Mr. MARTIN. I want to say that I am going to feel at liberty to ask any fool question that pops into my mind after that question of the chairman. [Laughter.]

Mr. PETTENGILL. That is all right. You scored that time a home run for Colorado.

Mr. HASTINGS. Now, there is also the matter of comparison with terminal rates and relationship with competitive terminal rates which has a tendency to reduce intermediate rates, what we might call the big stick of competition, and then, too, there is that intangible factor, the effect on the railroad man's mind, because, as my old friend, Mr. Munroe, once vice president of the Union Pacific, stated, that a reasonable rate was the result of the infallible intuition of an experienced traffic man, and so the effect on the railroad man's mind. of lower rates at certain points may to some extent act to bring about lower rates at other points. In other words, it may affect that infallible intuition.

A question was asked yesterday which I said I would answer today about competition between the Canal lines themselves. The Canal lines almost since the inception of the service in 1914, but at least, I am sure, since they resumed operations in 1920, have from time to time organized among themselves what are known as conferences, similar to our railroad rate associations, I presume; but not until recently governed by law at all, and I am not familiar with the provisions of the present law which does give the Shipping Board some jurisdiction over the all-water rates.

They require publication, but they have not the power, as I understand it, to fix maximum rates. At any rate, both before and after the passage of that act, the Canal lines from time to time organized these conferences and from time to time they disorganized them. They blew up, and when they blew up it was cutthroat competition again until they finally got together and organized another conference.

Now, during the time that prevailed between those conferences, it has always been the practice of these boat lines to make contracts with shippers for a certain period to haul their freight at certain rates, and whenever the conferences have been reorganized, they have effected those contracts to their expiration regardless of the fact that on other business they were back at conference rates.

We have thought sometimes-and, I think we have good reason to believe that when we filed our applications with the Interstate Commerce Commission for relief from the fourth section to the Pacific coast, the Canal lines got together and raised their rates in order that when the hearings took place they might show the Commission that the rates we proposed were lower than those required. by the competition. At any rate, we have noticed that after our petitions were denied, the rates went down again.

Now, if I may be thought to be accusing the Canal lines of unethical practices, I would like to have some of you read the hearings before the Shipping Board a few months ago and find out what they accuse each other of. I have not begun to equal it.

Mr. MARTIN. I notice you have got a table here on page 3 of your memorandum, showing the Canal tonnage in 1921 to 1934, inclusive, and you stated on page 13 that you only had the railway figures for 1929 and 1930, in carloads.

Mr. HASTINGS. Westbound; yes, sir.

Mr. MARTIN. Westbound. Have you got those figures, roughly, now?

Mr. HASTINGS. For other years?

Mr. MARTIN. No; for those 2 years. What roughly can you state,. what roughly was the railroad tonnage in 1929 and 1930?

Mr. HASTINGS. No, sir; I have here only the figures from the States named in the statement that was attached following page 13.. They were the commodities, as I said, of the heaviest movement from all of the Eastern and Southern States, and the total movement of those to the Pacific coast terminals for 1925 was 483,560 tons and for 1930, 350,604 tons, contrasted with 2,592,294 tons in 1929 and 2,020,674 tons in 1930, by the Canal, but I do not quote that to say that that was all of the business westbound via the railroads. It was not nearly all of it, because we have not included there whatever business originated in the Middle Western States.

Mr. MARTIN. Have you any idea how that tonnage compared in 1934, between the canal and the railroads; that is, the total tonnage, I mean, both ways?

Mr. HASTINGS. No; I have never seen any figures that would give the combined totals.

Mr. MARTIN. Their tonnage last year was over 8,000,000 both ways, the canal tonnage, 8,000,000 tons.

Mr. HASTINGS. I can only say this, Mr. Martin, that the competitive tonnage that is hauled by the boats, is far in excess of that hauled by the railroads. The tonnage of the railroads might include hauls to or from these States where there are but 8 or 9 percent of population, west of the Missouri River, and a good deal of other business that is not competitive with the canal.

Mr. O'BRIEN. You say, the boats carry more than the railroads? Mr. HASTINGS. Of the competitive tonnage; yes. I think the statement shows-this is competitive, westbound-that the railroads carried only 17 percent in those 2 years.

Mr. MARTIN. That is the coast-to-coast tonnage?

Mr. HASTINGS. No; that includes the tonnage of those commodities, and they were the principal commodities moving from the States east of Illinois and the Mississippi River, Louisiana and Texasthe entire Eastern States, as we usually know them, and the Central States.

Mr. MARTIN. To the coast and intermountain territory?

Mr. HASTINGS. And to the coast terminals. We handled but 17 percent from all of those States, but when it came to the coast and the whole nine States adjacent to the Pacific coast, why, we handled-I will give you the figures in a moment. It was 30-some percent-36 percent.

Now, that 36 percent was of the business in those commodities. from the territory east of Illinois and the Mississippi River, and from the Gulf States of Louisiana and Texas, to the nine Pacific Coast States, named on the statements, which are Arizona, California, Nevada, New Mexico, Utah-no, it is not all of Utah-Utah west of Ogden and Salt Lake City, and south of Provost, and the States of Idaho, Montana, Oregon, and Washington.

Mr. PETTENGILL. Thank you, Mr. Hastings.
Mr. HASTINGS. Thank you, Mr. Chairman.

Mr. PETTENGILL. It may be, gentlemen, that we will not be able to have a hearing tomorrow afternoon because it is anticipated that the N. R. A. extension bill will be up under a special rule tomorrow afternoon, and, if so, I doubt if the members of the committee, any of them, will find it possible to be here, but we will know that fact before the afternoon is over.

So we will proceed with Mr. Wilcox.

STATEMENT OF L. T. WILCOX, ASSISTANT FREIGHT TRAFFIC MANAGER, UNION PACIFIC SYSTEM, OMAHA, NEBR.

Mr. WILCOX. My name is L. T. Wilcox. I am assistant freight traffic manager, Union Pacific System, with headquarters at Omaha, Nebr. I have been with the Union Pacific constantly since March 1902, except during the period of Federal control, at which time I was with the Railroad Administration in the traffic department. About 7 or 8 years of my experience was in the commerce department of the Union Pacific which had charge of rate litigation before the Interstate Commerce Commission and the State commissions. During my experience in railroad rate work and the rate litigation before the Interstate Commerce Commission of more than 3 decades, there have been many changes-some of them quite radical-in the methods of controlling the activities of the railroad traffic officers in this important field of endeavor. Not by any means the least of these has been the policy of the Interstate Commerce Commission in administering the fourth section of the Commerce Act as it relates to charging rates higher for shorter than for longer distances over the same line or route of railroad. Time was when the railroad traffic officer could exercise his managerial discretion in meeting water and other uncontrolled competition and yet not dissipate his company's revenues by needless rate reductions at places where there was no such competitive conditions. But the fourth section as it now stands strips this power from the railroad manager and puts it squarely into the hands of the Federal tribunal.

We probably would have no quarrel with the situation as it is now, if the policy of the Commission in administering the law were based on the same round principles that must, and do, control the railroad rate maker, and also if the Commission could act upon fourth section applications as promptly as the rate-maker must act to meet in part the competitive situations. The rate-maker is in daily contact with the competitive situations which he must meet or retire from the field. His years of experience have taught him to take broad views of all such situations and make rates which while holding to the rail lines, or recovering, traffic that is competitive with other forms of transportation, will yield some additional revenue. This could not be done if in meeting the competition where he finds it he also makes rate reductions in territories which are free of that competitive situation. The latter would more than overcome the former, and the result would be loss, not gain. Mr. REECE. I would like to interrupt, if you will permit me. Mr. WILCOX. Yes, sir.

Mr. REECE. Would there be anything that the railroads would have to gain in setting a competitive rate to set a rate by which the roads would lose money?

Mr. WILCOX. If I follow your question correctly, this is the situation: If, at a terminal point, you are required to make a lower rate to meet a competitive situation, lower than the normally reasonable rate, under the present conditions, you would be required to carry that rate as the maximum rate at the intermediate points. Now, your traffic moving to the intermediate points and to the terminal would both be involved in that reduction of intermediate rates.

Mr. REECE. NO; that was not the question I had in mind.

Would there be any inducement which would encourage a railroad to set a competitive rate on which it would lose money? Mr. WILCOX. Oh, no. That would be an unreasonable rate, Mr. Reece.

Mr. REECE. There would be no incentive for a railroad to do that? Mr. WILCOX. Not at all.

Mr. REECE. Then, when you are prohibited from setting a competitive rate which will enable you to share in the business, and which, if you were able to set and maintain a rate you could share in the business, you are deprived from earning something for the railroad. Mr. WILCOX. That is right.

Mr. REECE. And it would do no shippers at any other point any good?

Mr. WILCOX. That is correct.

Mr. HOLMES. May I make an observation there, Mr. Wilcox, while we are on that subject?

Mr. WILCOX. Yes.

Mr. HOLMES. I think this morning and yesterday afternoon there were quite a number of "complimentary "observations made on the speed with which the Interstate Commerce Commission has handled all of these applications, and I think it would be well to put into the record, from the report of the Commission of December 1, 1934, a statement in relation to the number of fourth-section cases that were there.

The number of applications was 395. The number of orders entered in response to applications was 311, of which 68 were denial orders, 77 were orders granting permanent relief, and 166 were orders authorizing temporary relief; 117 formal reports were issued.

Applications withdrawn, wholly or in part, after correspondence with carriers, numbered 31; and 196 applications or portions thereof were heard in fourth-section proceedings.

The number of petitions for modifications of orders was 344, of which 284 were granted, 22 were denied, 6 were withdrawn, and 32 are still pending.

All but six of the applications filed under the 1910 amendments to the fourth section have been disposed of.

We were discussing that very point-are discussing it now-about relief from the Commission; and according to their own report and the volume of work or the applications that they have ahead of them it should not require the length of time of 2 years to decide a case on appeal from the railroad for relief.

Mr. O'BRIEN. I do not think so, either.

Mr. HOLMES. I just wanted to make it clear, because that in itself contradicts, in my opinion, the statements that were made. I want to be fair to the Commission on this thing. Of course, that might have been clouded up since December 1, 1934.

Mr. REECE. That does not necessarily indicate, however, that the cases which were cited here did have the delays which were credited to them.

Mr. HOLMES. I do not question that at all; but I mean, according to their reports, there are not very many cases pending, and if the Commission was so disposed to give relief where the railroads really needed relief, it should not take that length of time to arrive at some decision and extend relief where necessary.

Mr. BELL. Mr. Chairman, I am not testifying, but I think that I could make an explanatory comment regarding that.

Mr. O'BRIEN. Go ahead and make it. That is what we are looking for.

Mr. PETTENGILL. What is your name, for the record?

Mr. BELL. J. R. Bell. I think that I can make an analysis of that. Mr. O'BRIEN. And whom do you represent?

Mr. BELL. The railroads.

I think that an analysis of those cases, unless I am mistaken, and I do not think I am, respecting the number granted, contrasted with the number denied, and so forth, will show that the ones denied were the ones that primarily are essential to enable the railroads to compete for traffic with the other forms of transportation. They are in rate adjustment in connection with rates prescribed by the Commission in numerous instances where fourth-section relief is a matter more or less, of course, automatic. It takes them tremendous time to work it out, as has been explained to you.

Now, 395 applications, I think the number is, that were filed in that year, and the number disposed of in that year, does not signify that the ones filed that year were disposed of in that year.

Later on, Mr. Hallmark will have some very interesting illustrations on transcontinental applications and the time it took the Commission to dispose of them, so it should be borne in mind in connection with this statement that mere numbers mean nothing from the standpoint of enabling the carrier to compete for this traffic, because there are a number of applications that may be granted that involve nothing except working out rate adjustments.

Mr. REECE. The cases disposed of

Mr. HOLMES. About 240.

Mr. REECE. Does the report indicate that they were the same things which were filed during the year?

Mr. HOLMES. No.

Mr. REECE. Mr. Bell suggests they were not the same cases.

Mr. HOLMES. No. The last paragraph in this report shows all but six of the applications filed under fourth section had been disposed of.

Mr. BELL. That does not mean that all of the pending applications but six before the Commission had been disposed of. Those were the general applications filed away back there, subsequent to the amendment of 1910, to cover the situation under that until the Commission could get around to it. But there are a multitude of applications, specific applications, that have been filed subsequent to those general applications, so do not get the idea that they had disposed of all applications pending and on file since 1910 but six. The six simply means those filed immediately after 1910.