[Attachment No. 1]

International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers

American Federation of Technical Engineers

International Union of Operating Engineers

National Marine Engineers Beneficial Association

International Brotherhood of Firemen and Oilers

American Federation of Grain Millers

International Brotherhood of Longshoremen

International Organization of Masters, Mates, and Pilots

Seafarers' International Union of North America

American Federation of State, County, and Municipal Employees

The Commercial Telegraphers' Union (Radio Officers)

Office Employees International Union

United Brotherhood of Carpenters and Joiners of America

Senator SMATHERS. We will stand in recess until 10 o'clock in the morning.

(Whereupon, at 5:34 p. m., the committee adjourned, to reconvene at 10 a. m. Wednesday, May 21, 1958.)

RATEMAKING RULE-ICC ACT

WEDNESDAY, MAY 21, 1958

UNITED STATES SENATE,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C. The committee met, pursuant to adjournment, at 10 a. m., in room G-16, the Capitol, Senator George A. Smathers presiding. Senator SMATHERS. The meeting will come to order.

We have other Senators who are on their way over here. But we have so many witnesses we are trying to get along. So we will start this morning with Mr. James F. Pinkney, general counsel of the American Trucking Associations, a great southerner, a great legalist, great constitutionalist, and a man whom we are delighted to have

appear.

STATEMENT OF JAMES F. PINKNEY, GENERAL COUNSEL, AMERICAN TRUCKING ASSOCIATIONS

Mr. PINKNEY. Mr. Chairman, I am delighted to be here.

My name is James F. Pinkney, general counsel of the American Trucking Associations, Washington, D. C.

Mr. Chairman, I have with me Mr. Edgar Watkins, practicing attorney, who has handled a great many of the motor carrier rate cases. I have brought him along as the one more familiar than I with some of the rate problems of our industry, and would like to call upon him where necessary for assistance to answer any questions that might arise.

Senator SMATHERS. We will be delighted to have him.

We recognize that statement as one born only from the very modest polite nature. We are delighted to have you, Mr. Watkins, and to have what contributions you can make.

Mr. WATKINS. Thank you, Senator.

Mr. PINKNEY. I appear before you today to discuss the very troublesome question of amending the Interstate Commerce Act with respect to the authority of the Interstate Commerce Commission relating to competitive rates between the different modes of transportation.

We have been searching hard and diligently for some solution which would resolve this question in a manner satisfactory to all concerned. We feel that the problem is one which, on the surface at least, should be susceptible of solution by the discovery of words which, on the one hand, would make it clear that the Commission should not hold up the rates of one form of transportation solely to protect another form but, on the other hand, also make it clear that

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it is not intended by such language adversely to affect the rate structure of this country or permit destructive or unfair rates and practices.

Senator SMATHERS. I want to stop you right there to commend you on that paragraph. I think that is good. I want to say it has been my observation that the truckers have genuinely attempted to work with us, in an attempt to find some language, which as Mr. Pinkney has expressed it here, would not adversely upset the entire rate structure, but at the same time permit us to beat some additional flexibility into the ratemaking program. They have sincerely tried to arrive at that language.

Mr. PINKNEY. Now, the trucking industry seeks no change in the act, but the railroads are most insistent upon some change, and the problem that has been posed to us is one of giving up in some degree our position without at the same time having action taken which will impinge upon the industry's vital interests.

Let me say in passing that of the many proposals contained in the subcommittee's report, the only one of serious concern is the one on competitive ratemaking. We do not seek to stand in the way of any of the other proposals which deal with the truly serious problem of some of the railroads and, of course, we are very much in favor of some of these other proposals such as the one dealing with the agricultural exemption problem.

The railroads for the past 3 years have been making a major effort to gain what they choose to term more freedom to compete. They have inserted or promoted the insertion in a very large number of magazines, newspapers, speeches, and other means of expression the theme that the Interstate Commerce Commission is preventing the railroads from exercising their inherent advantages by holding up their rates solely to protect their competitors. They contend there must be something placed in the law which will prohibit the Interstate Commerce Commission from thus holding an alleged umbrella over the rates of their principal competitors.

As we have heretofore stated to you, we do not agree that the Commission does hold an umbrella over our rates and we do not advocate such a policy on the part of the Commission. We think it not only can, but it has been demonstrated that the Interstate Commerce Commission does not condemn reduced competitive rates solely for the purpose of protecting competing modes of transportation, although on rare occasions language can be found in their decisions indicating that it might be doing so. On this point, it seems to us that the facts contained in two Commission expressions are conclusive.

Mr. Chairman, I state these not to quote from Commissioners speaking but because I believe these statements to be factually correct. The first of those expressions that I wish to read is the one that appears in the testimony before this committee and which I believe bears repetition:

Exclusive of schedules involving general increase 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. It is our estimate that 98.3 percent of these tariffs became effective without protest or restraint by the Commission. Of the remaining 1.7 percent which were protested, about 85 percent (of the 1.7 percent) were nevertheless permitted to go into effect without suspension. This left about one-fourth of 1 percent of the total in which the voluntary action of the carriers was restrained by the Commission's exercise

of its investigation and suspension powers. In almost one-half of the cases suspended pending investigation, the proposed rates were approved upon completion of the proceedings. And so, instead of the specter of a meddling Government unwarrantably preventing what the carriers regard as the proper exercise of their managerial responsibilities, we find that a bare one-eighth of 1 percent of their proposals are condemned. Among this one-eighth of 1 percent are found the proceedings which are repeatedly cited as examples of persecution and outrage.

On this same point, about 1 year earlier in February 27, 1957, Commissioner Arpaia made this statement which we believe to be factually correct:

Railroads alone file with the ICC an average of over 3,000 rate changes every working day of the year. During the year 1956, how many rates out of the million or more rate changes filed by railroads were adjudged to be unlawful by the Commission after protest by competing forms of transportation? Ten thousand? Two thousand? One thousand? One hundred? No. Just exactly 12. How much traffic was involved in these 12 cases? In other words, how badly hurt were the railroads by our finding that these rate changes were unlawful? If they had been able to obtain every single pound of the traffic involved, from competing forms of transportation, which of cousre is hardly likely, they could have added only $1,228,879 to their gross revenue; $1,109,359 of this amount from water carriers, and a mere $119,520 from motor competitors. This represents only eleven-thousandths of 1 percent of the total revenue of railroads for the year 1956.

I might say, Mr. Chairman, that we made a quick check yesterday of the cases recently decided by the Commission and found in volume 301, a volume not yet published but in looseleaf form, advance sheet form, these cases cover a 5-month period from June 1957 to October 1957, and there were 147 reports included.

I will not go into all the details of what we found in there, but I might state that there were 3 cases in which railroad rates were disapproved, 2 of those involved piggy-back rates, and the other involved a shipper discrimination.

There was one case in which the rail rates were modified and the modification allowed reductions but required the railroads to establish rates to afford all shippers similarly situated an equal opportunity.

And so we see from that, Mr. Chairman, and gentlemen of the committee, that we are talking here about an infinitesimal amount of the railroads' traffic, the amount of traffic that they say has been taken away from them or withheld from them by action by the Commission. Let me make one other point right on that same thing:

It is a curious thing to us, but we have been unable to find any instance in which the railroads have gone into the courts protesting that the action of the Interstate Commerce Commission, even in such few of these cases as they have struck down the railroads, that the Interstate Commerce Commission failed to follow the transportation policy of 1940.

This committee will recall that the principal burden of the railroad complaint 2 years ago was that the Commission was allocating traffic between the several modes of transportation on a so-called fair share basis. I don't believe that point was ever specifically before this committee, but was argued for many months over on the House side. We believe that the testimony which was placed before the House committee in the hearings in 1955 on the so-called Presidential Cabinet Committee report, and subsequently on the rail-sponsored "three shall not" proposal, conclusively demonstrated that the Commission was not attempting so to divide the traffic. Inasmuch as nothing more has