with and I don't blame them for not making a clear-out decision under the circumstances. The CHAIRMAN. You recall, Mr. Gardner, when this act you gave my name to a little while ago was passed, there was stricken out of it in conference the right to fix a minimum rate? Mr. GARDNER. Yes. The CHAIRMAN. So, I suppose there has always been a hesitation on the part of the Shipping Board Mr. GARDNER. Naturally. The CHAIRMAN (continuing). To act in accordance with the way we really wanted to do, because we were thwarted right in this very room from accomplishing what we have in mind. Mr. GARDNER. I remember that very well. I attended those hearings. Senator WHITE. Could you tell us what interest, if any, would be likely to oppose if the definite authority that you ask be established? Mr. GARDKER. I would assume that the so-called "A" and possibly some of the "B" lines would be opposed to this. During the course of the past couple of years, since the passage of the 1933 act there have been repeated hearings to determine just what could be done in this intercoastal trade. At those hearings certain of the "A" line representatives came and testified with regard to what they thought ought to be done. Mr. Quevedo in the course of his examination of Mr. Luckenbach asked him: Mr. Luckenbach, why is it that you advocate one single rate in the intercoastal operation? Answer. Well, from my experience. I am competing with fast ships, and I am perfectly willing to do that, and I think everybody else should be in the same boat. Now, he spoke from the standpoint of that one operator as to what he feels should be done with regard to this service. It is interesting to note, however, that Mr. Luckenbach, who in that hearing denied the right to these slower vessels subsidies, went right on to testify that he insisted that his business must be allowed a differential under the transcontinental railroad rate, because, "I would not get any business if I did not." Now, because there is this difference in the service furnished, it would seem highly desirable that this committee recommend to the Congress generally in this new bill that we are setting up here this matter of differentials and make it a mandatory part of the things which must be considered by the Authority in fixing freight rates. It would not only be for the purpose particularly of the shipping business, but it would be of benefit to the shippers who use the different classes of service. The railroads have different classes of passenger service. They likewise have different classes of freight service, and all of our steamships also do. Who would think, for instance, of going on the Queen Mary and expect to buy a ticket on the Queen Mary at a rate for the passage that would be comparable to the cost of a ticket on one of these smaller or so-called "cabin" liners? He expects to pay for the better service rendered by the better and faster vessel. Even in the same vessel, we have first-class, second-class, third-class, and tourist third. So that you pay on the same vessel different prices for different services rendered to you. This principle is so well recognized that it seems to me hardly necessary to refer to it. But I want to call attention to the fact that differentials are permitted (a) on all-water routes against all rail, (b) on, rail-and-water reufes against all rail, and (e) on rail and water where the water trip is long against rail-and water where the water trip is short. Here again the right of the public to varying services, at varying costs has moved the Government to protect services, which, at a parity of rates, could not possibly exist. Differentials are well recognized on many all-water routes. The Pacific coastwise trade have differentials on a large number of items, classifying their lines into "A", "B", and "C" The River Plate, Brazil, south-bound conference have had a differential varving be tween 5 percent and 10 percent--now about 7 percent. The Habana conference has a differential from 3 percent to 7 percent. There is a differential conference to Italy. Differentials are permitted and fostered in a great variety of other forms of transportation. Street-car fares are less than bus fares; bus fares than taxicab fares; goods or mail moved by airplane pay nore than by train; by train more than by bus; by bus more than by canal boat, and so forth, the world over. Indeed, it is so obvious as to preclude all discussion that a parity of rates for all types of transportation service, irrespective of cost, would be against the public interest. Such a parity would be sheer economic waste. It would cripple the free flow of commodities. It would drive the more modest but economically valuable means of transport out of business. It would deprive shippers and consumers of a varied and well-balanced system of transportation, and compel them to pay for a uniformly high-geared one which they neither need nor want. This situation has been a little more difficult due to the fact of the depression during the past few years. The depression partly accounts for some of it. We have a little bit more, possibly in the way of changes, in the intercoastal trade, at least in the west-bound service: there are more vessels than are needed and there is not enough business for each individual line. They are fighting for that business among themselves, and naturally different groups get together and try to figure out some way of f arnishang their indiviinal groups with business, Senator WHITE What are these Shepar1 boats? What is their tonnage! A VOICE. 8,800 tons to 9,600, Mr. SHEPARD. It sounds like those lakers. Senator WHITE. What is it for the cargo! A VOICE. 800 tons to 9,600 tons. Mr. GARDNER. They carry all manner of cargo every year. Senator White, I would like to put in the record, if I may Senator WHITE. They carry a good deal of lumber, do they not? Mr. GARDNER. They carry a great deal of lumber east-bound. I would like to put in here a list of the shippers who use this particular service. The very names of these companies will indicate *he class and chatmeter of commodities we carry. www Bristol-Myers Co. Sterling Products, Inc. Bayer Co., Inc. Winthrop Chemical Co., Inc. Antidoor Manufacturing Co., Inc. Wells & Richardson Co., Inc. Chas. H. Phillips Chemical Co. Acme Fast Freight, Inc. American Agricultural Chemical Co. American Freight Traffic Institute Arbuckle Bros. Babcock & Wilcox Co. Bauman, Milton P. Bayer Co., Inc. Best Foods, Inc. Bigelow Sanford Carpet Co., Inc. Bohack Co., Inc., H. C. Borden Co. Borgfeldt & Co., Geo. Brooklyn Chamber of Commerce Church & Dwight Co., Inc. Colgate-Palmolive-Peet Co. Consolidated Cigar Corporation Coty Processing Co., Inc. Dunbar Molasses Corporation Elwell, Phillips & Pomeroy, Inc. Federated Metals Corporation Gair Co., Inc., Robert General Baking Co. General Chemical Co. General Cold Storage Co. General Food Sales Co., Inc. Manufacturers Association, Inc. ****ll, Burdsail & Ward Bolt & Nut Regs Paper Co in Bros, In d Farms Co. Inc. Diag Service Organization walk Minufacturers of America, Inc. Smythons Co M News Co. Inc. dard Brands, Inc. ndard Fruit & Steamship Co. dard Textile Products Co. dard Varnish Works Marrett Lehigh Building ten, H. & Co, Inc. wart Hartshorn Co, Srh Trucking Co., Inc. Textile Fabrics Association war Magazines, Ine Teo Prob; ts Corporation United Clar Stores Delaware Cor United kour Trucking Corporation Trated States Leather Co. ted States Rubber Co. United States Steel Products Co. West Virginia Pulp & Paper Co. Westinghouse Lamp Co. Wort' ington Pump & Machinery Cor- * Wrazey, Jr., Co, William F W Woolworth Co, | Kresge Department Stores Ine. Cmner fal Traffic Managers of Phila- Sacramento Chamber of Commerce Griff. Manufacturing Co. of Erie, National Industrial Traffe League, Virginia Carolina Chemical Corpora- Columbia Peanut Co. Elenton Peanut Co West Viritta Pulp Paper Co, Portland Industrial Traff Club of Virginia Smelting Co. The CHAIRMAN. You carry lumber to Maine? Mr. GARDNER. That is not correct. But it is an interesting fact that Mare does import lumber. Scrator GIBSON. T at lumber comes from the west coast. Mr. GARDNER. It comes from the west coast. Of course, Washington and the Pacific Northwest is the great source of lumber. 1. CHAIRMAN. Is it lumber you take to Albany! A Vorch. Yes; we carry luniber to Albany, as well as all kinds of general cargo, and we take all kids of general cargo out of Aany. The CHAIRMAN. I that port developing? Is there an increasing volane of business being done there! The Ver. I think it is graally developing all the time. T6 CHAIRMAN. I would ! ke to ask von about your language here, if I am not interrupting your thought. Would this language be sient if you shortened it a little: Panded that in pryser? 1.299 11 virantau data 1 um rates, fires and i nees in the se. Vic s Mr. GARDNER, Yes; you understand that the last is merely a plea, it is a pleading as to why you si uld do what you just read. The CHAIRMAN. Well, it would seem to me that if we are going to do it at all, we should do it in general terms. Mr. GARDNER. The last "to the end ", as a matter of fact, that was merely to show the reasons why you should do it. It is not only the small carrier who would be benefited, because it would be for the benefit of all services. The CHAIRMAN. It would seem to me almost necessary to have some classification of services in order to determine the best and reasonable maximum and minimum rates. Mr. GARDNER. I think so, and I think you would find that the Shipping Board Bureau in their general policies rather recognize that fact, but in these hearings here you get a large group of business coming in here and presenting their claims and that general equitable principle is lost sight of in the urgency of the man who wants more business. I don't believe it is necessary to read the rest of this brief. I would like to have, if I may, printed in the record this brief. It is a little more orderly in its presentation. The CHAIRMAN. We would be glad to have it in the record. MEMORANDUM SUBMITTED BY SHEPARD STEAMSHIP CO, IN SUPPORT OF AN AMEND- The purpose of this brief is to urge upon the committee the necessity of adding the following proviso to section 701 (1) of the bill (which amends section 18 of the Shipping Act, 1916) on page 32, line 11 thereof: 1 "Provided that in prescribing such maximum and minimum rates, fares, and charges differentials shall be established based upon differences in the service rendered, to the end that small water carriers operating in the domestic commerce of the United States shall be adequately protected." The same proviso should also be added to section 701 (3) of the bill (which amends section 3 of the Intercoastal Shipping Act, 1933), on page 33, line 201 The sections of the bill referred to would effect a change in the law by conferring upon the new Federal Maritime Authority the power to prescribe minimum rates for water carriers operating in interstate and intercoastal trade. The effect of the additional language offered herein would be to insure (1) that this new power would be exercised in such a way as to allow each class or type of water transportation to serve the need to which it is economically best adapted and (2) that it will not be used so as to create a shipping monopoly and to deprive the shippers and consumers of this country of the economie advantage of paying less for a type of service whics it costs less to provide. I. THE NECESSITY, IN THE PUBLIC INTEREST, FOR RATE DIFFERENTIALS BASED UPON DIFFERENCES IN THE SERVICE RENDERED, IS UNIVERSALLY RECOGNIZED From the earliest beginnings of transportation for hire the necessity has been resognized for differentials in rates, based upon differences in the type of serv ice rendered. It is obvious that a varied machinery of transportation could not exist if the same rate were charged for simpler and less costly modes of transportation as for the most expensive one. (1) Differentials erist on every all-rail route.-Express shipments by rail (fast, frequent) always pay a premium over freight shipments over the same distance, and this choice of service is of very great importance to shippers. (2) Differentials are permitted (a) on all-water routes against all rail (b) on rail and water routes against all rail, and (c) on rail and water where the water trip is long, against rail and water, where the water trip is shortHere again the right of the public to varying services at varying costs has moved the Government to protect services, which, at a parity of rates could not possibly exist. The page and line numbers refer to Committee Print No. 2, dated Apr. 24, 1935. |