lines operating through the Panama Canal, lower rates than applied to and from intermediate points in California, Arizona, New Mexico, and Texas. As shown at page 776 of that decision, the intercoastal water rate, including incidental charges, on iron and steel articles, in carloads, minimum 36,000 pounds, was a minimum of 39 cents or a maximum of 44 cents. The Southern Pacific sought to establish rate of 42%1⁄2 cents, minimum 36,000 pounds, via its water and rail route through Galveston, including the transfer from vessel to cars at the latter points, and to concurrently maintain rate of $1, minimum 80,000 pounds, to the substantially lesser-distant and intermediate points on the same commodities over the same line or route. As shown in the decision of the Commission in that proceeding, the distance between New York City and Galveston is 2,160 nautical miles. However, the Southern Pacific for the purpose of that case contended that as water service was less expensive than rail service, the water mileage should be equated on the basis of 3 water miles to 1 rail mile, and thus computed the distance used by it for the water haul as 720 miles. The rail distance from Galveston to San Francisco, shown by the Southern Pacific, was 2,160 miles. Thus, on the basis of the equated mileage between New York and Galveston of 720 miles and 2,160 miles from Galveston to San Francisco, the Southern Pacific arrived at a total distance of 2,880 miles, and contended that the proposed rate of 42% cents, which it sought to establish, was a reasonably compensatory rate for said haul on iron and steel articles. However, it concurrently, and just as vigorously, contended that the rate of $1, minimum 80,000 pounds or 44,000 pounds higher than the minimum which it proposed to establish to the Pacific coast, was not in excess of a reasonable per se rate, nor did it result in unjust discrimination or undue prejudice to the lesser-distant and directly intermediate points, representative of which is Phoenix, Ariz., 892 miles less distant via the Southern Pacific than San Francisco from New York City. The Commission, after full and complete investigation, in its wisdom, denied the application on the ground, among others, that the lower rates sought to be established for the longer hauls to the Pacific coast were less than the cost of performing the service, and, therefore, would if permitted to become effective place an undue burden upon other traffic. During the time the Southern Pacific case was before the Commission, the Los Angeles Chamber of Commerce in the Los Angeles case assailed the rates on iron and steel articles from Los Angeles to points in Arizona. Among the rates thus assailed was rate of 59 cents, minimum 80,000 pounds, from Los Angeles to Phoenix for a distance of but 424 miles. This rate is representative of the adjustment there involved. Notwithstanding its contentions before the Commission in the Southern Pacific case that the rate of 421⁄2 cents for the 2,880-mile haul from New York to San Francisco, or the average haul of 2,720 miles from New York to the Pacific coast ports, was a reasonably compensatory rate in connection with lower minimum weight of 36,000 pounds, the Southern Pacific and its connections in the Los Angeles case defended the 59-cent rate for the 424-mile haul on the same commodities from Los Angeles to Phoenix as not in excess of a reasonable per se rate. The Commission, after a full and complete investigation, found that said rate for the 424-mile haul was not shown to be unreasonable. These two proceedings show that the railroads even under regulation blow hot and cold. The question arises, What would they not do if relieved of all restraint in this respect by the repeal of the long-and-short-haul clause of section 4, as proposed by them? It is self-evident, we think, that the repeal of the long-and-short-haul clause under the existing circumstances is clearly not in the public interest. It would leave the railroads free to establish and maintain their rates for long hauls on the pretext of meeting competition without any regard whatsoever to the cost of performing the service. It is a well established fact that as distance increases, the cost of performing transportation increases. That being true, it irresistibly follows that the shippers or localities which are accorded lower rates for longer hauls than shippers or localities for shorter hauls over the same line or route are not bearing their proper share of the transportation burden. If this were not so, manifestly, there would be no excuse, much less reason, for maintaining the the higher rates for the lesser service performed in connection with the shorter hauls. Therefore, we say without fear of successful contradiction that the repeal of the long-and-short-haul clause will result in favored shippers and localities securing undue and unreasonable preference, and, conversely, localities and shippers served thereby where there is no competition compelled to pay excessive, unjustly discriminatory, and unduly prejudicial rates for the purpose of compensating the railroads for the losses sustained in connection with the lower rates for the greater service. Such a situation or contention is unthinkable. It is not in the public interest. This fact is abundantly and ably supported by the several annual and special reports of the Commission and the Federal Coordinator of Transportation to Congress in recent years. The Commission after considering the proposal in H. R. 8100 before the Seventy-third Congress, which, as previously stated, is identical to the bills here concerned, in the special report to Congress hereinbefore referred to, stated: 66* * * We are unable to understand how the public interest would be served by the enactment of such a bill. Experience has shown during the years before and since the enactment of the act to regulate commerce in 1887 that special measures are necessary to prevent the peculiar form of undue prejudice and discrimination which may be created by the establishment of higher rates for shorter than for longer distances. Section 4 was designed to protect the public against this special kind of prejudice and discrimination. Section 3 is designed to protect the public against undue prejudice or preference generally, but under that section the question as to whether rates or charges result in prejudice or preference which is undue involves the exercise of judgment and discretion as applied to the circumstances of each case, and a shipper claiming relief under that section must sustain the burden of proving that the alleged prejudice or preference is undue. There is no such uncertainty or burden upon the shipper with respect to section 4. The statute expressly declares the charging of higher rates for shorter than for longer distances to be unlawful except where upon proper showing by the carriers such rates have been specifically authorized by the Commission. H. R. 8100 would remove from the carriers the duty of showing the justification for a higher rate for a shorter than for a longer distance before it could be charged, and impose upon the shipper charged the higher rate the burden of proving that it is unduly prejudicial. Assuming this to have been shown, the prospect of obtaining any redress in such a case with respect to past shipment is practically nil, as it is almost impossible for the shipper to prove the extent to which he has been damaged by having been compelled to pay the higher rate. "We are of the opinion that the record of the carriers with respect to the establishment of higher rates for shorter than for longer distances during the nearly half a century since the enactment of the original act has fully demonstrated the need for further protection of the shipping public against the kind of discrimination and prejudice resulting from the establishment of higher rates for shorter than for longer distances than that afforded generally by those sections of the act other than section 4, and it is our view that the long-and-short-haul provision of that section should be continued in force to insure this protection. "The Federal Coordinator of Transportation in his report of March 10, 1934, recommended that the fourth section be not repealed, and that the words "under substantially similar circumstances and conditions" should not be reintroduced, but that the amendments introduced in 1920 might well be eliminated. The Coordinator's recommendations were approved by the Commission, except Chairman Lee and the writer did not concur in the suggested amendments of the fourth section. "For the reasons herein stated the Commission cannot approve the bill, H. R. 8100, and recommends that it be not passed. Commissioner Farrell does not concur in the report and is of opinion that section 4 of the Interstate Commerce Act should be repealed." The statements of the Commission above quoted with respect to H. R. 8100 apply to H. R. 3263 and H. R. 3610 here under consideration with equal force. Subsequent reports of the Commission and the Federal Coordinator of Transportation to Congress with respect to the proposal to repeal the long-and-shorthaul clause have been and are in the same tenor. These two agencies of Congress are exercising informed judgment based upon years of experience in the regulation of the railroads. They are wholly impartial, and therefore we submit their judgment in the matter here involved is entitled to greater weight than that of the proponents of the bills in question and should be controlling. Hence, we respectfully but urgently request that Congress heed the admonition of its servants, the Commission and the Federal Coordinator, and relegate these proposals of the railroads to the scrap heap along with the link and pin coupler to the end that all shippers and localities throughout the Nation may enjoy the benefits to which they are entitled by reason of their geographical locations. Respectfully submitted. CHAS. E. BLAINE, Traffic Counsel. Mr. JOHN F. SHAUGHNESSY, STATE OF WASHINGTON, Olympia, June 11, 1935. Washington, D. C. President Intermediate Rate Association, DEAR SIR: We enclose copy of letter written to our Representatives in Congress concerning the "long-and-short-haul clause." Yours very truly, DEPARTMENT OF PUBLIC WORKS, Hon. MARION A. ZIONCHECK, House of Representatives, Washington, D. C. Supervisor of Transportation. JUNE 11, 1935. DEAR SIR: This is to advise you of our attitude and to urge you to use your influence against the passage of the Pettingill bill as introduced in the House, which, if it becomes a law, will repeal the fourth section of the act to regulate commerce, commonly known as the "long-and-short-haul clause." We have hesitated to take any definite stand in this controversy as being the transportation regulatory body of the State it is our duty to protect the interests of all shippers and receivers of freight in the State. In this instance it appears on the face of things that the interests of the two sections of the State are different; that is, the passage of this bill would put our seaports in line for lower freight rates from eastern shipping points while the eastern portion would very likely be subjected to substantial increases. However, we believe that the principle established in the fourth section of the act has been a great influence in maintaining a stabilized rate structure throughout the entire country and for that reason should be allowed to stand as it is. Our Washington public service laws contain practically the same provisions and there has been no inclination on the part of any group to have it repealed or even amended. Looking at the question from the standpoint of the seaports alone, it is possible that the repeal of this section might do more damage than could be offset by any reduction in freight rates they might receive. With the present restriction removed it would be possible for the railroads to reduce their rates to coast points to such an extent that the intercoastal steamship lines could not compete with them and be forced to discontinue their service. If such a thing should happen, the loss of our boat service would be more detrimental to our ports than the benefits derived from reduced freight rates would be able to overcome. The fourth section of the act as it now stands provides that if the conditions justify it the Interstate Commerce Commission can authorize departures and in that manner they have taken care of peculiar situations that might have worked a hardship on some particular railroad. The past decision of the Interstate Commerce Commission will bear out the fact that this authority has not been abused and we believe that in the best interests of all concerned this provision of the act should not be changed. We therefore again urge you to use your influence against the passage of the Pettingill bill or any similar bill which may come up for your consideration. Yours very truly, DEPARTMENT OF PUBLIC WORKS, Supervisor of Transportation. PUBLIC SERVICE COMMISSION OF NEVADA, Hon. SAM RAYBURN, Washington, D. C. DEAR SIR: At a regular meeting held at its offices in Carson City June 3, 1935, the Public Service Commission of Nevada authorized Mr. J. F. Shaughnessy to represent it in connection with his appearance on behalf of other members of the Intermediate Rate Association before your honorable committee in opposition to the long- and short-haul bills now pending-the_Rayburn bill, H. R. 5362; the Pettengill bill, H. R. 3263; and the Dirkson bill, H. Ř. 3610. Respectfully submitted. HARLEY A. HARMON, Chairman. RENO CHAMBER OF COMMERCE, COMMITTEE ON INTERSTATE AND FOREIGN Commerce, House of Representatives, Washington, D. C. GENTELEMEN: This is to advise that Hon. J. F. Shaughnessy, formerly chair man of the Public Service Commission of Navada, has been duly authorized to represent the Reno Chamber of Commerce, Reno, Nev., in all matters brought before your honorable committee in connection with questions concerning proposed amendments to the fourth section of the Interstate Commerce Act. Respectfully yours, JOHN F. SHAUGHNESSY, Washington, D. C. E. H. WALKER, Manager. SNYDER-CRECELIUS PAPER Co., DEAR SIR: It will be impossible for our firm to be represented at the hearings on the Pettengill bill and other measures calling for the repeal of the long-andshort-haul clause. We earnestly request you to represent us at these hearings and do whatever you can to stop any action abolishing this long- and short-haul clause. It will be a terrible economic injustice for our country and for the many other localities situated likewise if this fourth section clause is destroyed. We sincerely trust your endeavors will result in a satisfactory conclusion. Very truly yours, Mr. MARTIN. Thank you for your statement. A. C. CRECELIUS. Mr. MARTIN. You may revise and extend your remarks in the record of the hearings. Mr. SHAUGHNESSY. Thank you, Mr. Chairman. Mr. MARTIN. We will stand adjourned until Monday morning at 10 o'clock sharp. (Thereupon, at 5:55 p. m., the committee adjourned to meet Monday, June 24, 1935, at 10 a. m.) AMEND FOURTH SECTION, INTERSTATE COMMERCE ACT MONDAY, JUNE 24, 1935 HOUSE OF REPRESENTATIVES, INTERSTATE AND FOREIGN COMMERCE, The subcommittee met, pursuant to adjournment in room 115, House Office Building, at 10 a. m., Hon. John A. Martin presiding. Mr. MARTIN. The committee will be in order. The first witness this morning is Mr. Brenckman, Washington representative of the National Grange. STATEMENT OF FRED BRENCKMAN, WASHINGTON REPRESENTATIVE, THE NATIONAL GRANGE, WASHINGTON, D. C. Mr. BRENCKMAN. Mr. Chairman and gentlemen of the committee, my name is Fred Brenckman. I am the Washington representative of the National Grange. Mr. MARTIN. The National Grange? Mr. BRENCKMAN. Yes. Mr. BRENCKMAN. The Grange. The question of long-and-shorthaul discrimination has come before the National Grange on various occasions. It has engaged the attention of our transportation committee, as well as the executive committee, and on several occasions the Grange has taken action opposing long-and-short-haul violations or the repeal of the long-and-short-haul law. At our last annual session held at Hartford, Conn., in November, our committee on transportation reported on this subject as follows: Several years ago the railroads engaged in a discrimination of rates through what was termed the long-and-short-haul freight rate. In more recent years, section 4, an amendment to the Interstate Commerce Act was enacted. It was the intent of the law to prevent the discrimination which grew out of the longand-short-haul rates. However, this has not proved fully effective. We believe that every shipper in the country is entitled to a fair freight rate and that discrimination should not be allowed. The committee, therefore, recommends that the National Grange go on record as being opposed to discrimination in freight rates and that shippers in any part of the United States be given a rate which will be fair and equitable in comparison with rates paid by shippers in all other parts of the country. This report was unanimously adopted, and you will note that Grange feels that the long-and-short-haul law is not strong enough as it exists today, but should be strengthened even further. The overwhelming majority of out farmers live in the interior of the country. The farmer is the man who would be discriminated against both coming and going in the event that the fourth section of the transportation act is repealed. |