Mr. BURGESS. They were heard upon their own complaint for the establishment of joint rates. They were opposed by the other Lake lines. The real controversy was between two sets of Lake lines, those that had the business and the others that wanted it. But the case was heard and decided on its merts.

Mr. SWEENY. Mr. Chairman, I will be glad to withdraw that statement, because I gave it as hearsay evidence. I was informed of it the other night by a gentleman whom I assumed knew the facts, who stated that the Nicholson Steamship Co. had been denied any right in the case that he mentioned, under section 3 of the Interstate Commerce Act, because they were not under the jurisdiction of the Interstate Commerce Commission; and if my statement is not correct, I will be glad to withdraw it from the record.

Mr. PETTENGILL. We know that whatever you said, you said in perfect good faith. We will hear Mr. Coates.

STATEMENT OF J. A. COATES, FIRST VICE PRESIDENT OF THE EASTERN STEAMSHIP LINES, INC.

Mr. COATES. In deference to the wishes of the committee, I am going to avoid repetition here and confine myself to a brief statement of the position of our company.

Mr. PETTENGILL. Will you just give your name and the name of you connections, Mr. Coates?

Mr. COATES. My name is J. A. Coates. I am first vice president of the Eastern Steamship Lines, Inc., operating 20 vessels of 70,000 tons, costing $21,545,000, and on behalf of my company wish to endorse the position taken by opponents to pending bills proposing to modify or repeal the fourth section of the Interstate Commerce Act.

Among the many abuses which resulted in the enactment of the Interstate Commerce Act was the disastrous policy followed by the railroads in competing with the water lines and there would appear to be no good reason to believe that removal of the restraint now imposed by the fourth section of that act would not bring about a return of conditions which resulted in the practical elimination of water competition.

It is possible that the repeal of the fourth section, which would be the practical effect of the enactment of the Pettengill bill or the Dirksen bill, might benefit some interests; but, judging from past experience, it is certain that the net result of such action would prove exceedingly harmful to both rail and water carriers and to the public interests at large.

Inasmuch as the Interstate Commerce Act was found necessary to protect the public interests and the Interstate Commerce Commission, which is charged with the administering of this law, has authority to give the railroads relief from the fourth section when circumstances are such as not to adversely affect their own or the public interests; and further, since the Federal Coordinator of Transportation after exhaustive study has recommended the retention of the fourth section of this act, the enactment of proposed legislation seems not only unnecessary but unwise.

I would like to touch briefly upon a couple of points that have arisen during the discussion here. Probably it may prove helpful in giving the committee a clearer view of the actual situation.

I was a little surprised to hear Congressman Martin say a few minutes ago that the primary purpose of this legislation was the regulation of the intercoastal traffic.

Now, our lines are essential coastwise-Atlantic coastwise, principally. We are not interested at all in the intercoastal traffic.

These coastwise lines handle greater tonnage than the intercoastal lines do. They would all be affected by this proposed legislation. So I do think that side of the picture wants to be taken into consideration and it must be realized that this is not only going to affect the intercoastal trade, but the coastwise trade.

A great deal has been said here

Mr. MARTIN. What is your coastwise tonnage?

Mr. COATES. We handle about 1,250,000 tons a year.

Mr. MARTIN. I mean, what is the total? Do you know the total of all of the coast lines?

Mr. COATES. No; I do not, unfortunately. I had no idea that that was the thought. I thought that this was on the whole coastwise and intercoastal business. I did not think that a division of it would be made.

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Mr. MARTIN. I realize that it is on the whole thing. I ha my thought for the moment focused on the transcontinental proposition. Mr. COATES. Well, I think that you will find that the coastwise and the Gulf traffic is just as important, Mr. Martin, and that is what I wanted to bring out.

Mr. LYONS. Your one company handles 1,125,000 tons?

Mr. COATES. Yes. Now, as to what the possible result of this legislation might be, I think it is fair to judge by what the experience was before, before we had this legislation. I think it brought aboutwe know it brought about-the elimination of the water lines.. Mr. PETTENGILL. You mean before 1887?

Mr. COATES. Yes, sir.

Mr. PETTENGILL. Going all of the way back?

Mr. COATES. Yes.

practically, as existed.

It would revert to that same situation,

Mr. PETTENGILL. Well, of course, without being technically informed on the matter, I am assuming that the other sections of the Interstate Commerce act would still be in effect as well as the declared policy of Congress in the transportation act of 1920.

Mr. COATES. Yes.

Mr. PETTENGILL. So that I may understand and follow you clearly, when you say that you think that this would take us all of the way back to before 1887, I would be glad to have your views on that.

Mr. COATES. You mean, my views on the other provisions?
Mr. PETTENGILL. Yes.

Mr. COATES. You think that we would have protection under that?
Mr. PETTENGILL. I would assume that you would.

Mr. COATES. There seems to be quite a controversy and divergence of opinion on that, but assuming that such is the case, and we have a law that protects the public; that protects the rail lines, and protects the water lines, why not let that law continue? The water lines need this protection just as much as the rail lines do.

Mr. PETTENGILL. Well, of course, the water lines do not have any long-and-short-haul clause to contend with.

Mr. COATES. Well, as a matter of fact, we have long and short hauls to contend with. We go to the Commission very often and ask for relief on it.

Mr. PETTENGILL. You do?

Mr. COATES. Yes; as a matter of fact, we do.

Mr. PETTENGILL. What is the provision of law that prevents water carriers charging less for long haul than short haul?

Mr. COATES. But, our lines operate largely in conjunction with rail lines.

Mr. PETTENGILL. You mean on through traffic.

Mr. COATES. On through traffic. A large proportion of our traffic is handled in that way, and we are subject to the Interstate Commerce Commission, and we are quite content with the regulation of the Interstate Commerce Commission.

Now, there has been a question brought up here as to the necessity for protecting the rail lines. In other words, the big investment as compared with the comparatively small investment in the water lines. I think that is a real situation, but I do not think this is a question of the survival of one form of transportation or another. Both exist now. Both did exist before the depression, and both were prosperous before the depression, and I think there is a question here that is being magnified, as to what is bringing about the real situation of the railroads. I say that I am not going to rehash what has been said here, because I would just be repeating their financial set-up, their duplication of services, and everything that has been gone over; but I am not going over all of that, but the fact remains, before the depression, the railroads were prosperous, and so were the water lines, and since the depression there are just as many of the water lines in bad shape as there are of the rail lines.

I think that can be verified and proven, and so I do not think that this is a question of the survival of one form of transportation or the other. I think it is a question of putting all forms under one form of regulation, under a form of regulation so that they can be controlled and governed.

Mr. PETTENGILL. Do you welcome that?

Mr. COATES. Yes; I certainly do.

Mr. PETTENGILL. So far as the water carriers are concerned?
Mr. COATES. Yes, sir.

Mr. PETTENGILL (continuing). Welcome being placed under the Interstate Commerce Commission?

Mr. COATES. Absolutely.

Mr. PETTENGILL. And having rates fixed by the Interstate Commerce Commission?

Mr. COATES. Yes, sir. I think it is unfair for the rail lines to have one form of regulation and for the water lines, and truck competitors, to have a different form. I think they all ought to be put under the Interstate Commerce Commission.

Mr. PETTENGILL. That sounds like a very fair statement.

Mr. COATES. There is nothing unreasonable in the water lines. There is certainly nothing unreasonable in the position we take. Mr. SALM. May I ask one question?

Mr. PETTENGILL. Yes.

Mr. SALM. Do you think that if the water lines were put under regulation by the Interstate Commerce Commission, similar to the rail regulations, do you not think that would have a tendency to do

away with this complaint the railroads now have in connection with this long-and-short-haul?

Mr. COATES. I certainly do. I certainly do.

Mr. MARTIN. Is there any port-to-port competition in the coastwise lines? I asked that question a few minutes ago.

Mr. COATES. Yes, sir; decidedly. There is port-to-port competition; also port competition, and competition from the interior territory where they work in conjunction with the railroads.

Mr. MARTIN. My recollection of many years ago is that there was not any competition, that they had it divided up.

Mr. COATES. That situation has changed very materially, Mr. Martin. I think that is one picture you ought to get. There seems to be a suspicion of the water lines toward the rail lines and the rail lines toward the water lines, and I guess it is well founded probably on both sides.

Mr. PETTENGILL. In saying that you would welcome the water carriers being placed under Interstate Commerce Commission regulations to the same extent as the railroads are, do you think that you express the prevailing thought in your industry?

Mr. COATES. I have got to be very careful in expressing myself on that. I think on the coastwise industry, that I do. That is, the majority of thought. I think if you will refer to the hearings on 1632, the Eastman bill, I think you will find that a majority of the coastwise lines appeared in support of that bill, That is true, is it not, Mr. Sweeny?

Mr. SWEENY. Yes.

Mr. MARTIN. Just to get into the record at this point

Mr. COATES (interposing). I am not stating that as a fact, but that is my opinion.

Mr. MARTIN (continuing). Mr. Lyon stated that he represented 70 percent of the Panama Canal intercoastal traffic. He expressed himself in the same way, did you not, Mr. Lyon?

Mr. LYONS. I did, so far as my personal opinion is concerned, but I said that I did not mean that all nine of the companies that I represented were in favor of regulation by the Interstate Commerce Commission, but Mr. Farley speaking for about two or three hundred million dollars before this Senate committee expressed the view that those were fully in favor of regulation of the Interstate Commerce Commission. There is a difference of opinion among the intercoastal companies, just as there is a difference of opinion among the coastwise traffic. Is that not correct?

Mr. COATES. Yes; that is correct, and I think if you will refer to those hearings on that bill you will also find that they support what he says, and I am quite certain that you will find that the bulk of the tonnage, both intercoastal and coastwise trade are in favor of uniform regulation. Probably that has not been the position and would not be the position of the water lines 20 years ago or 10 years ago, but this very situation you refer to now, this change in competition among water carriers themselves and competition of water carriers with trucks have made their position so different. They suffer in exactly the same way that the rail lines are suffering. Consequently, they recognize the necessity for uniform regulation.

Mr. MARTIN. You feel that trucks up and down the coast are competing with you?

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Mr. COATES. Very, very much. It is a different form of competition, we have, but we suffer more from competition from the traffic we are interested in competition with the rail lines that they have. I am talking about competition from Norfolk to New York; New York to Boston, or New York to Portland, in that territory. We have had more competition, in fact, and have been hurt more by motor carrier competition than the rail lines have, or full as much.

Mr. MARTIN. Yours is a slower method of transportation.
Mr. COATES. Absolutely.

Just one other point that I would like to clear up, and I think there must be some misunderstanding on the part of the committee as to the attitude of the rail lines in regard to meeting water competition.

It certainly is not the experience of ours that the rail lines are content to grant us a reasonable differential, speaking for our line, and I think it is fundamentally true with a great many of the companies, as well as with my line. We are perfectly willing to let an impartial body like the Interstate Commerce Commission fix reasonable differentials for the water lines. We have gotten together with a number of rail lines and tried to get together and agree on differentials on our port-to-port traffic and also on traffic to interior points, and they would not concede that we had any right to differentials from our ports to their interior territory. They would not concede that at all.

Mr. PETTENGILL. If the water carriers were brought under the Interstate Commerce Commission, do you think that it would then become necessary or advisable to maintain the policy of nonidentity of ownership between railroads and water carriers?

Mr. COATES. I do not quite get your question. I do not understand what you mean by that.

Mr. PETTENGILL. As I understand it, at least so far as the Panama Canal is concerned, no boats owned by railroads can go through the canal.

Mr. COATES. That is correct.

Mr. PETTENGILL. Now, if water transportation is brought under the Interstate Commerce Commission equally with rail transportation, do you think then that it would be necessary or advisable to maintain the nonidentity of ownership of rail and water transportation?

Mr. COATES. Yes; I do, because I think then that the rail lines would be in a position to use their rail lines to drive out water competi tion. I mean they could take and work in conjunction with water lines and rail lines, could work in conjunction to the detriment of the independent water lines. I think it would be an unsafe thing. I will just give an illustration of what I mean. Suppose there is a line operated by our railroad competitors between New York and Norfolk, we will say. They also have their rail lines. They could go down on their water rates to drive us out and still have their rail rates, and they could put down their rail and water rates and be forced to do it by the bulk of the traffic they have, and the intermediate traffic they have in that territory, where we, being dependent upon just the traffic we get between our ports, you naturally see what the situation would be. Otherwise, the same situation would exist as existed so far as the Panama Canal is concerned in the first place.

Mr. PETTENGILL. If the water carriers, including the railroad-owned vessels in that case were all under the Interstate Commerce Commislation, do you think the Interstate Commerce Commission