only to pay for the gas and oil on that leg of the movement, it is ahead of the game. Thus, the so-called private carrier seizes upon the agricultural exemption to make economically feasible the transportation of its own property. The railroads are convinced that much private carriage today could not be economically justified and would not exist if it were not for the ability of the private company to engage in for-hire transportation for exempt commodities.

While it is impossible to measure with preciseness the volume of exempt commodities being moved in for-hire transportation by private carriers, there can be no doubt that such volume is substantial. Moreover, we are concerned not only with the volume of that exempt traffic but with the volume of traffic that would otherwise move by common carriage if it were not for the exemption.

There, if you please, I mean the transportation of the private carrier himself, the traffic he has made it economically feasible to transport. In addition, the existence of for-hire private carriage itself is an anomally and tends definitely to be unfair and destructive and directly contrary to the objective of our so-called national transportation policy.

Nowhere in the legislative history of the agricultural and bulk commodities exemptions was there the slightest indication that the exemptions were for the benefit of such private carriers. Commissioner Joseph B. Eastman of the Interstate Commerce Commission, then acting as Federal Coordinator of Transportation, considered this problem and indicated to Congress that under the proposed legislation the private carrier would not become a competitive menace to the forhire carrier, because he would not be permitted to carry return loads for hire and would therefore have considerable emptyreturn mileage. In this connection he said:

It may be urged that regulation will encourage private trucking and thereby work a serious injury to the for-hire sections of the industry. There is little reason to believe that important injury would result. As the legislation proposed would debar the private operator from transporting freight for hire, unless he submits to the regulation proposed for for-hire operators, his opportunity to fill up outbound loads and to pick up for-hire traffic on return trips would be materially limited. Such a restriction is justified for the protection of the common carrier upon whom the general public must depend.

This change would reduce the radius of operation of the strictly private carrier, except where, for example, he can carry his own products out and bring back raw or semifinished products or other supplies for his own use (S. Doc. No. 152, 73d Cong., 1st sess., 1934, p. 33).

Stating the above proposition somewhat differently, Commissioner Eastman tried to put the minds of Congress at rest on the private carrier problem by calling their attention to the basic economic fact that the private carrier could not successfully compete against the for-hire carrier without a backhaul.

Seventeen years later in referring to this position of the Coordinator of Transportation, the progress report of the Domestic Land and Water Transportation Subcommittee, previously mentioned, stated:

The same difficulties which have plagued common carriers by motor and rail in competition with contract and exempt motor carriers arise in those situations which involve the private motor carrier. The Coordinator of Transportation, in 1935, expressed no fear of the expansion of private carriage into the for-hire industry and made no recommendation for their inclusion.

In the space of 5 years, however, it became clear that corrective steps would have to be taken. Consequently, in 1940, section 203 (a) (17) was added to the act, defining a private carrier in the following language:

"SEC. 203. (a) (17) *the term 'private carrier of property by motor vehicle' means any person not included in the terms 'common carrier by motor vehicle' or 'contract carrier by motor vehicle,' who or which transports in interstate or foreign commerce by motor vehicle property of which such person is the owner, lessee, or bailee, when such transportation is for the purpose of sale, lease, rent, or bailment, or in furtherance of any commercial enterprise."

The optimism of the Coordinator in 1935 has certainly not been justified by experience. The tendency of regulation has again been to drive more and more traffic into unregulated carriage.

Primarily Congress must insure that private carriers which invade the fields of contract or common carriers be regulated in strict accordance with the true nature of their operations (Rept. No. 1039, pp. 19, 21).

The difficulty is brought about by the fact that the private carrier, when, for instance, engaging in for-hire transportation of agricultural commodities by motor vehicle, was and is subjected to the same regulation that was imposed upon other for-hire operations; namely, no regulation whatsoever.

I do not believe there has been heretofore submitted to a congressional committee any really factual presentation on this subject. This simply is because there is available no statistical information with respect to the exempt for-hire-private carriage, nor can such statistical information be obtained. It is common knowledge that such transportation takes place and the number of agricultural groups and private carriers expressing their vital interest in such indicates the considerable volume of traffic concerned.

It seems to me there is great need for a meaningful and comprehensive study of private carriage within the United States. It is not possible that such study can be undertaken by any segment of the transportation industry itself. The Department of Commerce, through the Bureau of the Census, is charged with the responsibility of periodic national transportation surveys. However funds have not been appropriated for such studies, though I understand some sort of a study is now being contemplated and outlined by the Bureau of the Census. I believe funds should be made available for this stated purpose and that any such transportation survey should emphasize with a considerable degree of particularity the field of private transportation.

The railroads set about to obtain knowledge of illustrative situations throughout the United States. Their survey was by no means comprehensive, nor is there any feasible way for the railroads to make a comprehensive survey. There were obtained, however, sufficient examples to establish the widespread utilization of the exemption in what we believe to be this clearly unintended fashion.

The railroads believe that private carriage should be confined to precisely what the term implies and that private carriers should not be permitted to engage in for-hire transportation. Attached to my statement and identified as "appendix 4" is a draft of legislation which the railroads propose and which would prohibit a private carrier from engaging in the for-hire transportation of exempt agricultural commodities. As part of this appendix 4 there are listed actual illustrations of private carriers in various States utilizing the agricultural exemptions to engage in for-hire carriage.

In discussing the matter of a shipper's own trucks engaging in forhire transportation of exempt commodities, a term has come into

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rather prominent use. The term is "refrigerated bathtubs." This refers to a manufacturer or plumbing supply company transporting its own bathtubs in a refrigerator truck and hauling produce in the reverse direction. I invite attention to the actual illustrations, contained in appendix 4 to my statement, of instances of so-called private, for-hire trucking.

On page 3 of appendix 4 there will be found the instance of a piano company operating a refrigerator truck, so we may now add to the trade terminology "refrigerated pianos.'

Also on page 3 of the appendix is found an illustration of a company manufacturing electrical products operating refrigerator trucks in order to carry fresh produce, so now we may add the term "refrigerated light fixtures."

On page 4 are numerous instances involving plumbing companies, a metals products company, a chemical company, and even a bedding manufacturer operating refrigerator trucks in order to carry exempt produce. We may toss in a glass and mirror company in the State of Georgia (app. 4, p. 5) operating refrigerator trucks. Perhaps I should call attention to the instance, on page 8 of appendix 4, of a toilet-seat manufacturer engaging in for-hire transportation. It does not appear whether this manufacturer's trucks were refrigerated or not, but I presume there is little market demand for refrigerated toilet seats.

I call these and other instances found in appendix 4 to your attention for the purpose of emphasizing that this matter of private trucks engaging in for-hire transportation is not a happenstance. It is a calculated entry into the field of for-hire transportation in many instances with type of equipment entirely unneeded for the shippers own needs but designed to engage in for-hire transportation in order to make economical what would otherwise be uneconomical, to wit: private transportation of their own goods.

Mr. Burton N. Behling presented to you the depressing picture of railway passenger traffic. The railroads, along with all other public carriers of passengers, are in direct competition with transportation by private automobile. The private automobile now accounts for approximately 90 percent of all intercity passenger travel in the United States.

During World War II an excise tax was imposed upon for-hire passenger transportation for the avowed purpose of discouraging unnecessary travel during the war period. Today, when every effort should be directed to encouraging utilization by the traveling public of the facilities of the common carriers, such tax remains in effect. I am sorry to say that it is still accomplishing its original intent, to wit: the discouragement of travel by public conveyance. One means of aiding the common carriers would be the immediate repeal of this tax and we urge that such be done by this Congress.

It has been brought out previously that the public carriers subject to this tax now account for only 10 percent of the total intercity travel market in passenger miles and that private automobiles account for a overwhelming 90 percent.

Moreover, it is significant that this share of the public carriers has been declining, for in 1955 it was 12 percent and in 1950 it was 15 percent. Unquestionably the travel tax has been an important con

tributing factor in this shrinking proportion for the public carriers and will continue to exert its depressing influence unless repealed. If repeal of the punitive travel tax would restore to the public carriers their 1950 proportion of the total intercity travel market, from the present 10 percent to 15 percent, this would amount to a 30-percent increase in their revenue passenger miles.

Referring particularly to the hard-pressed railroads, I can say emphatically that such a 30-percent increase in passenger traffic and revenue would greatly improve the outlook in this most troubled segment of their public service.

A 30-percent increase in their gross revenues from passenger traffic, which in 1960 were over $500 million excluding commutation service revenues, would amount to approximately $150 million.

Most of this greater volume could be handled with presently unused space, since the average occupancy in railroad passenger cars is only about 30 percent. Such improved utilization of space and seats would mean that most-probably $100 million-of the increased grosS revenues would be carried through to net, thus helping very substantially to reduce the railroad passenger-train deficit which in 1959 amounted to $544 million.

In comparison with these prospective gains for a sorely troubled public service industry, the losses of tax revenue from repeal of the raffic-depressing 10-percent excise tax are trivial indeed. In fiscal 960, travelers by railroad contributed an estimated $46 million, or nly 18 percent, of the total passenger tax revenues collected by the

reasury.

However, the net loss to the Treasury would be considerably less han this amount because of the income tax offset feature on busiess travel. A recent special study by the Department of Commerce Bureau of the Census, Travel Survey-1957") found that 34 perent of travelers by rail (excluding commutation and other short ips) are on business trips, for which the transportation expense, cluding the excise tax. is deductible for income tax purposes. Assuming conservatively that the applicable income tax bracket ith reference to such business travel would average 50 percent, action of the passenger tax results in an income tax loss to the reasury of approximately $8 million ($46 million times 34 times 9). Hence, after this income tax loss adjustment, the net yield to the reasury from the 10-percent excise tax on travel by railroad was no ore than $38 million. Actually, even this calculated figure is conlerably too high because it does not take into account that a relaely high proportion of the business trips are at first-class fares d thus produce more than 34 percent of the rail passenger revenues which the 10-percent tax is applied.

Discriminatory taxation: In the preliminary draft of the report this committee of its special study group on transportation licy in the United States, pursuant to S. Res. 39, 151, and 244 of S6th Congress, another tax matter of substantial importance to common carrier railroads is discussed, and it is the matter of criminatory ad valorem taxation of railroad property.

The railroads made a study embracing some 31 States. The e ts of this study revealed at least one clear and distinct pattern t

plan of discrimination; namely, the studied and deliberate practice of assessing railroad property at a proportion of full value substantially higher than other property subject to the same tax rates.

It was estimated that as a result of such practices the railroads paid approximately $141 million in taxes more than they would have paid had railroad assessments been made at the same percentage of value as were the assessments on property general, subject to the same tax rates.

There has been introduced in the House a bill (H.R. 7421) attached as appendix 5, which would declare unlawful, as an unreasonable and unjust burden upon interstate commerce, the assessment of property owned and used by any common carrier subject to the Interstate Commerce Act at a value which bears a higher ratio to the true market value of such property than the assessed value of all other property in the taxing district subject to the same tax levy bears to the true market value of all such property.

The railroads wholeheartedly endorse and support such legislation as desirable and necessary in the interests of the common carrier transportation system of this country.

Summation: The decline of the common carrier family as a whole and the accelerated growth of exempt carriage is attributable, in the main, to the vast areas of exemption from regulation contained in the present statutes, while the particular plight of the railroads is attributable to other factors, in addition, to which I referred at the outset of my statement.

One of the principal factors is the intolerable situation in which the 100-percent regulated railroads find themselves in competing with the largely unregulated water and motor carriers. (The appendices are as follows:)

APPENDIX 1

[H.R. 1824, 87th Cong., 1st sess.]

A BILL To provide for the economic regulation of certain motor vehicles heretofore ent ditionally exempt therefrom under the provisions of section 203(b)(6) of the Interstate Commerce Act, as amended, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (b) of section 203 of the Interstate Commerce Act, as amended, is amended by repealing clause (6) thereof in its entirety.

SEC. 2. (a) Subsection (f) of section 204 of the Interstate Commerce Act. as amended, is amended to read as follows:

"(f) Nothing in this part shall be construed to authorize the Commission to regulate the duration of any such lease, contract, or other arrangement for the use of any motor vehicle, with driver, or the amount of compensation to be paid for such use, where the motor vehicle so to be used is that of a farmer or of a cooperative association or a federation of cooperative associations, as specified in section 203 (b) (4a) or (5), and such motor vehicle is to be used by the motor carrier in a single movement or in one or more of a series of movements, loaded or empty, in the general direction of the general area in which such motor vehicle is based."

(b) Clause (2) of subsection (b) of section 402 of the Interstate Commerce Act, as amended, is amended to read as follows:

"(2) where the property with respect to which service is performed consists of used household goods."

SEC. 3. (a) Unless otherwise specifically indicated therein, the holder of any certificate or permit heretofore issued by the Interstate Commerce Commission or hereafter so issued pursuant to an application filed on or before the date on which this Act takes effect, authorizing the holder thereof to engage as a common or contract carrier by motor vehicle in the transportation in interstate