Since nondiscriminatory transportation tariffs are a basic guarantee of fair competition in industry, the Government may well end up by operating the common carrier services. This would be a reversal of a popular and successful move which took the Government out of operating river barge lines in 1953. The powerful interests will be able to take care of themselves; those hurt by the collapse of common carrier service would be the thousands of small businesses which depend for their existence on an equitable transportation system.

We believe that the passage of the bill S. 1284, sponsored in this session by the Interstate Commerce Commission, would be a useful beginning to a program that will reverse the decline of the importance of the common carrier industry.

Repealing the dry bulk exemption, which this bill would accomplish, will be an important and valuable reform. But to cure the specific problem of combinations of private and "for hire" carriage, the removal of the exemptions should be combined with a prohibition against any carrier, which transports its own goods or those of an affiliate, engaging by any means, directly or indirectly, in public “for hire" transportation.

Thank you very much.

Senator SCHOEPPEL (presiding). Thank you very much, Mr. Hershey.

Do you have any questions?

Mr. BAYNTON. I have no questions, Senator.

Senator SCHOEPPEL. According to the information which I have before me, Mr. Baker, president of the TAA, is due back, and he is from out of town. I understand that he desires to testify next. We desire to accommodate him if possible.

Will Mr. Baker come forward?

Mr. Baker, we will be glad to hear from you.

I note that you have a prepared statement. You may proceed in whatever manner you desire.

STATEMENT OF GEORGE P. BAKER, PROFESSOR OF TRANSPORTATION, HARVARD GRADUATE SCHOOL OF BUSINESS ADMINISTRATION, AND PRESIDENT OF TRANSPORTATION ASSOCIATION OF AMERICA

Mr. BAKER. Thank you, Senator.

I do appreciate being put on now, because I do have to get back. My name is George P. Baker. I am professor of transportation at the Harvard Graduate School of Business Administration. Today I am appearing before your subcommittee in my capacity as president of the Transportation Association of America to express the association's views and concern about the decline of common carriage in the United States.

For the record, TAA is a nonprofit research and educational institution made up of users, investors, and carriers of all modes who collectively devote their efforts to the development and implementation of sound national policies aimed at the creation of the strongest possible transportation system under private ownership and operation. For a number of years, TAA spokesmen have been expressing concern about the trends in transportation which show a progressively

Basic research is the cornerstone on which the successful use of the seas must rest. Progress here is largely dependent on the work of scientists at many universities and laboratories throughout the United States and on ships at sea. Their investigations cover all aspects of the marine environment, the motion and composition of ocean waters, the evolution and distribution of marine plants and animals, the shape and composition of the ocean bottom, and many other geophysical and biological problems. Of timely significance is the attempt to penetrate to the earth's mantle to better our understanding of the origin and history of our planet. This undertaking, known as Project Mohole, involves the development of new drilling methods that can be used in the deep seas. This project has recently resulted in a spectacular achievement. Samples from nearly a thousand feet beneath the sea floor were obtained by drilling in 3,000 feet of water.

Considerable attention will also be given to applied problems in the marine sciences. Oceanographers will be studying such problems as sound propagation in water, the effects of changes in ocean conditions on the movement of ships, weather forecasting and fisheries management. Methods of predicting changes in ocean conditions also are being developed. Eventually they may lead to maps of "weather within the sea" much like the atmospheric weather maps of today.

Many advances are being made in methods of exploring the seas. Oceanographers are now able to descend to the great depths in bathyscaphs. New electronic equipment will allow them to probe the ocean and to "see" with sound pulses what before has been opaque. Using these new techniques, our scientists already have discovered vast currents below the ocean surface a thousand times larger than the flow of the Mississippi.

4. TRAINING OF OCEANOGRAPHERS

The most important part of our long-range program in oceanography is the training of young scientists. Scientific manpower of every sort will be needed— technicians, college graduates, and postgraduate researchers-and they must be trained in many scientific disciplines. This training should go hand in hand with the conduct of research at universities and other oceanographic institutions. By their support of these institutions, the programs of the National Science Foundation, the Office of Naval Research, and the Department of Health, Education, and Welfare will be of major importance to an expanding program in oceanography; for they can result in the education of new young scientists as well as in the production of new knowledge. In the coming year, these agencies are undertaking to increase the number of fellowship awards and graduate student research contracts, and they also will encourage the development of new university programs in oceanography.

5. OCEAN SURVEYS

Worldwide surveys of the oceans-their properties, their contents and boundaries are needed to make charts and maps for use of scientists in their research programs and for a variety of commercial and defense applications. The U.S. ocean survey program of fiscal year 1962 is being increased within the limits of ships available for this purpose. I am requesting additional funds to allow the Coast and Geodetic Survey to extend the operating season of its existing ships, thus making the maximum use of limited ship resources. As already mentioned, funds are included for a new survey ship which will increase our deep-sea survey capability.

6. INTERNATIONAL COOPERATION

Oceanography is a natural area of opportunity for extensive international cooperation. Indeed, systematic surveys and research in all the oceans of the world represent tasks of such formidable magnitude that international sharing of the work is a necessity.

Our present maps of the oceans are comparable in accuracy and detail to maps of the land areas of the earth in the early part of the 18th century. Precise methods of measuring ocean depths have become available during the last 10 years, and these, when combined with new developments in navigation, should make possible for the first time modern maps of the topography of the entire sea floor. An accurate mapping of the oceans will require international cooperation in ship operations and in establishing a worldwide system of navigation. In these endeavors the United States can play a leading part.

put and ownership. The airlines, starting at a very modest level in 1946, took full advantage of aviation developments and promotion both during and following the war and expanded rapidly throughout this period.

From a traffic standpoint, therefore, the intercity passenger problem was primarily a rail-bus problem.

Transport traffic trends, 1956-60: The trends in traffic during the past 5 years have developed a somewhat different pattern from those of the previous decade. This is largely the result of a slowing down in the relative growth of the overall economy, with total output increasing by only 10 percent, or about half the 1946-55 rate.

With less additional traffic to compete for, common carriers other than the railroads found competition increasingly severe, especially in the trucking field, where hundreds of thousands of exempt forhire and private carriers were aggressively taking over more and more of the traffic.

To illustrate the growing concern of motor common carriers, despite the climb between 1955 and 1956 of overall intercity freight traffic to an all-time peak, the ICC-regulated trucklines failed to pick up any additional traffic during that year. Furthermore, this experience of gaining no or very minor traffic occurred in 4 out of the last 5 years. During the same period, the railroads ended up with less freight traffic than they started with. Yet, truckers not regulated by the ICC continued upward at a rapid pace, picking up about 56 billion tonmiles of traffic, for a striking 39 percent gain. This rapid growth of traffic by truckers not regulated by the ICC, at the expense of ICCregulated railroads and trucks respectively, is illustrated in the second attached tabulation and accompanying charts.

Unfortunately, an unknown but apparently growing portion of this unregulated truck traffic was believed to have been conducted illegally. State enforcement officials estimate illegal operators handle "at least" 25 percent of the total intercity truck traffic.

This unhappy condition from the standpoint of common carriers, was also taking place in the freight forwarder field, with ICC-regulated forwarders not being able to increase traffic volume because of what they claim is the growing competition from unregulated shippers associations-again an unknown number of which were engaging in for-hire freight forwarding contrary to the intent of the exemption for such nonprofit associations.

In the inland waterways field, ICC-regulated common carriers have made numerous complaints about unregulated competition from exempt for-hire and private carriers, who dominate this field.

In the intercity passenger field, rail traffic continued to drop during the last 5 years, although tending to level off somewhat. But traffic volume definitely stabilized. Air carrier traffic volume continued to increase, but at a declining rate, which has now placed the airlines in a situation similar to that faced by the railroads and bus companies, of operating with load factors well below that necessary to maintain a strong financial position.

Yet, use of the private automobile continued to increase, with gains every year, and its share of the total intercity passenger market increasing steadily during the 5-year period to where, in 1960, it accounted for 90 percent of the traffic.

COMMITTEE ON COMMERCE
UNITED STATES SENATE

EIGHTY-SEVENTH CONGRESS

FIRST SESSION

TO DETERMINE THE CAUSES AND EXTENT OF THE RELATIVE DECLINE OF REGULATED CARRIERS AS AGAINST OTHER TYPES OF CARRIAGE AND EVALUATE THE RESULTING EFFECT ON THE ADEQUACY OF OUR NATIONAL TRANSPORTATION SYSTEM

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MARCH 22-23, JUNE 27-28, AND AUGUST 30, 1961

Printed for the use of the Committee on Commerce

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1962

Another example of discriminatory taxation against common carriers is State and local tax assessments of railroad property. To illustrate, the Association of American Railroads reported that in 1957, of the $441 million that the railroads paid 31 State and local governments in such taxes, $141 million of it represented assessments at rates exceeding those for other industries. This is obviously a heavy burden to be carried on an annual basis by carriers faced with serious financial problems.

What groups are responsible for the trends: Just as there are many reasons for these trends away from common carriage, only a few of which I have mentioned above, there are many groups which must assume and share the responsibility for them.

Carriers: While the TAA does not operate in the area of carrier operations, it would be only fair to point out that the carriers themselves must share some of the responsibility for the trend away from common carriage. Only in recent years have they started to recognize that many of the problems in the transportation field are ones of common interest. While new innovations and improved common carrier service have taken place, there certainly has been room for considerably more progress, especially in the area of coordinated services. The necessity for really working together in the area of national transportation policy is still, unfortunately, not appreciated by all common carriers.

Labor: Perhaps in no other major economic field in the United States is labor so well organized and powerful as in the common carrier transport field. Labor Department statistics show that the transportation industry leads all other major U.S. industry classifications in average annual earnings per full-time employee, despite the fact that the transportation industry is in a much poorer financial position than such industry groups as communications-public utilities, manufacturing, and finance-insurance-real estate.

There is no question but that transport labor demands have been excessive and have been an important factor in the growth of exempt and private carriage.

Government: The role of the Federal Government in determining the health of our common carrier system is vital, and if this system is weakening, the Government must assume part of the blame. While both the congressional and executive branches of the Government have made thorough studies of the problems confronting our transport industry, they have taken action on only a few of them. This prob ably is due to the fact that because of the widespread impact of national transport policy changes, most changes of importance become very controversial and are vigorously opposed by segments of the industry.

Regardless of the reason, the fact remains that the Federal Government has not as yet found a reasonable balance in our transport promotional policies. It has not fully modernized our transport regulations so that common carriers are assisted rather than hindered. It has not removed all discriminatory taxes that tend to discourage the use of interstate common carriers. As a user of transportation services, it has often followed policies that tend to weaken our common carrier system. As a provider of transportation services, it has engaged in certain areas in direct competition with common carriers to their detriment.