and the motor carriers, and it is being used, as I indicated, where the rails are willing to do business with the trucklines, and some of them now are for the first time. But I have made this unkind remark a number of times about our rail friends, and that is that from the very beginning they have had a great reluctance to coordinate their service with that of the motor carriers. They have taken action to prevent such coordination. It has been in only recent years that that dam has been breached to some extent, and there now is beginning to appear such coordinated service, not tee has in dealing with this legislation, trying to adjust it, as judges of this race between these various forms of transportation, the difficulties and complexities with which they are confronted. Mr. Pinkney, I presume there will be somebody who is an expert on these rate cases, who will discuss the effect of the Supreme Court decision in the Milwaukee case, which was enlarged in the Utah case. What I was interested in was on the same day the reasons why the Supreme Court upheld the ICC in this instance as against the Minnesota Railroad and Warehouse Commission rate case. I have not read those decisions, but I was hoping some expert would come along. Are you familiar with those three decisions? Mr. PINKNEY. Mr. O'Hara, I am not. They do not affect us directly. I believe you have Mr. Jervis Langdon coming on. I will put his head on the block on that question. I am quite sure he is familiar with it, and he will follow me. Those cases affected the railroads, of course, primarily. I am not qualified to discuss them. Mr. O'HARA. You did state in answer to my colleague, Mr. Flynt, that you did feel that under existing law, if one form of transportation could reduce its rates, under existing law as compared to other competing carriers, that you felt that it was a wiser provision of law, and that the ICC should, in such hearing, authorize the reduction of rate of a compensable rate to one form of transportation even though it was to the disadvantage of other types of carriers. Did I understand you correctly? Mr. PINKNEY. The problem arises there, Mr. O'Hara, as to what is meant by compensatory. Our quarrel mainly stems from the fact that you have situations, for example, between the railroads and the barges, where the railroads may still be above their bare out-of-pocket cost, but below the full cost of the water carrier or the motor carrier, and if they drop to that bare out-of-pocket cost which they claim is a compensatory rate for them, because of added traffic theories and other theories they advance, that they should have the right to do that. Whereas, we point out that if that type of ratemaking is permitted, you will destroy those competing forms of transportation; that the Commission must be able to step in there at some point, just from the standpoint of competition alone, and prevent the destruction of one form of transportation by another through the technique of the out-ofpocket cost reductions. Of course, far more than the fate of the carriers is involved in any such situation. Your whole rate structure becomes involved in a rate war which would derive, let us say, the rates on alcoholic liquors, which are very, very high, well above full costs, down to bare out-of-pocket cost levels. Somebody has to make that up, because all carriers somehow have to get back their full cost. It shifts the burden from the luxury item, the alcoholic beverage item, over to items such as the product of the farm, the forest, and the mines, the raw-material-type product. Mr. O'HARA. I am sitting here thinking of a rate case that would arise, let us say, between Minneapolis and New Orleans. We have barge transportation between those two points. We have freight transportation, railroad transportation, and we have the truck transportation. I have often wondered what sort of mental gymnastics the ICC would go through in that form of a hearing. I suppose you have sat in on some of them. Mr. PINKNEY. There have been some hearings like that, hearings involving, for example, the movement of petroleum up the Pacific coast, where truck, coastal ships, and rail were all involved. The Commission has stepped in and stopped rate wars which would have had the effect of wiping out the water carriage or wiping out the truck carriage of petroleum in those areas, which is essential to some communities, essential to many communities depending entirely upon the truck or depending entirely upon the water. So the Commission has stepped into that type of rate situation and fixed rates. Usually the water rate is the low rate. Usually the rail rate is above the water rate but under the motor rate, with the motor rate usually the highest, but preserving for those communities and that area the choice of transportation media, so that the shipper still has a choice of truck, water, or rail, whichever best suits his needs. Mr. O'HARA. What effect has the railroad freight increases which have occurred over the years had on trucking companies? Mr. PINKNEY. Mr. O'Hara, the trucking companies have been subject to exactly the same pressures, of course, inflationary pressures, rising labor costs, and so forth, that the rails have, and I would say that, generally speaking, the truck rates have gone up pretty much as have the rail rates. The effect has been that when the rail rates went up for the same reasons, usually the truck rates have gone up. Mr. O'HARA. Does that mean that as these rate increases have been granted by the ICC, the motor carriers made application for equivalent rate increases, or does that follow automatically by simply filing your tariff increases? Mr. PINKNEY. Usually the latter, sir. I have not participated in those proceedings. The big ex parte rail general rate increase cases have no exact counterparts in the trucking industry, which are usually on a regional basis. The truck operators have gotten together and increased their rates at approximately the same time, usually just following the rail increases. Mr. O'HARA. That has been by their own action? Mr. PINKNEY. Yes; by their own action. Mr. O'HARA. As you stated on page 3, where you quote from the Interstate Commerce Commission statement, that Exclusive of schedules involving general increases in rates, more than 50,000 rail tariffs were filed with the Commission in 1957. These rail tariffs contained hundreds of thousands and probably millions of rates, and 98.3 of those rates went into effect and were not objected to or challenged. The question that has arisen in my mind from a practical matter, Mr. Pinkney, is: With that sort of a natural situation which does exist, why are you so violently concerned over the advanced claim of the rails to have the right to file a tariff which could not be challenged if it was compensatory to the particular rail carrier, or any one form of transportation. Do you feel that it would be, as you have stated, a complete destruction of the competitive right of other carriers? Mr. PINKNEY. Those facts and figures, Mr. O'Hara, arise under the law as it is. While we have grave concern, and we quarrel bitterly with the Interstate Commerce Commission many, many times about the rail rate reductions that have taken place in the last 5 years, most of which the rails have been successful in obtaining, we think that if you change the law, in the manner, for example, suggested by the three "shall nots"-according to the railroads' own statement-they would enter into a widespread program of reducing rates, so that those figures would jump tremendously if you relax or take away from the Commission its power which it presently has to control competition in transportation. Mr. O'HARA. But that in a practical effect is what exists today, by simply a carrier filing a tariff with a different rate, isn't that true? Mr. PINKNEY. Yes; that exists today. But at the present time, the Commission has the power to step in and examine those rates. Mr. O'HARA. And to suspend them. Mr. PINKNEY. Yes; to suspend those rates. We would not like to see anything done that would take away from the Commission its present power to suspend in a proper case these rate reductions made for competitive purposes and which might have the effect of destroying us. Mr. O'HARA. I believe I have used my 5 minutes, Mr. Chairman. Mr. HALE. No questions. Mr. ROBERTS. The gentleman from California. Mr. YOUNGER. Mr. Pinkney, I do not understand your reasoning, just what you object to in the proposal in the Smathers bill on the ratemaking provisions. Mr. PINKNEY. Mr. Younger, I set out on page 10 of my statement some of the effects that we believe that language would have. Mr. YOUNGER. I know you set them out, but those things that you set out are the right of decision of the ICC, and you still want to have the ICC have complete control over and the right to look into everything, including fully compensatory, nondiscriminatory rates. You want everything to rest with the power of the ICC, which, you say, they have now. Where in the Smathers law do you take anything away from the ICC? Mr. PINKNEY. You specifically take away from the ICC in that language as it is written, the power of the Commission to consider all of the competitive facts in considering Mr. YOUNGER. Where does it say that? Mr. PINKNEY. I have a copy of it right before me, sir. I will read from S. 3778, on page 7, which is section 5 of that bill, proposed to amend section 15 (a), by stating: In a proceeding involving competition with another mode of transportation, the Commission, in determining whether a railroad 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. Mr. YOUNGER. Well, they have that right now. Mr. PINKNEY. I beg your pardon, sir. Mr. YOUNGER. I say they have that right now, where they can limit it now as they see fit under the present law. Mr. PINKNEY. We would attack, I think, if they so limited it under the present law, and I believe we would be successful, if they attempted to say that there can be no consideration of the facts and circumstances attending the movement of the traffic by the other mode. This would prohibit any consideration of those facts and circumstances. Mr. YOUNGER. Well, I do not know. You say in the present law that it is fair and reasonable. |