Of course, nobody that appeared here before we came on the stand said anything about regulation at all. The railroads did not say anything about regulation.

Of course, it is up to us to give the committee the information so that they may not be misled.

Mr. MARTIN. But I think this: You, Mr. Petersen, are advancing that argument far beyond anything that has been presented to us yet. Mr. PETERSEN. But here is the law; I quote the law.

MERCHANT MARINE ACT, 1916

SEC. 15. That every common carrier by water, or other person subject to this Act, shall file immediately with the board a true copy, or, if oral, a true and complete memorandum, of every agreement with another such carrier or other person subject to this Act, or modification or cancellation thereof, to which it may be a party or conform in whole or in part, fixing or regulating transportation rates or fares; giving or receiving special rates, accommodations, or other special privileges or advantages; controlling, regulating, preventing, or destroying competition; pooling or apportioning earnings, losses, or traffic; alloting ports or restricting or otherwise regulating the number and character of sailings between ports; limiting or regulating in any way the volume or character of freight or passenger traffic to be carried; or in any manner providing for an exclusive, preferential, or cooperative working arrangement. The term "agreement" in this section includes understandings, conferences, and other arrangements.

The board may by order disapprove, cancel, or modify any agreement, or any modification or cancellation thereof, whether or not previously approved by it, that it finds to be unjustly discriminatory or unfair as between carriers, shippers, exporters, importers, or ports, or between exporters from the United States and their foreign competitors, or to operate to the detriment of the commerce of the United States, or to be in violation of this Act, and shall approve all other agreements, modifications, or cancellations.

Agreements existing at the time of the organization of the board shall be law. ful until disapproved by the board. It shall be unlawful to carry out any agreement or any portion thereof disapproved by the board.

All agreements, modifications, or cancellations made after the organization of the board shall be lawful only when and as long as approved by the board, and before approval or after disapproval it shall be unlawful to carry out in whole or in part, directly or indirectly, any such agreement, modification, or cancellation. Every agreement, modification, or cancellation lawful under this section shall be excepted from the provision of the Act approved July second, eighteen hundred and ninety, entitled "An Act to protect trade and commerce against unlawful restraints and monopolies," and amendments and acts supplementary thereto, and the provisions of sections seventy-three to seventy-seven, both inclusive, of the Act approved August twenty-seventh, eighteen hundred and ninety-four, entitled "An Act to reduce taxation, to provide revenue for the Government, and for other purposes," and amendments and acts supplementary thereto.

Whoever violates any provision of this section shall be liable to a penalty of $1,000 for each day such violation continues, to be recovered by the United States in a civil action.

Mr. BELL. Mr. Chairman, may I make a brief statement?

Mr. PETTENGILL. Yes.

Mr. PETERSEN. Mr. Chairman, I would like to finish my statement, and if Mr. Bell has anything to say, let him say it when we have finished.

Mr. PETTENGILL. I think that that would be better.

Mr. BELL. The record shows an entirely erroneous situation, if the record shows that these coastwise lines, or intercoastal lines, are regu lated to the same extent that the railroads are. I do not want that to stand.

Mr. PETERSEN. Mr. Bell, you will have an opportunity to answer that when we have gotten through, I know.

Mr. MARTIN. It is my understanding that they have not been regulated anything like the railroads have.

Mr. PETERSEN. I have read the law, Mr. Martin.

Mr. PETTENGILL. Some of the coastwise shippers want regulation just to get away from cut-throat competition among themselves.

Mr. PETERSEN. So did the railroads. They were in exactly the same position, so far as sections 1, 2, 3, parts of 4, and parts of 15 were in exactly the same position.

The Interstate Commerce Commission was set up to protect the railroads, from unfair competition among themselves. That was the origin of the Interstate Commerce Act.

Mr. PETTENGILL. It certainly is not plain to my mind why some of the shippers want to come further under the jurisdiction of some Federal agency to prevent undercutting among them if that question of regulation of rates is already in the Shipping Board. I do not quite get it.

Mr. PETERSEN. Well, if you will just refer to the policy of this Administration laid down by the President of the United States, that efforts should be made to consolidate various bureaus; I have shown you that the water carriers are under the jurisdiction of every Government bureau except the Department of Commerce.

We believe that if we can centralize that authority and have us under one organization that is ship-minded, mind you, ship-minded, that we will be doing the very thing that the President is asking.

Mr. REECE. Do you have any information on how many rate questions are now pending before the United States Shipping Board? Mr. PETERSEN. I do not know. Mr. Ewers may give you some information about that.

Mr. EWERS. The Shipping Board recently made some general inquiries about intercoastal rates.

Mr. LYON. That has been going on for 18 months. I have no information as to the various aspects set forth in that report.

As to my own personal knowledge, I myself have handled, I think, four rate matters before the regulatory body of the Shipping Board since the first of the year that went to formal hearings. I do not know what number of docketed cases there are. I should say, including supervision over rate agreements, rates and tariffs, that there are three or four hundred cases of one description or another pending there all of the time.

I have handled 25 or 50 cases in representing these people.

I want to say that the regulation of the intercoastal lines and coast lines, that the regulation of the intercoastal is almost on all fours with with the regulation of the railroads. The sections are copied from the bill. They have a great many details in a $25,000,000,000 organization that you do not have in a $100,000,000 organization, but during the last 6 months the Shipping Board has assumed jurisdiction to prevent some of Mr. Ewers' clients from operating in the intercoastal trade, because their rates were too low. That is a correct statement, and they canceled those rates, and they did that, not under the law which regulates intercoastal lines, which is the 1933 act, but they did it under the Merchant Marine Act of 1916 and the Shipping Act of 1916 and the Merchant Marine Act of 1920. They got their authority and jurisdiction to fix minimum rates under that act, so that that must apply to the coastwise just as it applies to the intercoastal.

Mr. PETTENGILL. You may proceed.

Mr. PETERSEN. Some of us old timers remember the time when the Southern Pacific Co. had a monopoly of transportation in California, and they then charged all the traffic would bear-and not only did they control traffic rates but they also controlled the politics of California, and hardly a Member of Congress could be nominated unless the Southern Pacific Co. approved the nomination. Since that time, however, they have reformed; but, so far as traffic is concerned, they were converted, not by any moral motives, but by the Interstate Commerce Act, especially the long-and-short-haul provision which they now seek to repeal. They join in the anvil chorus of the rest of the rail lines in asking the repeal of this legislation, so that once more they may be permitted to fix rates at their own sweet will and without the Government control of a so-called "bureaucratic agency".

As I listened to the well-ordered presentation of the railroad case by the proponents of this legislation now being considered, I was struck with the unanimity of the views presented, and, with the exception of certain local arguments, every paper read might have emanated from the same source, and the guiding hand of eminent counsel was quite apparent as the proceedings continued.

Mr. Hallmark criticized some of the water carriers on the Pacific for sending out printed matter that urged certain shippers to send word to their Representatives in Congress asking them to vote against the repeal of fourth section relief, particularly in relation to the long-and-short-haul provision. Now, Mr. Hallmark does not like this kind of propaganda; but may we assume that he is opposed to the action of the Senate of Montana, reported by Mr. Cleveland, to the effect that that body had approved the repeal of the long-andshort-haul provision, and also to the action of the Legislature of Wisconsin of the same import? Of course the action of these two political bodies was secured by highly moral motives, but as a usual proposition actions of this character are brought about by intense political propaganda.

To be sure, Mr. Hallmark is not opposed to the efforts of the railroad brotherhoods who have been supporting the railroad executives and whose membership, and others whom they may influence, are sending communications to Members of the Congress in support of his views; but, let a steamship organization do this same thing and their actions must be viewed with suspicion.

Mr. Hallmark, with other railroad proponents of the bill, view with suspicion and alarm the action of the Interstate Commerce Commission in relation to the decisions of that body concerning the longand-short-haul provision. He states they are unfair to the railroads; that they do not act upon the opinions of the Interstate Commerce Commission examiners who are more familiar with the act than the Commission itself. It seems to us that the Interstate Commerce Act was passed by the Congress of the United States and is the law of the land. It is to be presumed that the Commission renders their deci sions in the public interest, no matter who the plaintiffs may be; and, if they are capricious, dictatorial, unfair or discriminative or are not familiar with the duties imposed upon them by law, the railroads should seek to change the personnel of the Commission, rather than attempt to change the act itself.

If these charges are untrue, however if the Commission is acting in the public interest-the railroads have not made a case, and this subcommittee, after investigation, should act accordingly.

The criticism directed against deep sea water carriers by the railroads and the consolidated demand for the repeal of the long-andshort-haul provision by the railroads deepens the suspicion of the water carriers that they are not impelled by their efforts to work in the public interest but, rather, are they motivated by selfish ambitionsand one of them is to make more difficult the operation of American ships.

We on the Pacific coast agree that the railroads fill a most important place in the economic life of the Nation. We agree that they have every honest right to seek relief from the Congress when they are unfairly treated; but we cannot agree with their doleful predictions that unless the long-and-short-haul provision is repealed they will be forced to the wall of financial destruction. The railroads cannot expect the public to refrain from using truck, inland water, and deepsea transportation, when that transportation is efficient and economical; and, when they attempt to influence the Congress by political propaganda, they may expect rising resentment and counter propaganda to arise in opposition to their views.

Fighting tactics between elements in transportation will never accomplish any good results. We have set up an agency intended to compose and fairly decide disputes when they arise. The disputes between the water and rail lines are deep rooted, and one is suspicious of the other, but these disputes should not cause an effort to disrupt a law that, if fairly administered, will accomplish every good purpose if the public interest. If the Commission does not, in its decisions, honestly and intelligently administer the laws, the remedy, as before stated, is with the personnel of the Commission and not in the repeal of the law itself.

The committee has before it four bills-H. R. 3263, H. R. 3610, H. R. 5362, and H. R. 8364-but, as the railroad advocates have directed their attention to H. R. 3263, the so-called "Pettengill bill," it may be assumed that they would be satisfied with the Pettengill bill that would revoke the long-and-short-haul provision of section 4. I do not think it can be denied that this bill, if enacted into law, would seriously hurt the water carriers, for, with the passing of this legislation, the rail carriers would have freedom in fixing rates, fares, and charges, without the assent or control of the Interstate Commerce Commission. Surely, if the rail carriers had the freedom they demand, and the deep-water carriers had to obey the regulations of the United States Shipping Board Bureau, the deep-sea vessels would be placed in an unfair competitive situation.

As we read the Interstate Commerce Act, its apparent purpose is to prevent unfair competition between the railroads. The first four sections, exclusive of the long-and-short-haul provision of section 4, provide the regulation to control competition between the railroads. Without these sections and the control of the Commission, the railroads would be at each other's throats and this condition would affect the public interest.

So, we have but little complaint from the railroads concerning the provisions of the Interstate Commerce Act, but they direct their attention to the repeal of the long-and-short-haul provision of the act.

The question of noncompensatory rate fixing is the barrier between the railroads and the water carriers, and the long and short-haul provision, therefore, is anathema to the railroads. The long and short-haul provision is the only provision that provides for fair treatment in the public interest between the railroads and the water carriers. With the repeal of this provision, the water carriers would be at the mercy of the railroads, but the long and short-haul provision provides an effective curb to the railroads so as to prevent them from cutting rates and setting up noncompensatory rates that, if carried into effect, would be greatly to the detriment of the water carriers.

It is the same old fight between the economical water transport and the unrestrained rail competition. Prior to 1887, the then highly subsidized railroads proceeded upon the principle that all transportation should be by rail, and, even when great losses were inevitable, the railroads quoted ruinous prices to stop or forestall threats of water competition.

But, in 1910, the Congress of the United States, after much deliberation and study, provided the amendment to section 4 and stopped the railroads from these unfair competitive practices, and this provision gave the water carriers the right to compete with railroads for the transportation of passengers and commodities. For 10 years after this provision was inserted in the law the railroads carried a major proportion of the commerce of the United States, and are still able to carry the greater proportion of that commerce.

The Panama Canal Act, the improved inland and deep-sea transportation facilities, the improvement in railroad transportation facilities, and the depression caused the pinch to come on the railroads, and now, although they are still carrying a major proportion of the commerce of the United States, they look back with longing eyes to the days when they exercised the law of might and charged all the traffic would bear.

So, they say, we must again have that unrestricted freedom in fixing rates, fares, and charges, compensatory or not, that we once enjoyed; the Congress must release the shackles that now bind us; we must have no autocratic or bureaucratic Government control or supervision of railroads; we must be permitted to fix our rates without accountability to anyone but ourselves.

They say that other sections of the act provide ample protection to the public, but they fail to emphasize that the other sections of the act only provide protection as against themselves and unfair competition between the railroads. So, while in one breath they praise the actions of the Interstate Commerce Commission that protects them against themselves, by the faintness of their emphasis in connection with fourth-section relief-the long and short haul provision -they damn the Interstate Commerce Commission in that regard.

The Interstate Commerce Act was built up step by step after experience and the needs of the public became better understood. Organically, the act emphasizes the public interest. The Commission is supposed to protect the public interest and aid all forms of transportation for the public good.

Mr. REECE. My attention was diverted for the moment, but at the bottom of page 15 of your memorandum, you say, "We must again have that unrestricted freedom in fixing rates, fares, and charges,