Mr. PETTENGILL. Does anyone else wish to appear at this time? Mr. JOHNSON. I think perhaps Mr. Corbett, of the engineers, would like to make a statement along that line.

I would like to say that I want about 2 or 3 minutes, and I think that Mr. Wilson will not take up over 15 or 20 minutes of your time at the outside.

Mr. PETTENGILL. We will try to arrange to hear both.

STATEMENT OF JOHN T. CORBETT, NATIONAL LEGISLATIVE REPRESENTATIVE, BROTHERHOOD OF LOCOMOTIVE ENGINEERS, WASHINGTON, D. C.

Mr. CORBETT. My name is John T. Corbett, national legislative representative, Brotherhood of Locomotive Engineers, 10 B Street SW., Washington, D. C.

I want to verify what Mr. Johnson has just said. I have a member of the engineers' organization coming here from Ogden, Mr. Pell, and the best information that I can secure is that he should arrive here possibly Thursday forenoon, but I am not sure as to that time.

Mr. PETTENGILL. I am sure that the committee will want to hear from him. We want to limit his time within reason, of course, so as to not unduly disrupt our other program for Thursday, but I am sure we will all want to have the benefit of his testimony as well as Mr. Wilson's.

Mr. CORBETT. I would like to appear just ahead of him.

Mr. PETTENGILL. All right.

Is there anyone else who wishes to go on this afternoon? If not, we will adjourn until tomorrow afternoon at 2 o'clock.

(Thereupon, at 4:50 p. m., the subcommittee adjourned to meet at 2 p. m. the following day, Wednesday, June 12, 1935.)

TO AMEND THE FOURTH SECTION OF THE INTERSTATE

COMMERCE ACT

WEDNESDAY, JUNE 12, 1935

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE OF THE COMMITTEE ON
INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The subcommittee met in room 115, House Office Building, pursuant to adjournment, at 2 p. m., Hon. John A. Martin presiding. Mr. MARTIN. The committee will be in order.

Mr. Haynes, you may proceed.

STATEMENT OF J. P. HAYNES, EXECUTIVE VICE PRESIDENT, CHICAGO ASSOCIATION OF COMMERCE, CHICAGO, ILL.

Mr. HAYNES. Mr. Chairman and members of the committee, my name is J. P. Haynes. I am executive vice president of the Chicago Association of Commerce, Chicago, Ill.

I have been connected with transportation and commercial organization work since 1906. I have been in my present position for 14 years. For the past 12 years I have been chairman of the_special fourth-section committee of the National Industrial Traffic League, an organization comprised wholly of shippers, industries, and manufacturing interests, and I am appearing here in the capacity of chairman of that special committee.

At the outset of the hearing, in order to conserve time, the chairman requested the shipper proponents of the bill to confer to see if they could coordinate their statements in order that as little time as possible be utilized, and that has been done, and I would like to file at this time a list of some 17 shipper organizations that met bere yesterday, with the allotment of the time for each.

Mr. BELL. Did you say shipper opponents or proponents?
Mr. HAYNES. Proponents.

Before going on with my statement I would like to say that the National Industrial Traffic League at its annual meeting in 1933 and at its annual meeting in 1934 went on record in support of the principles now before you in the Pettengill bill. At its spring meeting held in Cincinnati, in April of this year, the matter was reviewed for the third time in the light of the pending bill now before you. I was directed to appear here and present the testimony that I am now to present.

I am appearing at this time in the capacity of chairman of a special committee, appointed by the National Industrial Traffic League to present the views of that organization.

The National Industrial Traffic League is, as its name implies, a national organization; it is composed of individual shippers, firms, corporations, and commercial organizations representative of shippers. Directly through its own membership and indirectly through the membership of various commercial, trade, and traffic associations throughout the country, the league represents several hundred thousand shippers.

The application of the long-and-short-haul clause of the fourth section of the Interstate Commerce Act, its influence on the rate structure and commerce of the country and on the operations of the railroads, has been before the league since its organization in 1907. Throughout this period of 27 years the league has combatted ever effort to enact a rigid long-and-short-haul rule and has frequently appeared in proceedings before the Interstate Commerce Commission where the question before the Commission and its interpretation of the fourth section involved the public interest.

The league, a national organization, representing as stated, shippers in substantially every State of the Union, must view this, as well as all other subjects coming before it, from the standpoint of the general public interest.

The term "public interest" comprises the interest of all, including laborers, farmers, manufacturers, distributors, consumers, and the transportation agencies of whatever character, as contrasted with the term "private interest" which may subordinate all other considerations to the advantage of a few and the corresponding disadvantages of the great majority.

Unquestionably, the public interest is best served when commerce is permitted to move freely over all available transportation agencies. Competition in general has been a powerful influence in the development of the trade and commerce of the United States and the competition between transportation agencies has without doubt represented as great an influence in this respect as has the competition between manufacturers and other commercial industries. In fact, early development of industry and commerce of the United States was reached under a railroad policy which was responsive to the demands and ideals of the American people and which permitted freight rates to be adjusted to fit the needs of industry and commerce, which the railroads were created to serve, instead of requiring industry and commerce to adjust its needs to fit freight rates made in accordance with some arbitrary inflexible rule. Flexibility and elasticity should be the watch words in transportation price making as in the price. making of other industries. The railroads are one of the most important instruments of commerce, but as you regulate or limit their right to adjust the price of their services to promote the free flow of commerce and increase their business, with the exception, of course, of such regulation as is necessary to prevent unreasonable or discriminatory rates, you detract from and deprive the public of their initiative and usefulness and thereby burden and impede commerce.

The restrictive legislation placed upon the rail carriers at a time when they had a monopoly on transportation is no longer necessary and the time has come when some of these restrictive provisions should be repealed.

It is upon the experience of the past; a careful study and analysis of the freight-rate structure of the country; the effect on all parties.

concerned of the application or nonapplication of the long-and-shorthaul provision of the fourth section in many cases where relief from the provisions of such section has been granted or denied by the Commission; a study of the great changes which have occurred in the transportation industry in the past few years, and the effect which such changes have had upon transportation agencies as well as industry and commerce generally, that the position of the league is grounded. That position is that the public interest would best be served by the repeal of the long-and-short-haul clause of the fourth section of the Interstate Commerce Act, which would be accomplished by the adoption of the measure which you are now consideringH. R. 3263.

We are here in the capacity of shippers and will address you on this subject from the viewpoint of shippers who use not only the railroads but all available transportation agencies. Our statement will, therefore, be limited to a presentation of facts showing how the long-andshort-haul clause of the fourth section-as it now reads and as it is now administered-places an undue burden upon the shipping public and commerce generally.

Before proceeding to a discussion of the cases arising under the long-and-short-haul provision of the fourth section, which will illustrate its application and effect, we would like to direct your attention to the fact that we are living today in a new transportation world.

At the present time the investment in highway and waterway facilities approximately equals the investment in railroad facilities. In addition, there has been extensive development in air transportation and transportation by pipe lines. These transportation agencies are all competing with each other and with the railroads for the commerce of the country.

The following quotation from the chairman of the Interstate Commerce Commission transmitting a report of the Federal Coordinator of Transportation on the regulation of transportation agencies, Senate Document No. 152, Seventy-third Congress, second session, clearly illustrates the development that has taken place [reading]:

The past 15 years have been a period of great change, development, and adjustment in transportation, not only in this country, but all over the world. There has been an extraordinary growth in the use of other means of transporting persons and property as a substitute for railroad transportation. Two of these means were new; the highway motor vehicle and the airplane; one, the pipe line, has been in use for many years, but experienced a sudden and rapid new development; another, carriage by water, is one of the oldest forms of transportation, but has recently gained a relative importance in this country, principally through the opening of the Panama Canal and the improvement of inland waterways. The electric transmission line transports only energy but it tends to reduce the transportation by the railroads of stored energy in the form of coal.

It may, therefore, be said that during the past few years there has been a rapid transition from a monopoly in transportation, which was enjoyed by the railroads, to a situation where the railroads are confronted with many competitors. Railroad management thus faces new conditions which imperatively require changes in methods of operation, manner of service and price policies, the initiation and establishment of which require the exercise of sound managerial judgment and discretion which cannot and should not be supplied by a regulatory body unfamiliar with the facts involved in each and every situation which may arise.