Mr. CULPEPPER. Well, I thank you, sir. I wish to emphasize what I said applies to the modified bill as suggested by the Interstate Commerce Commission.

The CHAIRMAN. We are glad to have your views.

The CHAIRMAN. Without objection, I want to insert in the record the following statements:

STATEMENT OF ELMER T. SCHEUERMANN, SECRETARY-TREASURER, DAYTON SHIPPERS' ASSOCIATION

My name is Elmer T. Scheuermann. I am secretary-manager of the Dayton Retail Merchants' Association and secretary-treasurer of the Dayton Shippers' Association, both of the city of Dayton, Ohio.

The Dayton Shippers' Association, Inc., is incorporated not for profit, under the General Corporation Act of the State of Ohio. The membership of this association is comprised of the following nine retail outlets: Donenfeld's, Inc., Elder & Johnston Co., Gallahers, The Home Store, Leakas Furriers, Inc., Metropolitan, Ray's, Rike-Kumler Co., Thal's, Inc., and the purposes of said corporation are as follow:

1. To procure the pooling, consolidating, transportation, and distribution of merchandise for its members on a nonprofit basis in carload, truckload, or other consolidated quantities.

2. To procure for its members a more prompt and efficient distribution of their merchandise or products.

3. To develop and promote interchange of ideas, methods, and information concerning traffic and transportation matters.

4. To encourage and support the establishment and maintenance of fair and equitable handling, transportation, and delivery of merchandise.

5. To promote cordial relations between shippers and common and contract carriers, and owners of transportation equipment.

At the direction of the board of trustees of the Dayton Shippers' Association, I am here today to voice our opposition to Senate bill 2713, which would amend the Interstate Commerce Act with regard to those entitled to exemption under section IV of said act.

The supplement to section 402-C is apparently written with the intent to destroy shippers' associations, in that the Interstate Commerce Commission, through this loosely written bill, could determine the basis as to whether the exemption is to be granted.

In regard to the service which has been improved through shippers' associations, it is clear that the importance and advantages of better service would certainly be in jeopardy. This would be true not only due to the fact merchandise would be moved via numerous carriers in small lots but, also, that lack of competitive interest in providing efficient service would be very pronounced. This would be particularly true in the retail industry inasmuch as a high percentage of the merchandise, moving via our New York to Dayton operation, is in the readyto-wear field, and it is in these lines particularly that service is a paramount factor in the ultimate sale to the consumer.

Relative to the effect that this legislation would have on prices, we must assume that the Defense Production Act, due to expire in June of this year, will be renewed for at least another year. This would force any increased transportation costs to be absorbed by the retailer, as price-listing_charts under CPR 7 do not allow for adjustments in transportation costs. It should also be remembered that many items in retail stores are sold as a service to the consumer and bring very low over-all margins, which could result in the disappearance of this type merchandise from department store shelves.

Through the use of one hauler the problem of local delivery, local traffic problems, and confusion is greatly alleviated, in that merchandise from a certain area is delivered to our docks by one delivery company and at a time designated by the receivers so as to assist their personnel in properly receiving marking, and processing merchandise to the selling floors. In the event such merchandise came in at different times of the day, operating budgets would have to be revised upward, as the cost of handling in each individual store would be increased. This holds true regardless of the size of the retailing outlet. Also created by

ineffective and numerous deliveries, would be a more difficult inventory control problem which is extremely important to stores, not only in keeping their merchandise current but to hold such inventories commensurate with the present everyday changing conditions.

For a number of years there has been in effect an all-commodity rate, which we believe was established for the use and benefit of the general public. It is our conviction that a shippers' association is one of the vehicles through which these commodity rates can be used to benefit the general public and consumer. As a matter of fact, we feel this is the only way that all commodity rates could be beneficial, particularly in communities of our size.

It is our sincere belief that this bill would again place more control over the operations of private business and would certainly further complicate the administration of the Interstate Commerce Act and additionally burden the admittedly overworked Interstate Commerce Commission and we certainly believe it to be detrimental to the public interest in many ways.

Under section IV of the Interstate Commerce Act, it is evident that sufficient authority remains with the Commission to investigate and act on any case violations, consequently, it is apparent that the Commission currently has all of the instruments needed at their disposal to corect any violations of the act and that the need for this further legislation is not justified as its intended purpose must be to destroy.

In the operation of the Dayton Shippers' Association, we have taken extreme care to perform in the manner so outlined in the exemption of the Interstate Commerce Act. We haul shipments only for our members listed in this brief. Our membership consists of only those within our terminal area and we operate completely as a nonprofit organization, with our actions being that of an agent only. It is our sincere belief that Senate bill 2713 is unnecessary in that the Commission already has the right to correct any violations and the feeling of the trustees of the Dayton Shippers' Association that this is another example of overlegislation is concurred, not only by the directors of the Dayton Retail Merchants' Association, but by the traffic committee of the Dayton Chamber of Commerce. We ask your consideration in not recommending for passage this piece of legislation, on the grounds that it is unnecessary, discriminatory, and that it could prove detrimental to the general public.

STATEMENT OF JOHN J. MUNDY, TRAFFIC MANAGER, M. O'NEIL Co., Akron, OHIO

STATE OF OHIO,

County of Summit:

John J. Mundy, being duly sworn, deposes and says:

I am employed in the capacity of traffic manager for the M. O'Neil Co., located at Akron, Ohio.

The M. O'Neil Co. is engaged in the business of retail department store sales. In connection with that business, my company, as a member, helped form and has successfully used and enjoyed the service of a nonprofit shipper's association since its inauguration in the city of Akron in 1947.

In the conduct of our business, we require the service of such an association. The various commodities we receive through this means of transportation is shipped from the greater New York area and the majority of the merchandise being shipped through the association is high styled merchandise of a very competitive nature.

It is definitely not the type merchandise that is purchased from warehouse stock, but rather from a manufacturer's scheduled production line. It is vitally important that we receive the fastest possible service in transit, as many of these shipments are purchased for a specific scheduled sale with costly newspaper ads to

cover.

By using the association, we receive second morning delivery to our store. Our freight is consolidated and loaded into cars which move from origin to destination without any intermediate transfer. Due to the minimum amount of handling, we have cut our over short and damage claims by more than 50 percent since the association has been in operation.

I know of no other service or any other carrier in the Akron territory which would satisfactorily meet the requirements for the handling of the shipments for which my company needs and uses their shipper's association.

If this service was to be hampered or curtailed in any way it would perform a definite hardship on my company to take care of our customer's needs. It would

also greatly increase our transportation costs which certainly would not be fair at a time when the OPS has not given the retailer any relief. Furthermore, until we formed a nonprofit shipper's association, we were not able to enjoy the use of the all-commodity rates established by the railroads.

We are of the opinion the exemption in part IV of the act has given the Commission all the power it needs to investigate any nonprofit shipper's organization. We also believe any additional legislation could very well hamper or destroy our nonprofit shipper's association. For this reason we are opposed to Senate bill

2713 and House bill 6802.

STATEMENT OF BARNEY MELTZER, SECRETARY-TREASURER, DAL-WORTH SHIPPERS' ASSOCIATION, INC.

DALLAS, TEX., April 1, 1952. To Chairman and Members of the Senate Interstate and Foreign Commerce Committee:

The attached statement is submitted by Barney Meltzer, secretary-treasurer of Dal-Worth Shippers' Association, Inc., 204 North Good Street, Dallas, Tex. This statement voices the opposition of the officers and directors of this association to S. 2713, introduced by Hon. Senator Magnuson.

We sincerely hope that this statement will be read by the committee members, and that it will be made part of the record of the hearings now in progress on this legislation, and will be taken into consideration when action is taken by the committee.

B. MELTZER.

This organization is an association of a number of business concerns who have set up a nonprofit consolidation and distribution operation for movement of less than carload freight shipments from their principal markets. The purpose of this consolidation and distribution operation is to reduce their transportation cost. The operation was started in good faith, in full compliance with legal interpretation of present legislation governing freight forwarders, and the exemptions from regulation which are provided for in the present part 4 of the Interstate Commerce Act. Every effort has been made to keep the operation within the letter and spirit of this legislation.

In its 3 years of operation, the members of our association have effected considerable savings in freight costs, and have derived other benefits from this operation which have not been obtainable through the facilities and rate structures of the regulated freight forwarders or any other transportation medium. The savings effected have to a large degree offset the impact of railroad and motor carrier freight rate increases which have been made during the past several years. This savings was accomplished without in any way reducing railroad or truck line revenue. This saving has helped the members to a great degree to maintain their business operations on a profitable basis. It has also helped to maintain prices for their products on a somewhat lower level than would otherwise be possible.

We have read with alarm the legislation introduced into Congress under S. 2713 by Senator Magnuson. From its text, it is apparent to us that this bill is designed to outlaw our operation and others like it. It appears to be in direct conflict with the original intent of part 4 of the Interstate Commerce Act, which permitted operations of this nature to be carried on without interference from any governing body.

We call particular attention to page 2 of the subject bill S. 2713, which purports to outline in detail the powers to be given to the ICC, and the factors which they must consider in the determination of what shall be deemed legal and what shall be declared illegal.

The wording and the apparent intent is to empower the ICC to be legislator, complainant, prosecutor, judge, and jury in any proceedings instituted under this legislation, and sets a number of factors which must be given consideration in their deliberations.

The present wording is so loose and all-encompassing that the Commission can very well declare all present associations and shippers' agents to be in violation of the law. It can even be interpreted to empower the Commission to outlaw the operations of a single shipper, who for economy reasons loads shipments for two or more consignees in the same car and consigns it to a distributing agent for division among the several consignees.

The bill provides that in its deliberations the ICC must consider the effect of a specific operation on, and competition with, regulated freight forwarders. It can be readily seen that any sort of consolidation and/or distribution operation will have some effect on a regulated freight forwarder. Shipments which are at present consolidated through associations are usually of a nature that they can be moved by a regulated freight forwarder in their service. Therefore, any consolidation can be interpreted to be in competition with a freight forwarder, and have an effect on their operation.

The bill also provides that whether the operation handles "single or homogeneous" commodities must be considered. If the intent is to restrict consolidations by Associations to one or a few related commodities, the bill will result in the outlawing of the vast majority of the associations now in existence, as most of them are engaged in consolidation of wide varieties of commodities.

Relative to the number of persons participating in or benefiting from the operation of an association, if the intent is to restrict associations to a very limited membership, it will result in a flagrant discrimination against small business concerns. It can be readily seen that while only a few large concerns can develop sufficient tonnage to make an effective consolidation possible, it will take a considerably greater number of small business concerns to develop adequate tonnage. Any severe numerical restrictions can therefore have no other effect than to favor large business organizations as against small businesses. This certainly will be against all public policies which have been expressed time and again by governing bodies and legislators.

In the matter relating to associations operating in bad faith and with intent to evade the law, we agree that such operations should not be permitted. The question arises as to which law-that which now stands enacted or that which will result from the passage of the subject legislation. In the matter of evasion of present law, we believe that operations in bad faith or evasions can be eliminated under present law. The ICC has the right and authority to investigate such operations, and turn over to the Justice Department for prosecution any evidence that it obtains of bad faith or evasion. Thus, decision of illegality or legality remains in the hands of the branch of our government where it belongs, in the courts. Under the new legislation, the primary things to be determined are questions of fact, which in themselves are not a matter for review by the courts.

We wish to point out the factors which make the subjecs legislation unnecessary, ill-advised, and against public interest.

1. The present bill is unnecessary because under existent law, evasions and bad faith can be dealt with through regular legal channels, the Department of Justice and the Federal courts.

2. It is ill-advised because the records of hearings on the original legislation now known as part 4 of the Interstate Commerce Act definitely show that it was not the intention of the law to prevent private businesses from engaging in consolidation and distribution of jointly loaded cars, provided that it was done on a nonprofit basis, and that the benefits of such consolidation were passed on to the participants in the consolidation operations. There is ample proof in these records that if this exception, as now shown in the law, were not made, the entire legislation would have been shelved. While part 4 was intended to give the regulated freight forwarders some degree of protection, it was not intended to give the forwarders a monopoly of the less than carload freight movements in the country. It made provision for private business organizations who had the knowledge, foresight, and enterprise, who wish to work together in groups for their own benefit, the privilege of doing so. The subject legislation can very readily deprive them of that privilege, to the benefit of no one except a relatively small group of regulated freight forwarders. The intent of part 4 is clear that Congress intended that the shipping public be allowed to utilize the common carrier rates and facilities in the best way they knew how to their best advantage. This right is now in jeopardy. It must be borne in mind that although freight forwarders have been legally declared to be common carriers, in actuality they perform no transportation themselves, but rely on the other common carriers by rail, water and motor carrier to provide the actual transportation.

Freight forwarders do not have the billions of dollars invested in vehicles, plant, equipment, and rights-of-way which are involved in the other types of carriers. Why then should they be granted what can virtually develop into a monopoly of the movement of less carloads of freight between the large producing and consuming areas of the country? They are actual users of the same transportation media as every shipper and receiver of freight in the country, and are now endowed with certain exclusive rights and privileges which are not available

to the other users of transportation agencies. Why should they be further favored with exclusive right to use these transportation media to the detriment of the actual owners of the property being transported? Why should private businesses be denied the right to use the carload and truckload rates if by their ingenuity and enterprise, they find a means of using them for their less than carload shipments for their own advantage? The rapid development and growth of shipper associations is ample proof that the participants have found that the association type of operations meets their needs and requirements to a much greater degree than the services available through regulated freight forwarders. These private businesses have given of their time, their knowledge and of their money to develop their associations, and it is therefore evident that there is a general and widespread need for the associations. It must be borne in mind that the prime consideration in legislation of the type being discussed is the public need, interest, convenience, and necessity. The mere existence of the associations in substantial numbers is ample proof of such public need, interest, convenience, and necessity.

The associations, while depriving the regulated freight forwarders of a certain amount of tonnage which they might otherwise handle, have had no serious effect on operations of the regulated forwarders. The latest ICC reports on the finances and operations of regulated freight forwarders indicates that during the past few years, which coincides with the development period of most of the associations, a majority of the forwarders have improved their financial condition and have extended their operations. If the associations were having an adverse effect, the situation would be reversed.

In conclusion, it is our considered opinion that the subject legislation can have only the following results, and should therefore not be enacted into law:

1. The eventual elimination of all consolidating associations, and may vary well lead to further legislation, sponsored by our friends the freight forwarders, to forbid all pool cars, even if only a single shipper, a single commodity, and two or more consignees are involved. It is a natural sequence.

2. It will give to a limited number of regulated freight forwarders, many of whom are under joint control or ownership, who have no extensive investment in transport facilities, a virtual monopoly of the less-than-carload shipments which move for any considerable distance. Through this monopoly, their ability to influence railroads, truck lines and boat lines in rate and operational matters will be further increased to a point where they can well obtain a strangle hold on all transportation in the country. This may sound fantastic at the moment, but many things are fact today in the transportation field which would have been considered fantasy 10, 20, or 30 years ago. This bill is a further step toward that ultimate objective.

3. Elimination of associations will result in very substantial increase in transportation cost to a large segment of the shipping public. This increase in freight cost will add more fuel to the inflationary fire.

4. It will benefit no one, except the few freight forwarders who sponsor this bill. Their operating and financial reports indicate no need for their receiving any further benefits, particularly at the expense of the shipping public.

STATEMENT OF JOE L. HERBERGER, PRESIDENT, HOUSTON MERCHANTS
SHIPPERS ASSOCIATION, INC., HOUSTON, TEX.

Honorable Chairman and Senators, my name is Joe L. Herberger. I am employed by Foley's, a department store located at 1100 Main Street, Houston, Tex., as traffic manager. I am here before you today, however, as the president of Houston Merchants Shippers Association, 1610 Preston Avenue, Houston, Tex., organized and sponsored by the Retail Merchants Association of Houston, Tex., as a nonprofit organization incorporated within the State laws of Texas.

At a special meeting held on Monday, March 31, 1952, at 2 p. m., summoned for the sole purpose of discussing the proposed legislation identified as Senate bill S. 2713, the membership present, a majority as defined in the bylaws of our association, unanimously voted that I, as president, appear before you to express our views on the proposed legislation.

I appear before you, duly authorized, to state that we are opposed to bill S. 2713 as it is proposed as well as a similar bill, H. R. 6802, to be considered by a committee of the House of Representatives.