I said to them, as far as I am concerned, I have no personal interest in this bill. When on another occasion, Admiral Land came out against the legislation, the Secretary of Agriculture came out against it, and the Secretary of War did likewise. I called up the President and said to him, "Have you lost interest in this bill?"

He said, "Why?", and so I told him what had happened.

He said he didn't know about the Cabinet opposition as he had been down to Warm Springs.

I said, "You had better put a stop to it or I will throw the legislation in the wastebasket."

He put a stop to it.

Senator SMATHERS. We don't have that happy situation today. [Laughter.]

Mr. WHEELER. Well, he put a stop to it, I will say. When he told the Cabinet members to stop, they stopped. Don't make any mistake about that.

Senator SCHOEPPEL. Senator Wheeler, Mr. Chairman, if I might ask

Senator SMATHERS. Yes.

Senator SCHOEPPEL. There have been fears expressed by motor carriers and the water carriers with reference to the instant legislation or proposed legislation or proposed report instantly before this committee, upon which we are holding this hearing on this particular section, that the language there inserted-I am sure that you are familiar with it-would permit, say, the rails to invoke or inaugurate rates inherently which they possess, cheaper, running over steel rails, in many areas, to the detriment of the water carriers and the motor carriers, unless they were required to take into consideration the evil effects that might happen to them. Did you hear any such situation develop when you were having this act before you?

Mr. WHEELER. None whatever. Never at any time. As I say, it was the motor carriers that wanted such protective provisions, and the water carriers, and we put them in there purposely to protect them. Then we felt that we should not discriminate against the railroads so we gave them the same protection. The motor carriers never objected to our putting that policy in. We pointed it out repeatedly on the Senate floor that we were seeking to protect the inherent advantages of each form of transportation.

And I repeat what we were doing: We were taking the language from the Motor Carrier Act and writing it in to apply generally to all forms of transportation.

Senator COTTON. Mr. Chairman, there is just one thing that wasn't quite clear in my mind, Senator. I understood you to say that when this legislation was under consideration, that this provision was put in at the request, the affirmative request, of the water carriers and the motor carriers. Then later, I understood you to say that the motor carriers did not object to it. I was just wondering which is the case; were they actively and affirmatively asking for it, or were they simply not objecting to it at the time?

Mr. WHEELER. In the 1935 act, Motor Carrier Act, the motor carriers specifically wanted this language in the policy declaration and also in the rate-making provisions. We put it in there for them so as to protect their inherent advantages. And then, in 1939 and 1940, when the water carriers asked for it, we wrote in a similar

provision to protect the water carriers, so that there wouldn't be any possibility that the Commission could raise the water carriers' rates so as to put them out of business or put in rates equal to the railroad rates.

Then we wrote it in as a general policy of the Congress in the national transportation policy. That is this policy that we had put into the Motor Carrier Act, we then made applicable to all forms of transport. Then in the rate-making provisions, we took substantially what we had written into the Motor Carrier Act and added it to the rate-making sections for all forms of transportation.

Now, may I say my recollection-and I am quite sure that I am right, because I did go through the hearings hurriedly the other day and I saw at no place where they objected to our making these changes in the 1940 act.

Senator COTTON. But there was no place in the hearings where they particularly requested it? They simply were not objecting?

Mr. WHEELER. No; I don't think the motor carriers objected or requested it in 1940. At least that is my recollection.

Senator CorTON. Thank you.

Mr. WHEELER. Now, in the light of the efforts of the committee and those of us who were managers of the legislation to make abundantly clear that in fixing the rates, the inherent advantages of each mode of transportation was to be recognized and preserved, I was astonished to hear a few years ago that the Commission had not consistently adhered to this policy.

In its early decisions, after the passage of the act, the ICC stated that in considering the question of whether rates were unduly low, controlling weight should be given to the operating expenses, and not to the rates of competing modes of carriers. That is in the New England Motor Rate Bureau, and Seatrain cases.

In the New Automobile case, decided in 1945, and to which the subcommittee report makes reference, the Commission recognized that in some cases it had deviated from this policy. However, it reaffirmed its adherence to the congressional intent, stating

As Congress enacted separately stated ratemaking rules for each transport agency, it obviously intended that the rates of each such agency should be determined by us in each case according to the facts and circumstances attending the movement of the traffic by that agency. In other words, there appears no warrant for believing that rail rates, for example, should be held up to a particular level to preserve a motor-rate structure, or vice versa.

Now, that was clearly the intention of the Congress of the United States, and that was what the Interstate Commerce Commission held, not only in that case, but they held it also in one other case.

Now, I say that it wouldn't be necessary to have any legislation, providing that the Interstate Commerce Commission had followed the rule which they initiated, laid down, and which Congress intended. Since this clear recognition of the intent of the law, the Commission has from time to time departed from the policy we thought we had made plain in the Transportation Act of 1940 and the reports and debates thereon. This experience, as I said, seems to clearly indicate, if you want to continue the policy intended by Congress in the 1940 act as expressed not only in the House, but in the Senate and in the reports, then there is only one thing for you to do, and that is:

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to write clear and unmistakable language into the Interstate Commerce Act, itself.

Words on the floor, or in a report, don't always guide the various commissions, and they don't always bind the courts either.

Senator SMATHERS. May I ask you this question: On behalf of the subcommittee I will say that is exactly what we have attempted to do, to write language into this statute which, in fact, would carry out the intention of the Congress when it first put this ratemaking provision in in 1940, with respect to all.

Mr. WHEELER. Yes, I understand.

Senator SMATHERS. Now, have you seen the language that we tried to write?

Mr. WHEELER. I have; yes.

Senator SMATHERS. We say, 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.

Mr. WHEELER. Yes.

Senator SMATHERS. Now, in your opinion, does that expression there coincide with the intention of the Members of the Congress in 1940?

Mr. WHEELER. Very definitely. The only possible thought that I had is that you say "the railroad rates," where it seems to me that it should say "all rates."

Senator SMATHERS. All rates; right.

Mr. WHEELER. All rates. I can see how perhaps, as the language is presently written, the motor carriers might say, "Well, you are giving preference to the railroads." But, as a matter of fact, when you take into consideration the other provisions for their protection that doesn't seem true. However, from a psychological standpoint, it would seem to me that if you made it apply to all forms of transportation, it might be better.

Senator SMATHERS. Well, I may say that the subcommittee discussed that, and we agreed that probably we were in some error in not making that applicable to each mode of transportation, because in that way the general public, as a matter of fact, would be even better off, and it would make our efforts less subject to criticism.

Mr. WHEELER. I think, generally, the general public would very definitely benefit if the Commission would follow the rule that it laid down in the Automobile case. I have read decisions since that time, however, where the Commission in one case first decided it one way, and then backed away and decided it another way by a divided opinion 2 to 1. I felt clearly that the majority was wrong in that 1956 case. Now, I have said repeatedly on the floor of the Senate, and elsewhere, and I say it again, that I think the Interstate Commerce Commission, by and large, is probably, and has been throughout the years, one of the best commissions that we have. But they are not perfect; they are human, and they have made mistakes. Therefore, I think the language should be clarified so that there can't be any question in the future as to the intention of Congress.

Senator LAUSCHE, Mr. Chairman.

Senator SMATHERS. Senator Lausche.

Senator LAUSCHE. To get these events chronologically in order, may I ask whether the several different modes of transportation were at

the same or at different times subjected to the regulation by the Interstate Commerce Commission; and if they were at different times, give us the sequence in which each of the modes were brought under its jurisdiction.

Mr. WHEELER. Well, the railroads, of course, were brought under regulation in 1887.

Senator LAUSCHE. Right.

Mr. WHEELER. And they were brought under regulation because of discriminations between various areas, various businesses and localities, and so forth. That was the prime reason, I think, at the time.

Subsequent to that time, however, the Act was amended in 1920, and then it was amended many times thereafter. I amended it in 1935. The motor carriers came under the Act in 1935.

Senator LAUSCHE. The railroads in what year?

Mr. WHEELER. 1887.

Senator LAUSCHE. The motor carriers in 1935?
Mr. WHEELER. 1935.

Senator LAUSCHE. And the water carriers in-
Mr. WHEELER. In 1940.

Senator LAUSCHE. Thank you.

Senator SMATHERS. Are there any other questions?
Senator POTTER. Yes.

Senator SMATHERS. Senator Potter.

Senator POTTER. Yes. Senator Wheeler, the motor carriers and water carriers are fearful that if this language is adopted, that the railroads will be able to reduce rates below a compensatory figure as unfair competition. I would like to have your comments on that.

Mr. WHEELER. Of course, they cannot do it under the law, as it now stands. The Commission cannot permit them to reduce their rates below a compensatory rate. I hesitate about giving you the exact meaning of "compensatory," but it is one that brings in some profit to the railroads. That is my understanding of it. It must cover out-of-pocket costs plus contribute something to profit to the railroad. Senator MONRONEY. Would that compensatory refer to the reasonable minimum rate, or would it be synonymous with reasonable rate, as provided for in the Bill?

Mr. WHEELER. Well, it would be

Senator MONRONEY. Why wasn't "compensatory" used? Mr. WHEELER. Well, a reasonable compensatory rateSenator MONRONEY. It doesn't say "compensatory rate." Mr. WHEELER. A reasonable compensatory rate, as I recall. Senator MONRONEY. It just says a reasonable minimum rate. Why doesn't it say "compensable rate"-in the language of the amendment? Mr. WHEELER. Well, I am not talking about the amendment. I am talking about the language of the 1940 Act. And the Commission has repeatedly held it must be a compensatory rate, and they defined a compensatory_rate many times, and again they defined it in the Automobile case. I see the Commissioner here. He can correct me if I am in error.

I think a compensatory rate means not only out-of-pocket rate, but also one that brings in some money to the railroads.

Commissioner ARPAIA. Not necessarily.

Mr. WHEELER. Not necessarily.

Senator SMATHERS. May I say this: We wrote the words "reasonable minimum rate" into this language because there had been a num

ber of decisions with respect to those words. "Reasonable" means, first, compensatory, as we understand it; it means not discriminatory, it means not prejudicial, and it looked, in the light of the decisions and in the light of what all of us wanted to do, which would mean we did not want to let any railroad or anybody else reduce a rate below what it actually cost them to take it.

Senator POTTER. Do you figure that your reasonable minimum rate is more definitive than a compensatory rate?

Senator SMATHERS. Yes. Because there are other sections in there which refer to nondiscrimination, and it must be compensatory. Senator PoTTER. You believe that the reasonable minimum also means compensatory?

Senator SMATHERS. We believe-yes, we think there are decisions saying that reasonable means compensatory and not discriminatory. Senator MONRONEY. Senator Wheeler, may I ask: Do the railroads have great trouble now in getting rates approved by the ICC when they wish to meet competition?

Mr. WHEELER. That is something that I could not answer, because I have never represented any railroad or any trucking company in any rate matter at all. And I just don't know that. The only thing I have seen is the advertisement that appeared in the Washington Post and the Star last night, in which it said one-quarter of 1 percent, or something of the kind had been denied. Well, if that is true, I can't see why the truckers should have much objection to this bill, if that is the only amount that will be affected by it.

Senator MONRONEY. Of course, if that be a true figure, you wonder why it is necessary to go through all this to get this language approved, because if the railroads had been able to get all the relief they wanted in all but a fraction of the cases

Mr. WHEELER. It is important because the Interstate Commerce Commission ought to follow a consistent policy so that the railroads, the truckers, and the water carriers would know where they stand. But when they decide one way today and another way tomorrow, then it seems to me that it is bad for the industry as a whole.

Now, as I said, they pointed out very definitely in several cases the intent of the Congress of the United States. And as I said at the outset, this legislation first was called to my attention by the President of the United States, Mr. Roosevelt, when he called me in and asked me if I wouldn't handle the legislation. I told him I didn't want to do it, because of the fact that it took a lot of time and there was a lot of controversy.

As I said, there was no glory in it for anybody, just a lot of abuse and hard work. We worked on it for 2 years.

Senator SMATHERS. That situation hasn't changed.

Mr. WHEELER. We worked on it for 2 years, and the railroads threatened they would fight it if I didn't do so and so, and the brotherhoods on one occasion did the same, and the water carriers carried on a tremendous campaign, advertising and telegrams and everything else.

Senator SMATHERS. Are there any other questions?

Senator Yarborough.

Senator YARBOROUGH. If that means the same thing, would there be any objection to changing this language, a reasonable minimum rate, to a reasonable compensatory rate?