At my request, the Secretary of Commerce has undertaken a study of the current problems of the American merchant marine. This review will involve such specific issues as the state of coastal and intercoastal shipping and the costs of service to our noncontiguous territories. It will also consider more fundamental questions of long-term adjustment: Are the criteria adopted in 1936 as guides to the establishment of essential trade routes and services relevant for the future? Are there alternatives to the existing techniques for providing financial assistance which would benefit (a) the public in terms of better service and lower rates and (b) the operators in terms of higher profits, more freedom for management initiative and more incentive for privately financed research and technological advance? What research and development efforts are most likely to increase the competitiveness of our merchant marine? Can defense readiness requirements be met adequately by greater reliance on the reserve fleet and the ships of our allies under NATO agreements? Would a smaller reserve fleet be adequate? Are the international arrangements pursuant to which world shipping operations are carried on conducive to the stability of the industry, fair but effective competition and adequate service? I have also asked the Secretary of Defense to provide the Secretary of Commerce with estimates, under a range of assumptions as to military emergencies, of what active and reserve tonnages of merchant shipping should be maintained in the interest of national security. In addition, I have established a Cabinetlevel committee, chaired by the Secretary of Labor, whose study will include the flags of convenience and cargo preference issues. When the findings and conclusions of these studies become available, I shall send to the Congress appropriate specific recommendations concerning our maritime program. In the meantime, I have directed the Secretary of Commerce to implement fully section 212 (d) of the Merchant Marine Act of 1936, for securing preference to vessels of U.S. registry in the movement of commodities in our waterborne foreign commerce; and I have directed all executive branch agencies to comply fully with the purpose of our cargo preference laws. I have also recommended a stepped-up research program for developing ways and means of increasing the competitive efficiency of our merchant marine and related industries. Of particular significance in this effort will be the application of the principles of mass production, and the standardization of ship types and ship components, for reduction in the cost of new vessel construction. Also, I am urging that sound development in technology and automation be applied to merchant shipping as rapidly as possible, fully recognizing and providing for the job equities involved, as a major program for enhancing the competitive capability of our merchant marine. (B) International aviation An interdepartmental committee, headed by the Administrator of the Federal Aviation Agency, and including representatives from the Department of State, the Department of Defense, the Department of Commerce, the Civil Aeronautics Board, and the Bureau of the Budget, was established at my direction last July to undertake a study of U.S. international air transportation policies and problems. This study is presently underway, and will be completed by late summer. Concurrent with this policy study, the Bureau of the Budget is conducting a study of the organizational structure within which Government agencies carry out activities concerned with international aviation. Once these studies have been completed and evaluated, an administration policy on international civil aviation will be enunciated, with responsibilities assigned to the agencies involved according to statutory requirements. (A) Labor relations PART IV. LABOR RELATIONS AND RESEARCH Technological advance in transportation must be explored and developed if we are to meet growing requirements for the movement of people and goods. New equipment often requires new skills, sometimes displaces labor, and often requires retraining or relocation of manpower. An overall reduction in manpower requirements in transportation is not inevitable, however; and the new Manpower Development and Training Act will help those transportation workers in need of new jobs or new skills. For the long-range benefit of labor, management, and the public, collective bargaining in the transportation industry must promote efficiency as well as solve problems of labor-management relations. Problems of job assignments, work rules, and other employment policies must be dealt with in a manner that will both encourage increased productivity and recognize the job equities which are affected by technological change. The Government also has an obligation to develop policies and provide assistance to labor and management consistent with the above objectives. (B) Research To understand the increasingly complex transportation problems of the future, to identify the relationships of social, economic, administrative, and technical factors involved, to translate scientific knowledge into transportaton engineering practice, to weigh the merits of alternative systems, and to formulate new, improved, and consistent policies-we need information that can evolve only from a vigorous, continuous, and cordinated program of research. Yet, in the field of transportation where we have many unfulfilled opportunities, research has been fragmented, unsteady, inadequate in scope and balance. Scientific and engineering research will bring to all forms of transportation the benefits of new high strength, low-cost and durable materials, compact and economical powerplants, new devices to increase safety and convenienceimprovements which have characterized the development of jet-propelled aircraft. Experiments in the maritime field have resulted in the development of a nuclear-powered merchant ship, the NS Savannah, which has already begun test cruises, and a hydrofoil ship, the Dennison, which is nearing trial runs. Transportation on land, as well as in the air and on the seas, can benefit from accelerated scientific research. Economic and policy research will improve knowledge about the functioning of our transportation system as a whole and about the interrelation of the major branches of the industry. It should consider the new demands for transportation, the changing markets and products being handled, and the need for speed and safety. For instance, such research can consider the handling of freight as a system beginning in the shipper's plant and ending with the delivery of goods to the very doors of his customers-using new packaging, containerization and cargo handling methods that will take full advantage of new economies and convenience. Taking advantage of new techniques that would provide convenience and efficiency, we must consider the impact of different forms of transportation investment on economic development; we must combine and integrate systems to take advantage of the maximum benefits of each mode of travel; we must now consider the Nation's transportation network as an articulated and closely linked system rather than an uncoordinated set of independent entities. Just as a transport system must be built and operated as a whole, the different areas of transportation research must be coordinated within an overall concept. With the advice and assistance of the heads of the principal Federal agencies concerned with transportation and members of my own staff, the Secretary of Commerce is undertaking a broad evaluation of research needs in transportation and of the appropriate methods to meet these needs. I look to the Secretary of Commerce to develop a comprehensive transportation research program for the Government for later consideration by the Congress. Once such a coordinated and policy-oriented research program is underway, it will produce a flow of information of the kind that we must have to implement a comprehensive public policy on transportation. Improved statistics for private and Government use are also urgently needed. The 1963 budget repeats a request made by the previous administration for funds to prepare for a Census of Transportation. This census will make an important beginning to supplying these much-needed data. I urge early favorable action on this request. CONCLUSION The troubles in our transportation system are deep; and no just and comprehensive set of goals-which meets all the needs of each mode of transportation as well as shippers, consumers, taxpayers and the general public-can be quickly or easily reached. But few areas of public concern are more basic to our progress as a nation. The Congress and all citizens, as well as all Federal agencies, have an increasing interest in and an increasing responsibility to be aware of the shortcomings of existing transportation policies; and the proposals contained in this message are intended to be a constructive basis for the exercise of that responsibility. The difficulty and the complexity of these basic troubles will not correct themselves with the mere passage of time. On the contrary, we cannot afford to delay 91497-62 -3 further. Facing up to the realities of the situation, we must begin to make the painful decisions necessary to providing the transportation system required by the United States of today and tomorrow. JOHN F. KENNEDY. THE WHITE HOUSE, April 5, 1962. The CHAIRMAN. We also have reports from various agencies on these proposals which will be included in the record at this point. (The reports referred to follow :) Hon. OREN HARRIS, DEPARTMENT OF AGRICULTURE, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is in reply to your letter of May 9, 1962, requesting our comments on H.R. 11583, a bill to exempt certain carriers from minimum rate regulation in the transportation of bulk commodities, agricultural and fishery products, and passengers, and for other purposes. We favor passage of this bill because we believe it is consistent with the goals set forth in the President's transportation message and would be beneficial to agriculture generally as well as to the Nation's common carriers. If passed, this bill would exempt from minimum rate regulation the interstate transportation of (1) bulk commodities, (2) agricultural and fishery products, and (3) passengers. It would tend to equalize competitive opportunities between carriers of different modes of transportation and would permit the forces of competition to determine the charges paid by shippers for moving freight and the fares paid by passengers. At present, commodities moving in bulk in interstate commerce by inland waterway are exempt from economic regulation. These comodities, when moved by railway, are not exempt and when moved by highway are not correspondingly exempt. In addition, the present law is inconsistent because interstate transportation charges for moving unmanufactured agricultural commodities are not regulated by any Federal agency if moved by for-hire motor trucks but are regulated if moved by railroads or inland waterways (except in bulk by water). We are convinced that if this bill were passed, it would eliminate many of the above inconsistencies and would be beneficial to the movement of agricultural products and farm supplies. This is the reason for our strong support of it. Inasmuch as this bill bears directly on the transportation of virtually all farm products and supplies, we will continue to study it. If we have any additional comments to make, we will forward them to you as they occur to us. The Bureau of the Budget advises that there is no objection to the presentation of this report and that enactment of the proposed legislation would be in accord with the President's program. Sincerely yours, ORVILLE L. FREEMAN, Secretary. EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D.C., June 15, 1962. Hon. OREN HARRIS, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is in reply to your requests of May 9, 1962, for reports on H.R. 11583, to exempt certain carriers from minimum rate regulation in the transportation of bulk commodities, agricultural and fishery products, and passengers, and for other purposes, and H.R. 11584, to provide for strengthening and improving the national transportation system, and for other purposes. These bills were transmitted to the Congress by the Secretary of Commerce to carry out the recommendations made by the President in his transportation message of April 4, 1962. The Bureau of the Budget therefore urges enactment of the bills as a part of the program of the President. Sincerely yours, (Signed) Phillip S. Hughes, Assistant Director for Legislative Reference. Hon. OREN HARRIS, THE SECRETARY OF COMMERCE, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: In your letter of May 9, 1962, you asked for comment from this Department on H.R. 11583 and H.R. 11584. As you know, these are the bills submitted by this Department in draft form to the Speaker of the House on May 1, 1962, to implement the President's recommendations to Congress on transportation. In our submission to the Speaker we included a section-by-section analysis of the proposals to explain the meaning and purpose of the bills. We, of course, support the bills and expect to so testify before your committee during hearings which we understand will be held in the next few weeks. Please let us know the dates of these hearings. The Bureau of the Budget has advised that enactment of these bills would be in accord with the program of the President. Sincerely yours, EDWARD GUDEMAN, Acting Secretary of Commerce. THE SECRETARY OF COMMERCE, Hon. LYNDON B. JOHNSON, President of the Senate, Washington, D.C. Hon. JOHN W. MCCORMACK, Speaker of the House of Representatives, Washington, D.C. DEAR Mr. PRESIDENT AND Mr. SPEAKER: There are submitted herewith drafts of proposed bills to provide for strengthening and improving the national transportation system, and for other purposes, and to exempt certain carriers from minimum rate regulation in the transportation of bulk commodities, agricultural and fishery products, and passengers, and for other purposes. The proposed bills implement certain recommendations contained in the President's message on transportation which was submitted to the Congress on April 5, 1962. The first bill empowers the regulatory transportation agencies to sanction experimental freight rates and modifications in existing systems of service, classifications, and documentation; prohibits common carriers subject to the Interstate Commerce Act from discriminating as to service or rates in the transportation of vehicles or containers tendered by shippers or carriers; declares it to be in the national interest that through service and joint rates, fares and charges between carriers of all modes of transport be encouraged and promoted and authorizes the Federal Maritime Commission to participate with the Civil Aeronautics Board and the Interstate Commerce Commission in joint boards for the review of such rates; authorizes the Interstate Commerce Commission to enter into cooperative agreements with the States for enforcement of the economic and safety laws and regulations of the States and the Federal Government concerning highway transportation; provides for extension of civil forfeiture penalties of the Interstate Commerce Act to violations of safety regulations and involving lack of operating authority, and for increases in such penalties; requires that air carriers pay reparations to shippers charged unlawfully high rates; provides for simplification of Government transportation rates and procurement, and for greater flexibility in the use of motor vehicle common carriers for the transportation of mail; and provides for transfer to the Secretary of Commerce the powers and duties vested in the Civil Aeronautics Board and the Interstate Commerce Commission with respect to the guarantee of loans to air carriers and common carriers by railroad, respectively. The second bill exempts carriers from minimum rate regulation by the Civil Aeronautics Board, the Federal Maritime Commission, and the Interstate Commerce Commission in the transportation of bulk commodities and certain agricultural and fishery products. Carriers transporting passengers are also exempted from such regulation by the Federal Maritime Commission and the Interstate Commerce Commission. Carriers exempted from minimum rate regula tion who engage in any act or practice in violation of the "antitrust" laws will be subject to the proceedings and penalties specified in such laws. This Department believes that enactment of these bills, together with enactment of legislation relating to tax policies and user charges to be submitted by the Secretary of the Treasury and legislation pending before the Congress implementing recommendations in the President's mesage relating to making motor carrier safety regulations of the Interstate Commerce Commission applicable to private carriers (H.R. 5598 and S. 1287); repeal of the prohibition against rail carriers transporting certain commodities in which they have an interest (S. 734); making domestic trunk air carriers ineligible for operating subsidies in the future (H.R. 10813 and S. 2297); and the requirement that motor carriers and freight forwarders pay reparations to shippers charged unlawfully high rates (H.R. 5596 and S. 1283), will materially assist in the development of an efficient and dynamic transportation system, which is vital to our economic growth and progress. The Department of Commerce recommends, therefore, the enactment of the proposed bills. There are enclosed section-by-section analyses of the proposed bills. The Bureau of the Budget advises that enactment of the proposed bills will be in accord with the program of the President. Sincerely yours, Enclosures. LUTHER H. HODGES, Secretary of Commerce. ANALYSIS OF A PROPOSED BILL TO EXEMPT CERTAIN CARRIERS FROM MINIMUM RATE REGULATION IN THE TRANSPORTATION OF BULK COMMODITIES, AGRICULTURAL AND FISHERY PRODUCTS, AND PASSENGERS Section 1. Exemption for ICC Carriers: The exemption from minimum rate regulation provided in this section would apply to all carriers subject to regulation by the Interstate Commerce Commission. Such exemption applies to (1) bulk commodities, (2) agricultural and fishery products, and (3) passengers. (a) Bulk commodities: Rates charged by any carrier subject to the Interstate Commerce Act for the transportation of commodities in bulk which are loaded and carried without wrappers or containers and received and delivered by the carrier without transportation mark or count, or to the transportation of liquid commodities in bulk, would be exempt from the minimum rate regulation of the Interstate Commerce Commission. However, such carriers would be subject to applicable antitrust laws as discussed below. The purpose of this examination is to equalize competitive opportunities between carriers of different modes of transportation and to permit the forces of competition to replace cumbersome regulation for these commodities. At present, the transportation of bulk commodities by water carriers is exempt from all rate regulation under the Interstate Commerce Act, including and approval of minimum rates; but this exemption is denied to all other modes of transportation. Extending to such other carriers the exemption from the approval or prescription of minimum rates would correct this inequity. (b) Agricultural and fishery products: Similarly, the exemption from minimum rate regulation for the transportation of certain agricultural and fishery products (specified in sec. 203 (b) of the Interstate Commerce Act) now available only to motor carriers and freight forwarders would be extended under this section to all carriers subject to the Interstate Commerce Act. The purpose of this amendment, like the exemption from minimum rate regulation for bulk commodities, is to reduce drastically and equalize fairly the regulation of freight rates in this country. Freed to exercise normal managerial initiative, carriers will be able to rationalize their operations and reduce costs; and shippers should consequently enjoy a wider choice, improved service, and lower rates. (c) Passengers: Consistent with the freedom from minimum rate regulation for certain kinds of freight is the freedom to set minimum fares for passengers. Accordingly, this section would withdraw the power of the Commission to determine that a fare prescribed by a carrier is lower than a reasonable minimum fare. Again, as with the freedom to set minimum rates for bulk commodities and agricultural and fishery products, the carrier would be subject to the proceedings and penalties in the applicable "antitrust" laws with respect to the fares charged. |