Senator POTTER. Sorry, Captain.

Mr. INGERSOLL. In the case of the water-carrier industry, the act provides for rates that reflect the inherent advantage of this mode of transportation and at the same time acknowledges an inherent disadvantage in the natural limits of routes over which it operates and can operate, in the slowness of its service in relation to other modes of transportation which is inherent in its operating capabilities, and in the further disadvantage it has inherently in the nature and size of the cargoes it must cary in the type of equipment employed.

The subcommittee's finding in this instance, that carriers should have the opportunity to make rates reflecting their different inherent advantages, with the further understanding which the act now takes into consideration that there are also inherent disadvantages is a sound principle. But we believe that the ratemaking amendment proposal in S. 3778 is not consistent with this finding and instead seeks to give to one mode of transportation the right to assert superior financial resources as an inherent advantage. We do not believe that this was the intent of the subcommittee, inasmuch as its net effect would be to give to one mode of transportation the right to destroy another mode of transporation.

Nor can we see that it is of crucial importance to the railroads to do so in their present financial plight, since they would add no more than 3 percent-and a very low-rated 3 percent-to their total gross revenue, if they put the barge industry cmpletely out of business. The Surface Transportation Subcommittee also found that "the national transportation policy is clear, however, that such ratemaking should be regulated by the Commission to prevent unfair destructive practices on the part of any carrier or group of carriers." There is no question of the fairness and accuracy of that statement. But there is a serious question posed in S. 3778 by the proposed ratemaking amendment since in our opinion that amendment is designed to relieve the act of one of the safeguards against unfair destructive ratemaking practices and impose upon the Commission in its administration of the act a prohibition against the exercise of its authority to intervene when the railroads propose minimum rates that would be destructive of competition.

While we are confident that such was not the intent of the subcommittee, we believe that the railroads would urge that this language be so construed. And since the Interstate Commerce Act is the only protection that carriers have against such misuse of economic power by businesses with superior financial resources, the barge industry then would be at the mercy of this more powerful competitor. The theory of protecting smaller businesses from larger businesses who have greater financial resources is recognized as a good American practice, inasmuch as the Sherman, Clayton, and Robinson-Patman Acts, alĺ have been enacted into law and are enforced for that purpose. That the barge industry, an admittedly small business operation as compared to the railroad industry, enjoys a measure of such protection under the ratemaking rules of the Interstate Commerce Act is now made to appear to be an unusual practice, one that should be condemned and discontinued, and one that should be destroyed in order to allow the railroads to employ the advantage of superior financial resources to take to themselves business which is now handled by barges because of an inherent cost advantage in barge transportation

which had nothing to do with the financial resources of the barge industry itself.

We are not necessarily in disagreement with the Surface Transportation Subcommittee's findings

that the Commission consistently follow the principle of allowing each mode of transportation to assert its inherent advantages whether they be of service or of

cost.

Actually, we believe that to be the intent of the law as now written. In the exercise of its authority in the thousands of cases which come before it every year, the Commission may have failed from time to time to recognize "inherent advantage," but if that is the point in controversy, then the proposed amendment to the rule of ratemaking is not the answer. In translating the findings of the subcommittee into the language of an amendment to the act, we respectfully suggest to this committee that the amendment does not go far enough to implement the intent of the subcommittee. If there is intended a directive to the Commission that in its interpretation and enforcement of the act, it should adhere to the principle of allowing each mode of transportation to assert its inherent advantages, whether they be of service or of cost, then I respectfully suggest to this committee that, without delaying the otherwise meritorious proposals in S. 3778, a little more time be taken to draft compromise language on the ratemaking proposal which would satisfy the different modes of transportation and which would give to the Commission direction in the definition of what constitutes the inherent advantage.

Meanwhile, and until and unless this controversy can be resolved, the American Waterways Operators, Inc., for which I speak here today, is opposed to the amendment to the rule of ratemaking as proposed in S. 3778 because we believe it would give the railroads a weapon with which to destroy our individual operators by cutthroat competition.

(Appendix A to statement of Mr. Ingersoll follows:)

APPENDIX A

STATEMENT OF A. C. INGERSOLL, JR., CHAIRMAN OF THE BOARD, THE AMERICAN WATERWAYS OPERATORS, INC., WASHINGTON, D. C., IN OPPOSITION TO S. 3778 WITH RESPECT TO AMENDING SECTION 15A OF INTERSTATE COMMERCE ACT

In additional to being chairman of the board of the American Waterways Operators, Inc., I am president of Federal Barge Lines, Inc., a privately owned operator of towing vessels and barges with operating rights on the Mississippi River system, the Missouri River, the Illinois Waterway, portions of the Gulf Intracoastal Waterway, and the Warrior-Tombigbee Waterway. The principal offices of Federal Barge Lines, Inc., are located at 611 East Marceau Street, St. Louis, Mo.

I am a graduate of the New York State Merchant Marine Academy and have been associated with transportation on the inland waterways for almost all of my business life, having served in the operation of the vessels themselves as well as in executive positions. My experience includes a 5-year period when I was president of Federal Barge Lines at the time it was a part of the Inland Waterways Corporation operating as an enterprise of the Federal Government. I was chairman of the Manpower Subcommittee of the Inland Waterways Advisory Committee to the Office of Defense Transportation in 1944-45; director of the Inland Waterways Section of the Transportation Division of the United States Strategic Bombing Survey in Germany for a period during World War II; and deputy director of the Transportation Division of the United States Strategic Bombing Survey in Japan in 1945-46. I have also served in the capacity of general traffic manager for barge and towboat operating companies. My experi

ence in waterway transportation covers work with companies operating on the Ohio, Mississippi, Illinois, Missouri, Tennessee, Kanawha, and Monongahela Rivers.

I am appearing before this committee in my capacity as chairman of the board of directors of the American Waterways Operators, Inc., which I shall refer to hereafter as AWO or the association.

I would like to present to the committee a brief background statement on the inland waterways industry in order to qualify a spokesman of the American Waterways Operators, Inc., as a witness for an industry deserving of consideration at this hearing.

The United States has a network of approximately 29,000 miles of navigable inland river, canal, and intracoastal waterway channels, exclusive of the Great Lakes. About half of these channels have an operating depth of 9 feet or more, which is considered standard in this country for the movement of commerce in barges and shallow-draft tankers. There are approximately 1,700 operators of towboats, barges, tugs, and shallow-draft tankers. These companies operate 4,312 towing vessels, 12,545 dry cargo barges and scows, and 2,212 tank barges with an aggregate cargo carrying capacity of approximately 12,996,564 tons. They employ some 65,000 operating personnel. From these figures we can readily ascertain that the barge and towing vessel industry is largely made up of small businessmen, inasmuch as each of the 1,700 operators of equipment has an average of slightly less than 11 pieces of equipment, not enough per operator to make up one of the standard large tows operating in daily service on the principal waterways.

In spite of the fact that our industry is made up of small, highly diversified operators whose operations are individualistic in nature, the industry as a whole has proven itself to be a reliable, safe, economical mode of transportation which in 1956 attracted 8.1 percent of the total intercity freight traffic in the United States. When we compare that with the 3.5 percent of the total intercity freight traffic which the barges, towboats, and shallow-draft tankers handled in 1947, we get an idea of the attraction which the waterways industry has shown for commerce in the last 10 years.

Actually, the inland waterways transportation industry in its present form first demonstrated its ability as the low-cost carrier of bulk commodities during World War II when it rendered outstanding service particularly in the carriage of petroleum products over the protected inland waterways when Nazi submarines were throttling our domestic lifeline by sinking our offshore tankers. In the war years from December 1941 to August 15, 1945, barges carried 1,731,030,485 barrels of petroleum products in addition to handling large quantities of coal, ores, iron, and steel products. During the war years the shipyards which had been built along the inland waterways to serve water carrier operations turned their facilities and their talents to the building of war vessels and produced 3.945 vessels, 146 drydocks, 43,744 tons of sections of ships, and 500 tons of prefabricated sectional bulkheads. These inland-built war vessels, including submarines, went to sea over the inland channels, propelled by the same towboats that now move our domestic commerce. Many of the vessel sections which were built inland went to our coastal shipyards aboard barges propelled by these same towing vessels.

The record established by the inland waterways transportation industry during the war years has been translated in the 10-year postwar period into providing a transportation industry geared specifically to hauling the raw materials of industry at the most economical price afforded by any mode of transportation in the United States.

Our cargoes are made up principally of coal, petroleum, and petroleum products, grain and grain products, building materials, ores, iron and steel products, and chemicals. Our cargoes are the essential raw materials of industry, essential to our manufacturing processes. But they are of low value within themselves, mostly move in bulk, and therefore they command the lowest transportation rates of any group of commodities moving within this country. The barge and towing vessel industry has demonstrated its ability to handle these cargoes efficiently and economically and consequently was attracting an increasing share of this portion of the transportation load until the current recession.

This is a very brief recital of the background of the industry that I represent in my testimony before this committee. It may be of interest to the committee for me to add one other facet of the story. The towing vessels employed on the inland waterways are almost all diesel powered. They range from vessels with propulsion power of 500 horsepower to other with 6,000 horsepower. They are

each a specifically built powerplant designed to handle particular loads under the very exacting operating conditions imposed by the great variety of channel conditions which are encountered on our various waterways. These boats are equipped with living quarters for the crews, the necessary power and arrangements of screws and rudders to enable them to handle their designed loads, which in some cases range up to as many as 25 barges each with a cargo capacity of 500 to 3,000 tons each, and radar to permit them to operate around the clock in all kinds of weather. Many of the barges are specifically designed for efficient economical handling of special cargoes such as highly corrosive acids, molten sulfur, hot asphalt, as well as chemical cargoes that must be transported under pressure.

The operators of this equipment, as well as the shippers and receivers of commerce who employ inland waterways transportation, have a vital stake in the transportation policy of the United States and we believe this segment of the transportation industry deserves consideration in any legislation which this committee is considering.

Senator SMATHERS. Thank you very much, Captain.

Are there any questions?

Senator MONRONEY. I would like to ask a question:

You make a very strong case for the change of language, and then in your conclusion you suggest a delay in putting that into the bill.

Now, I, for one, have some reservations about the language as it now stands, but I would doubt that with this simple matter before us that some approach could be made.

I would like, if you have a suggestion, to receive it at this time, as to how the language could be perfected so as to carry out the policy statement of the subcommittee in protecting against destructive competition and at the same time permit the inherent advantages of any form of transportation to be used, for lower ratemaking.

Mr. INGERSOLL. My feeling, Senator, is that this is a matter of crucial importance to not only all forms of transportation-and I do not underrate the critical problem which confronts the railroad industry which to my mind is to adjust itself, somehow, to performing that part of the transportation task in the country for which rail transportation is the most efficient. This is a very difficult thing. Their task is a different task than that confronting the truck industry and the barge industry and the airlines industry and the pipeline industry, which are in a growing condition, whereas the railroads' share, willy-nilly, is shrinking.

To devise language in this critical area of Government policy is a thing that needs to be done with care. I would suggest that this is a thing that can best be done by the carriers.

Senator MONRONEY. We have had protestants, and they have made a rather strong case that they approve of the policy statement of the committee. They disagree with subsection 3, and it seems that there could be some suggestions, which would be very helpful to the committee members, who have not made up their mind, for proposals in the statements that would definitely spell out what they seek, if they could find a way to live with subsection 3 and still protect against this disastrous competition that is so frightening to the other modes of transportation.

Mr. INGERSOLL. I read in the statement of the subcommittee, on page 12, in the second and third paragraphs, the use of the words "inherent advantage" three times, and I have this morning, in this discussion, and in the questioning of witnesses, heard the Senators use the words "inherent advantage" numerous times in numerous contexts.

For my part, I can see nothing wrong with that as a yardstick.
Senator MONRONEY. The inherent advantage.

Mr. INGERSOLL. I said in my statement before this committee in March, when we were not considering any proposed legislation, that I could not see anything wrong, myself, with affording to the carrier which possessed the inherent advantage the freedom of the three shall nots. I see no reason why that same statement is not an appropriate one in this context and with reference to this language.

Senator MONRONEY. On page 9 of your statement you repeat the language of the Surface Transportation Subcommittee:

The national transportation policy is clear, however, that such ratemaking should be regulated by the Commission to prevent destructive practices on the part of any carrier or group of carriers.

Now, if that policy was reenunciated in some type of language to guarantee that it would be to prevent unfair destructive practices, would that approach make that paragraph satisfactory to your group? After all, that is the burden of your testimony, the opening of the door to unfair destructive practices that can eliminate complete modes of transportation.

Mr. INGERSOLL. That is true.

Senator MONRONEY. With that repeated, which is the policy statement of the committee in this paragraph, would that meet the objections of some of the ones on your side of the aisle?

Mr. INGERSOLL. I should think so. I am not here empowered to make such proposal.

Senator MONRONEY. We will finally have to draft the language. I am merely trying to get the ideas of the witnesses. I just hate to be on dead center with what appears to be a good bill, a necessary bill, and have it hooked up over just the choice of a few words that go into the thing. I know the subcommittee has wrestled with this thing in all good faith and spent a tremendous amount of time on it. I have drafted a lot of bills, and I have never seen them get down to just this small amount of disagreement in my life. It seems reasonable men, sitting around a table, could suggest language on which they-which they later might agree to modify, on which all forms of transportation would have no fear that they would be devoured by another form of transportation, by language that means to you what the subcommittee personally feels it doesn't mean to them.

Some inclusion of the transportation policy that I have read would help considerably, at least, to ameliorate the fears of those who are today feeling this opens the door to destructive competition; is that correct?

Mr. INGERSOLL. Yes, sir.

Senator MONRONEY. Let me ask one more question while I have you here, or do you want to go on with this line of questioning?

Senator LAUSCHE. No.

Senator POTTER. I would like to.

Senator MONRONEY. Yes.

Senator POTTER. The subcommittee has stated that that has been their intention, so that no one mode of transportation can drive another mode out of business. It is really a matter of semantics as to language. I agree with Senator Monroney, if we could have some suggested language to consider, to add to it, or as a substitute for it.