which is designed to accord to all forms of public transportation, including the railroads, an opportunity to compete for traffic under fair and impartial regulation. Implicit in this statement, it seems to me, is an acknowledgment by the spokesman for the railroads that the present Interstate Commerce Act permits the railroads to compete "under fair and impartial regulation." Why do the rails now claim otherwise? The present regulations maintain a healthy competitive balance, in the interest not only of the shipping public, but of the carriers as well. Thus, competition is controlled, rather than cutthroat. And as a result, freight rates are stable, rather than chaotic. Section 5 of S. 3778, on the other hand, may well lead to cutthroat carrier competition and produce uncontrolled rate wars so that freight rate stabilization between individual shippers, areas, or territories becomes impossible to maintain. There is no sound reason for believing that today's competition between different modes of transport, if freed of restraint under present rules, would not be destructive of fair and just shipper rate relations, as was the case prior to 1887. Penalizing other forms of transportation to help the railroads is not the way to achieve an economical, efficient, coordinated privately operated national transportation system. Inadequately regulated competition may be quite as much of a public evil as unregulated monopoly. There are countless communities in the United States served solely by trucks. If truck lines serving the major cities are weakened by railroad rate cuts implicit in S. 3778, how are these small communities, which do not have rail or water carriers, to receive their daily necessities? Will enough truck lines survive to furnish transportation to these communities? Will they be able to provide adequate services? Isn't it also likely that both business and consumers in these communities will have to pay higher prices? Competition in the best interests of a well-rounded transportation system should be based on service, not price. You all know the evil effect of price wars, particularly on the little fellow. And in the trucking industry and in the water-carrier industry the average person is a little fellow; he is a pigmy compared to the railroads. I should like to summarize the main points of this statement. These conclusions are, in my judgment, based upon sound economic principles and are supported both by recognized, independent transportation authorities, and by our industrial history. If S. 3778 is passed in its entirety: (1) Railroads are likely to obtain a monopoly over intercity freight transportation. With unlimited financial resources, the rails can afford to cut rates until they have either driven trucks off the road or forced them to sell to the railroads. Then, without competition, the rails can increase their rates to make shippers and consumers pay the costs of the transportation war and whatever the traffic will bear in the future. Senator SMATHERS. Do you think the ICC would let them do that? Mr. WEISS. If they are barred from considering the impact of rates on competing forms of transportation, definitely yes. Senator SCHOEPPEL. You don't think Congress would sit here and let them get away with that, do you? Mr. WEISS. Sir Senator SCHOEPPEL. If Congress, through its wisdom, should make the mistake you are pointing out or that we are likely to make you fear, do you really think that we would compound that matter? Mr. WEISS. Let me put it this way, if I may, sir: One of the safeguards against this eventuality is that a rate must not be discriminatory. How do you measure, do you measure it within the close confines of the railroad or do you look at the transportation size? That is the $64 question. How do you test? What is your measuring stick? Senator SMATHERS. If the factors which you complain about— which you say we are putting into this bill or in some respects we ar taking out-if in fact it is established that the Commission already follows those rules, and I presume you approve of what the Commission has been doing, then your objection would fall of its own weight, would it not? Mr. WEISS. No, sir; because presently the Commission, as I understand it, is considering impact on competing modes of transportation. Senator SMATHERS. Let me ask you this: How fast did the trucking industry grow from the end of World War II to 1950? Mr. WEISS. I don't have the figures available, sir. I know the growth has been substantial. Senator SMATHERS. Is it not a fact that they had their most substantial growth during that time? Mr. WEISS. The motor vehicle itself is a relatively new phenomena in our industrial history. Senator SMATHERS. We can show by law from 1945 to 1950 that the Commission followed exactly the procedure we are recommending here now. During this time the truckers had their greatest incidence of growth, and if we can establish that to you, then are you willing to say that we will let this go in? Mr. WEISS. No, sir; because you are speaking of a particular point in our history, 1945 to 1950 was the period-it included the war and the postwar period-when everything was mushrooming, including trucking and parenthetically the railroad industry. You didn't have the strains and stresses which are present at this recession period and I am very much afraid that the present plight of the railroads, which I hope for the sake of the railroads is a temporary one, may lead you into legislative enactments which may have long-reaching consequences. That is the point I made earlier. Senator SMATHERS. Let's go back before World War II, before the 1945 period. If, in the early forties the trucks also had an enormous growth and if the Commission was in fact following the same principle which we have now in this proposal, and still the trucks increased their operations immeasurably and apparently made money, would you then be willing to say that your argument falls of its own weight and that it would not in fact hurt the trucks as you claim it does. Mr. WEISS. No, sir, because you are, I think, sir, with due respect- Mr. WEISS. That you are confusing coexistence with causality. The fact that this may have occurred Senator SMATHERS. Very good, very good. [Laughter.] I am not quite sure I know what it means, but it sounds good. [Laughter.] Mr. WEISS. Coincidence with causality. I am afraid you are confusing coincidence with causality. The very fact that these two things may have occurred in the same point of time does not necessarily mean that the one caused or was responsible for the other. There is a basic principle in logic which you as a lawyer should know. Senator SMATHERS. What you are recommending is that we adopt this foreign affairs approach to this transportation system and let's have coexistence. [Laughter.] Mr. WEISS. Amen, sir. No, seriously, Senator, you would not argue that because two things happened to occur at the same point of time that there was a causal relationship. That is I am afraid what you are arguing. Senator SMATHERS. I would argue the reverse of it, I would say that there is more logic to believe that if under the conditions which you complain about, if in fact those conditions did exist already, if the evidence shows that the trucking industry had its greatest rate of growth, then I would say that you fellows are whistling in the dark. Mr. WEISS. No, sir. Senator SMATHERS. It may be that that is wrong, but I would say that the credible evidence that we have in front of us seems to indicate that more than this reaching out and saying, "My God, we are going back, it is going to be awful, we are all going to drown." Mr. WEISS. But aren't you ignoring the whole host of factors which may have been present at the same time, which might have had far greater import on the development of the trucking industry? Senator SMATHERS. I would say the difference between our positions is that at least I have some facts, whereas, you are reaching into the graveyard of fear, so to speak, and bringing up these ghosts and saying this is liable to happen. It may be that it would. Just as Senator Schoeppel says, if it does then we sure have our work to do again, because we don't want it to happen. Anyway, you have made a fine witness. Mr. WEISS. I hesitate to burden this with facts and figures, but if you feel that this is the graveyard of ghosts, and fears, I can supply statistical data. But I don't think that is too relevant. We have passed—we have history which caused the railroads to be made subject to regulation because of the practices they indulged in, sir. Senator SMATHERS. At the time that was done in 1880, which you heard about, how many airplanes were there flying, or for that matter, how many trucks were on the road? How much were we spending on highways? Oh, yes, the facts were different, at the time that you brought them under regulation. That is just what we are saying, that the competitive situation is not at all alike today as to what it was at the time the railroads were a monopoly and we had to do something with them. Yes. I think that was absolutely right that we regulated them when we did. I am sorry we didn't regulate them sooner Senator LAUSCHE. Mr. Chairman Senator SMATHERS. Yes, sir. Senator LAUSCHE. If we do not include in the bill this ratemaking regulation, what course do you recommend that we should follow to cope with this plight of the railroads? Mr. WEISS. I would say to you, sir, speaking for the teamsters, that we would suggest passage of S. 3778 without this particular section. Senator LAUSCHE. That is your passage of this section, with the elimination of this section Mr. WEISS. Of this bill without that section. Senator LAUSCHE. Of this bill, yes. Now, that would mean that we would be doing for all modes of transportation the identical things that we are doing for the railroads, except granting the railroads through the approval of the Interstate Commerce Commission, the right, (a) to discontinue passenger service and (b) to fix intrastate rates when they have an adverse impact upon interstate rates. That is what you would recommend? Mr. WEISS. I am not sure I understand you. If you say that passage of this bill would give the railroads permission or authority Senator LAUSCHE. Let me tell you. The passage of the bill as you recommend it would provide for all modes of transportation the elimination of the excise tax, the benefits that would come from restricting the right of private carriers, the benefits that would come from narrowing the definition of agricultural products, the benefits that would come from the recommendation that the right of depreciation shall be accelerated, and the benefits that would come from the establishment of a construction reserve fund providing for deferred taxation. All of those benefits would inure to the water carriers and the truck carriers, and railroads benefit only would be rather 3-the 2 that I enumerated and the loan fund. Is that what you recommend? Mr. WEISS. That is what I recommend. But I would like to make this clarification Senator LAUSCHE. Now then how would that become a permanent cure for the problem? Mr. WEISS. Sir, I am no transportation expert and it would be presumptuous on my part to suggest to this committee, which has studied this problem long and seriously, as to what the permanent cure is to the railroad problem. I don't have the answer. Senator LAUSCHE. All right. Now then, may I ask you this question: Do you believe in the principle that was enunciated in connection with the passage of the 1935 act dealing with truckers-and I think the 1940 act which dealt with all modes, which provided that it is the intent of Congress that for each mode of transportation there shall be preserved the benefits of the inherent advantages that they had in their mode of transportation? Do you believe in that principle? Mr. WEISS. Yes, sir. Senator LAUSCHE. Do you believe that that principle, if carried into effect, inures to the benefit of the public? Mr. WEISS. I do, sir. Senator LAUSCHE. You are taking the position that the primary objective of the Congress should be the preservation of the four modes of transportation, even though it means the elimination of the right to enjoy the benefits that come from the advantages inherent in the mode of transportation in which the carrier is engaged? Which of the two do you think we should consider primarily? Mr. WEISS. Implicit in your last question, Senator, is an assumption which unfortunately, because of my incomplete knowledge of this business, I can't say yes or nay, but I would like to question, namely, implicit in your question is the fact that recognition of the essential and inherent advantages of a particular mode necessarily require higher rates. And this I am not as yet prepared to buy. And I am not sure Senator LAUSCHE. In the declaration of principle in the 1935 act and in the 1940 act, it was provided that each mode of transportation shall be permitted to charge a rate, even though low, providing it is compensatory and is related to the inherent advantages that that mode of transportation has, is that correct? Mr. WEISS. So far as I know; yes. Senator LAUSCHE. Well do you believe in that principle? Mr. WEISS. Yes, sir; but I do not follow the corollary which I think is implicit. Senator LAUSCHE. All right. You are now arguing that our purpose should be the preservation of the four modes of transportation, and in the ratemaking laws, we should prohibit one mode of transportation from enjoying the full benefits of its inherent advantages? Mr. WEISS. No, sir. If I have given that impression, then I haven't done the job I set out to do, sir. But again, there you see, there is that assumption which has to be followed, I think this is basic, sir, because I am not willing to accept as yet, unless shown on the contrary, that recognition of the inherent advantage will necessarily mean the lowest possible rate, nor will it mean with respect to other modes of transportation, a higher rate than would otherwise be possible. Senator LAUSCHE. You do know that it was the truckers that argued: We do not want to be put within the jurisdiction of the Interstate Commerce Commission if we are not to enjoy the full advantages that we have in our inherent mode of transportation. Mr. WEISS. I don't know what prompted the position of the trucking industry at that time, sir. Senator LAUSCHE. The trucks were afraid that the Interstate Commerce Commission being friendly to the railroads, would say to the truckers: We will not allow you to reduce your rates because if you do, it may have a destructive impact upon the railroads. Mr. WEISS. Senator Lausche, are you aware of the fact that the impetus for regulation of the trucking industry came not from the trucking industry, but from the railroads? Senator LAUSCHE. Well Mr. BARTON. That is not entirely true. Senator LAUSCHE. Yes. Mr. BARTON. No, the truckers wanted regulation. Mr. WEISS. They were ably supported by the railroad industry, sir. Senator SMATHERS. All right, sir. Dr. Weiss, we thank you, sir. You have been very helpful. Senator SCHOEFFEL. I would like to ask Dr. Weiss this question. |