If I were operating a baking company and were told that I had to sell my bread for 10 cents a loaf, and another man in the same city was selling, maybe not bread, but some other competitive article, and was allowed to sell it for half of what I had to sell my bread, it would not be very long before I would have to shut down and go out of business. The railroads have not yet gone out of business, but we all know beyond cavil it would not be possible for them to continue to operate unless they can compete for traffic. The conditions with which they are faced today are attributable in no small degree to the operation under the long-and-short-haul clause of the fourth section by which they have lost an enormous volume of traffic to their competitors, and it is not possible, there is no opportunity to secure a return of that traffic until they are freed from the restrictions imposed by this once desirable but now iniquitous piece of legislation, and there is no way they can compete as long as this statute is on the books.

The water lines can reduce their rates at will. The railroads have got to go before the Interstate Commerce Commission, and then it is very problematical whether they will ever be able to get the rates reduced to meet that competition. By reason of that very fact, the water lines and the truck lines are invited to cut their rates. If the railroads were not faced with this restriction, neither the truck lines nor the water lines would cut their rates. They would be sensible and would leave the rates at a reasonable level at which they and the railroads could make money. There would be an equitable distribution between the different forms of transportation on a competitive basis.

Now, as to the reasonably compensatory situation: It is an established fact that under the fourth section the competitors of the railroads have gotten some traffic which the railroads heretofore had, and until they are relieved properly from the fourth section they cannot regain that traffic.

The railroads have their plants, they have their facilities, they have their overhead, they have 90-perhaps 95 percent, possibly, of the expenses they have to incur anyway, and any additional traffic gained by virtue of fourth-section relief they will get by virtue of the abolition of the long- and short-haul clause, which will very materially lower their operating cost on their regular traffic. As a matter of fact, anything they get will be that much velvet. It will be helpful in the operation if they do not make any money, because it will enable them to give better service to the shippers and take care of their employees, which they must do as long as they are going to exist as a private institution.

Now, there will be no unbridled competition. The railroads are not going to put the rates up to unreasonable levels, nor are they going to depress them to below where they can operate. They will not have to do so. They will not have to do so to meet steamship competition or truck-line competition, if the long- and short-haul clause is abolished; there will be no unbridled competition. It will simply mean that all of them will do more business, a more equitable division of the traffic will be the result when this thing is abolished; and we surely hope it will be. The rates will not be put up to unreasonable levels, but it will enable the railroads to get their fair share out of the available traffic, and all of them can make a reason

able profit. There will be no unbridled competition, as I say, but there will be a competition that will be equitable, and there must be competition in this country. proper competition, and any statute that attempts to prohibit competition, I think, is not desirable, particularly in the light of developments in the transportation field during the last 10 years.

Now, I believe that there will be some who will be opposed to this elimination of the long-and-short-haul clause; the intermountain sections may. There has been opposition in certain sections. I do not know what the opposition is going to be, but I simply want to call attention to the fact that when this clause was made a part of the law, conditions were entirely different, and I think when the people who have opposed its elimination realize fully the conditions existing today, there will not be so much opposition to the change. I think it is perhaps more often than not that the people in the intermountain points overlook the fact that they will be benefited quite as much as they may be if the change is not made, by virtue of the fact that if the railroads are unable to get this relief and be able to enter into competitive traffic with other carriers, thereby helping them to maintain their operation, they are going to have to have help, which may mean the raising of their general rate levels, and unless they can compete for that traffic-and they cannot compete at the figures they have now-it is only fair to assume that their rate must be materially higher in order to maintain their operation. If the rails are given the freedom to compete for this traffic, they can benefit the interior points as well as the terminal points.

Another thing is this-and a very important point, I think, that ought to be considered-and that is that there is nothing proposed in this bill that will deprive anyone of the protection of the law; nobody is being deprived of any rights; this in no way nullifies or renders ineffective sections 1, 2, or 3 of the Interstate Commerce Act. Nobody is being deprived of any protection whatever, and all the protection necessary for anyone is contained in those sections of the act. But what this will do will be to eliminate undesirable features of the law incident to the compilation and publication of rates.

I was looking over a tariff the other day, on my desk, containing a rate schedule on Middle and South Atlantic ports, and it had about 3 pages of rates and about 15 pages of route instructions, and I have been comparing tariffs and checking rates for 27 years. During that time it has been my privilege to be a member of the National Industrial Traffic League for the securing of simplification of tariffs, and I say to you, without any fear of contradiction whatever, that the tariffs today are more complicated than they were years before, and about 90 percent of that is attributable to the fourth section, the long-and-short-haul provision of the fourth section, and it is now to about where the shipper finds it almost impossible to tell what the rates are, and sometimes the railroads cannot tell you. I do know that doing away with the fourth section would go a long way to remedy that very distressing situation.

I simply discuss the principle involved in this proposed legislation. The evidence and the record is replete with facts, and I would like simply to have you consider what I have to say as coming from one who has had many long years of practical experience in rate

matters. I am not appearing for the railroads; I am simply appearing in the position of traffic director of the Tampa Tariff Association and endorsing what has been said on behalf of the National Industrial Traffic League.

Mr. MARTIN. Thank you very much, Mr. Donnell, for your statement. We appreciate very much your cooperation in not taking any longer time. If you wish to extend your remarks, when you revise them, you are at liberty to do so.

Mr. DONNELL. I beg your pardon?

Mr. MARTIN. If you would like to insert anything as a part of your remarks, you are at liberty to do so.

Mr. DONNELL. Thank you.

Mr. MARTIN. The last witness we will hear this morning will be Mr. Tooker, of the Utah Copper Co.

STATEMENT OF H. B. TOOKER, SAN FRANCISCO, CALIF.

Mr. TOOKER. I am going to make my statement very short, Mr. Chairman.

Mr. MARTIN. Very well.

Mr. TOOKER. My name is H. B. Tooker; address, Hobart Building, San Francisco, Calif.

I am appearing here in favor of the passage of the Pettengill bill, and representing the following companies whose traffic is handled under my direction: Butte & Superior Copper Co., operating in Montana; Utah Copper Co., operating in Utah; Nevada Consolidated Copper Corporation, operating in Nevada; Ray Consolidated Copper Co., operating in Arizona; Chino Copper Co., operating in New Mexico; also the Gallup American Coal Co., with mines at Gallup, N. Mex.

I have always been opposed to denying the transcontinental carriers fourth-section relief where it was possible for them to compete to some extent with the water carriers. In docket 12436, which was the transcontinental railroad companies' fourth-section relief case, I testified at Phoenix on February 9, 1924, that our interests in Montana, Utah, Nevada, Arizona, and New Mexico had no objection to fourth-section relief for the railroads as long as our intermountain rates were reasonable, and that is still my position as well as the position of the companies I represent. I feel that if the transcontinental carriers can secure a portion of the business moving to the Pacific coast and earn something above their out-of-pocket costs that it would be a good thing for the intermountain country, because the more overhead expense which the carriers can secure in competition with water lines the better service they can give the intermountain section, and a prosperous carrier is far better able to reduce rates than is a line barely able to keep out of receivership.

As I see it, the real needs of the rail lines at the present time is an increase in business and revenue. Various commodities are now reaching the Pacific coast via the Canal, and I cannot see how the intermountain country can be adversely affected by permitting the railroads to participate to some extent in this traffic. If there were no other means of reaching the Pacific coast than by rail, the picture would be entirely different, but as long as traffic is reaching the coast

through the Canal, it seems to me it would be greatly to the advantage of the intermountain country to have some of this business pass through those States, providing they enjoy reasonable rates, and they can always have the protection of the Interstate Commerce Commission in this respect.

I might add that while I am not authorized to speak for other mining and smelter interests in the intermountain country, at the same time I have discussed this subject with the traffic managers of the more important interests and they were all in favor of this application.

With respect to the Gallup American Coal Co., at Gallup, N. Mex., we sell coal to the Santa Fe Railroad, and engine coal is quite an item, you know, because we can get the lump coal then for commercial interest, and if it be only a few more miles of operation, it all helps out. And I might also add that the smelter products move in large quantities, and most rail-and-water routes today are moving up through Seattle and going through the Canal; and there is some movement in the same way, eastbound by rail and up through Duluth and on the Great Lakes. They do not have the fourth-section relief up there; they do not hit that intermountain territory.

Mr. MARTIN. Those interests that you have mentioned by StatesMr. TOOKER. Yes, sir.

Mr. MARTIN. Are all heavy producers and shippers in the Mountain States?

Mr. TOOKER. Yes.

Mr. MARTIN. In the mountain territory. I was in telephone conversation today with a representative of one of those States, who just does not know exactly where he is on this legislation, but feels apprehension as to what the real situation is, what the majority of the people in his section may think about it. What do you know concerning any unfavorable reactions to the Pettengill bill in that territory?

Mr. TOOKER. Well, I think you will find that the majority interests are in favor of doing something for the railroad. We have got to do something.

Mr. MARTIN. We have frequently been mentioned here as rather the focal point of the opposition to the changing of the law.

Mr. TOOKER. Yes.

Mr. MARTIN. That has been referred to a number of times.

Mr. TOOKER. Yes.

Mr. MARTIN. A great many witnesses have mentioned the intermountain States.

Mr. TOOKER. Yes.

Mr. MARTIN. As being rather the head and foot of the opposition to any relaxation.

Mr. TOOKER. I think that that has been true for quite some while, but I think the sentiment today is far different than it was 8 or 9 years ago, Mr. Martin.

Mr. MARTIN. Do you think the development of the other forms of transportation, increased water competition and bus and truck competition, and so forth, have changed the situation?

Mr. TOOKER. Well, I never thought of trucking copper, but it has been done. They are trucking copper to Los Angeles and hauling lumber back. I never thought that could be done.

Mr. MARTIN. Do you know what the sentiment in Salt Lake City is?

Mr. TOOKER. Well, I would not like to say. I think the little fellow, perhaps, would refer to that as, in a way, thinking he might get hurt, although I think if the situation were explained to himI know most of the men are reasonable, and I think that any man out there would be reasonable about it, if you tell him the difference and say to them that the railroads cannot put their stock on a shelf along with the grocer, who perhaps does not sell a can of goods today but can put it up and sell it tomorrow, but the railroads cannot do that; if they do not use the railroads today, they will not have them to use tomorrow. If they are not used they are gone forever.

Mr. MARTIN. Are the big producers and shippers generally in favor of the change?

Mr. TOOKER. Well, I have talked to the larger ones-the American Smelter & Refining Co., that operates in your State and other States throughout the country, are in favor of it.

The Phelps Distributing Co., the Anaconda Copper, and the other big fellows

Mr. O'BRIEN. They are in favor of the Pettengill bill?

Mr. TOOKER. Yes, indeed.

Mr. O'BRIEN. Do you think those people feel the Pettengill bill would hurt the little man?

Mr. TOOKER. Oh, no, Mr. Congressman; I feel it would help them. Mr. O'BRIEN. Under the Pettengill bill he still has the transportation that is available now.

Mr. TOOKER. Yes.

Mr. O'BRIEN. He does not have to use the railroads.

Mr. TOOKER. The thing that gets me, and the thing I wish someone would explain to me is that this freight goes from here to California now, by water, and they can still use that if you pass this bill, just the same.

Mr. O'BRIEN. Yes.

Mr. TOOKER. I do not see it.

Mr. O'BRIEN. I do not either.

Mr. MARTIN. In other words, the water competitive rates, low rates, are already there.

Mr. TOOKER. Yes; and it will not change the situation if you repeal the fourth section, but it will enable the railroads to compete for that traffic. That traffic will get out there, and it makes no difference how it gets there, whether they haul it out there by water or whether they haul it by truck, as some of them do sometimes.

Mr. REECE. Do you not think the apprehension that the small man may have of that situation grows out of the feeling which perhaps has been inspired that the repeal of the long-and-short-haul clause will establish a competitive rate by the railroads which will result in a loss to the railroads and that in trying to recoup those losses they will raise the intermediate rates wherever they can; do you not think that perhaps accounts for that apprehension among some of those people, that they expect the railroads to raise their rates to improve their situation?

Mr. TOOKER. That may be.