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Senator HARTKE. It is a lot better than 1.—what was that first? I want to tell you if I were in the railroad business I would rather have 3.90 than 1.97.

Commissioner WALRATH. Precisely. Senator HARTKE. They were going like that. Commissioner WALRATH. Yes, sir; they didn't go far though. In 1968, they got their increased brotherhood cost and cost of material and had to meet it in some way.

Senator HARTKE. Let me say to you that sounds to me like that wornout economics I hear preached in the finance committee and on the floor of the Senate, that you have to increase taxes to stop inflation. Same theory. All I am telling you is they are dead, dead, dead wrong. They couldn't be more wrong. If the people weren't suffering you could permit it to go. But the people suffer just for their theory's sake, just because someone is attempting to make predictions come true. This is what bothers me.

The whole theory of this country is built on mass production, mass distribution expansion. We seem to have adopted the theory that the citizens must be driven to the point of austerity and the economy must be collapsed. Squeeze them tight, higher interest rates, higher taxeshigher unemployment. Higher cost of living. All of it.

I want it to stop. I want to get off that merry-go-round. I am getting dizzy with it all. I want you people to give some thought to getting off, too.

Commissioner WALRATH. As a taxpayer I would have to agree with you. But operating under the national transportation policy which you gave us in 1940, we are charged with keeping transportation systems healthy economically and viable.

Senator HARTKE. All I can say is it looks like they are healthier without a rate increase than with one.

Commissioner WALRATH. You are suggesting, I take it, that we should let the Department of Agriculture tell us what level of rates to set. We have a record

Senator HARTKE. If you want to submit something contrary, you come and submit. I will give you more chance to have hearings than you have had for a long, long time. You people will have a real good chance to come up here and tell me what it is all about because I don't intend for this

to be the end of these hearings. You might as well un. derstand this. I want this Interstate Commerce Commission to be the shining star of all the Government agencies. I want you to be par excellence.

Commissioner WALRATH. We welcome the chance but I am reluctant to be placed in a position of defending a decision we made and questioned about why we made it. Then we get pretty close to congressional interference with what you delegated us to do.

Senator HARTKE. If you think I am interfering now, you wait. Because I am going to keep on digging and digging and digging. I am interested in getting these facts out there and I am not going to be persuaded by the fact we have 11 good men tried and true. I think you are great people but I want to try to make this Government, to the extent that one Senator is capable of doing, to make it more effective and efficient and more presentable to the public. I am telling you there is a public image that is bad here. I don't say you are the contributing fac

tor. But you are one of them. And we will do what we can to make it look better so these questions don't come to this Senator's mind. If they come to my mind they ought to be out there in other people's minds.

Commissioner WALRATH. I would hope we would not end on this note.

Senator HARTKE. We are not going to. You can come back if you want to do it publicly, privately-

Commissioner TUGGLE. Let me make a one-sentence observation. If the railroads had not obtained these general increases at the time you mentioned they would have had no return at all.

Senator HARTKE. How do you know? That is like the President coming out and saying

Commissioner TUGGLE. We know.
Senator HARTKE. How do you know?

Commissioner Tuggle. We go on very complete testimony as to their expenses, increases.

Senator HARTKE. Here is verified testimony to the contrary.
Commissioner TUGGLE. What is that?

Senator HARTKE. That is the Agriculture Department. Maybe they are wrong.

Commissioner TUGGLE. That is a bunch of lawyers trying to make their case.

Senator HARTKE. Well, I don't blame them for that.

Commissioner TUGGLE. I don't either, but our job representing the public is to analyze that and get the

Senator HARTKE. Is this wrong?

Commissioner TUGGLE. They don't work on the same basis. One will take constructive year, another will take an actual year. They don't reconcile them. We have to reconcile these things. That is one out of 100 briefs filed.

Senator HARTKE. I am not trying to justify this brief. Let me make that clear. But I want you to know that I don't believe in truth by assertion. We have had too much of that. That got us in a damnable mess in Vietnam. That got us into a damnable mess with the surtax.

When it is presented to the American people that you have to have this or this and they are both negatives you will choose the best of the two negatives.

All you are saying to me is that they would have been in worse shape if you hadn't done that. I agree with you—you probably sincerely believe that.

Commissioner TUGGLE. It is true.
Senator HARTKE. It is only true in your mind, Commissioner Tuggle.

Commissioner TUGGLE. It will tell you why it is true and you will agree with me. When they come in and show that due to wage increases their payrolls will increase $350 million in 1 year that can't be absorbed, they are not going to be able to make any return.

Senator HARTKE. If that is the basis of your statement, I will demonstrate the contrary to you on sound economic

ground, but I won't get into an argument with you on this thing. We will do that some night over a cup of coffee.

But the history of this country has constantly had increases in wages with reduction in prices. Now, that is the American system of mass production and mass distribution and it does not necessarily

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follow that an increase in wage means an increase in cost because when you get an increase in wage with a correspondingly higher increase in productivity, then you have a different proposition.

So, you have to measure-I think we will leave that at this stage because we will try to make a certain deadline here.

Commissioner WALRATH. A second point you asked me for information on, you asked us how many cases had been rate cases handled voluntarily by the Commission in the interest of the consumer without a protestant of record.

In what instances, if any, have we blocked an increase in rates or a change in rates when it was not protested. I was surprised myself to find the number. For example, from the period of May 1967 to June 1969 our Suspension Board acted on its own volition, on its own motion, without protest, in 155 such matters. Forty-one more—and I won't name these because I would like to offer it for the record or at least as an exhibit-41 more the Board was preparing to act upon when protests were filed or when the carriers themselves decided to cancel.

So, in the period from May 1967 to June 1969, 1 month more than 2 years, 196 such voluntary actions on our part were taken to prevent what we thought might be injury to the consumer interest.

Nobody appeared in these cases I am talking about.

If I might, I would like to simply hand this detailed information to the reporter to hold for you.

Senator HARTKE. Thank you.

Commissioner WALRATH. Another thing that might be of interest, again simply is illustrative of what we have done to try to help the consumer and general public, we publish each year—the matter that Commissioner Murphy mentioned a momento agorailroad costs, scales by territories. They are available for anybody to have. Anybody from a small shipper to a shipper organization can see exactly what the actual study costs are. We do that to the extent possible.

Senator HARTKE. Those will be included by reference.

Commissioner WALRATH. They are available. Again, as an illustration, in the motor carrier field-this happens to be the east-south territory for 1967—we do as many of those, the same thing, dividing the platform costs that we get from carriers from the line-haul costs so that anybody who wants to look at those may do so. They do frequently.

Shippers and protestants have access to all this. It shows how our costs are developed.

I would like to offer these, too, for reference.
Senator HARTKE. Those will be included by reference.

Let me make something clear. I don't want any of my questioning to imply in any way whatsoever that I want a certain result. I would be equally distressed if you moved in that direction just to accommodate me. I am sure you won't do that anyway.

Commissioner WALRATH. If I might add 2 minutes more, I didn't want to leave something hanging in the air. We ended just before noon on the Yak Fat case. I find that we had been required, in fact, to write many letters of explanation about that.

One is a very responsible one written by former Commissioner Freas who was then chairman of division 2, my predecessor. It hap

pened to be addressed to a Member of the House of Representatives, but it explains in detail precisely why that happened, how it happened and how it could again happen.

During the noon hour-I won't read this whole list of 28—but during the noon hour I found some interesting commodity descriptions that are just as ridiculous as yak fat. Tiger milk, for example. We don't have any more tigers in this country than we have yaks. Only in the zoo. Frozen cow bag; organ sounding; snatch block; hog fuel; liquid hog mucous; stitching horses; skunk tails; bull wheel; flitch; spermaceti.

There are enough more to make 28. With your permission—these are just as ridiculous as yak fat and yet they are legitimate commodities and are moving on tariff rates right this very moment.

I can read the whole list if you would like.
Senator HARTKE. That is fine. I think we had enough. [Laughter.]
Commissioner WALRATH. May I offer these for the record ?

Senator HARTKE. I am not too sure. I know the laws on certain statements have relaxed considerably, but I am not too sure what is on page 3. (Laughter.]

Commissioner WALRATH. I want to make certain the committee understood that we can't cast out something simply because it has a peculiar and funny name. We have to take it seriously until we find out differently.

I would like to offer these.
Senator HARTKE. We will put those in the record, too.

(The list follows:)
Hog fuel (waste material used to fire a furnace. The "hog” is a furnace.).
Fly ash (residue from burning soft coal-used as filler in road work).
Asbestos shorts.
Liquid hog mucous.
Human placentas (classification item No. 155770).
Horse urine (classification item No. 188220).
Nose trucks, hand (classification item No. 189320).
Stitching horses (classification item No. 186160).
Rip-Rap (a kind of stone).
Zein (a substance obtained from Indian corn).
Skunk tails (classification item No. 99350).
Holystones (a tool).
Wood flour (pulverized wood).
Agar-Agar (a moss).
Bull wheel.
Neatsfoot stock (made by boiling animal feet).
Flitch (side of hog).
Spermaceti (white substance from the oil in the head of the sperm whale).
Tiger milk.
Fatty amine.
Fatty Diamine.
Fatty sea animal oil.
Petroleum fatty.
Leather ash.
Sad iron attachment.
Frozen cow bag.
Snatch block.
Organ sounding.

AUGUST 27, 1965.
Congress of the United States, House of Representatives,
Washington, D.C.

DEAR CONGRESSMAN DEVINE: This is in response to your request of August 24, 1965, for comment regarding the highly publicized act of a midwestern motor carrier in publishing a rate on "yak fat.” It is obvious that much of the extensive comment on this subject has been made without any attempt properly to understand the situation. Your effort to ascertain the facts before passing judgment is very much appreciated.


Omitting some details to avoid extending this letter, it should be pointed out that under the system of ratemaking prescribed by the Congress, rates in the first instance are made by the carriers themselves. This, however, is subject to the overriding authority of the Commission to prevent the maintenance of any rates that are in any way unlawful. There is no presumption of wrong arising from the change of a rate by a carrier. Indeed, the presumption of honest intent and right conduct attends their actions. Moreover, the statute is so worded that there is no burden of proof imposed on the proponent of a rate, and Congress has made it a Federal offense to file fictitious statements or documents with governmental agencies. (See Title 18 of the United States Code, Section 1001.) Thus, the Commission approaches its consideration of rate proposals presuming that the carriers are taking what they believe to be lawful action.

However, in order that those affected may be heard, Congress has provided that when rates are changed, the carrier making the change, when properly called on, must be able to give a good reason therefor. Since there is no presumption that a change in rate is unlawful, the Commission requires that a prima facie case of unlawfulness be presented by protesting parties before its power to suspend is exercised. Because tariffs ordinarily become effective on 30 days' notice and protests must be filed in time to permit reply by the respondent and consideration by the Commission (all prior to the proposed effective date), action must be taken promptly by a protestant. It often does not have the time to explore the matter in great detail but must nevertheless protect its position against any eventuality. Because of the time that must be allowed in the interest of due process, the Commission's time is similarly restricted. In deciding whether to suspend or not, its procedure strongly resembles the discretionary power of a court to issue a temporary restraining order which, on the basis of preliminary facts presented, requires the maintenance of the status quo pending further proceedings. The procedure obviously does not contemplate at this initial stage a full dress inquiry by the Commission.

Let us apply the aforementined procedure to the situation of record. The motor carrier involved, Hilt Truck Line, Inc., of Lincoln, Nebraska, proposed in a tariff filed with this Commission to become effective on April 11, 1965, to establish a rate of 45 cents (per 100 pounds), minimum 80,000 pounds, on a commodity it described as “yak fat” from Omaha to Chicago. The proposal was protested in the appropriate manner by the railroads who alleged that the rate was not compensatory and submitted cost data to support that allegation. Whether “yak fat” moved in the past or was available for future movement between the points involved is not necessarily controlling. Once rates become effective they are often used for comparative purposes to justify later reductions on related commodities. It should be noted that the motor carrier involved maintained a higher rate at a lower minimum on such items as greases, oils, and tallow, stearine, and lard. Noncompensatory rates are unlawful and it seems entirely in order for carriers to object to a proposal of a competitor to establish unlawful rates. In this regard, you may be interested in the attached letter along similar lines received by the Commission from a motor carrier. (The carrier's name has been omitted.)

Moreover, the commodity description is not necessarily as strange as might appear. There are rates on file with this Commission on such commodities as fatty esters, asbestos shorts, furfural residue, and cracker jacks (an automobile jack). On one occasion, human placentas proved to be a competitive commodity. Rates on certain commodities, chemicals for example, are often filed under descriptions which have not yet found their way into descriptive industrial handbooks.

I believe that the actions both of the Commission and the protestants were entirely in order. The Interstate Commerce Act contemplates the suspension of a rate which appears to be unlawful. Indeed, suspension gave the motor carrier the benefit of the doubt to the extent that it provided the carrier an opportunity to then demonstrate the lawfulness of its proposal.

One final observation: The admitted purpose of the hoax, according to press reports, was to demonstrate that rail carriers would protest any rate filings of a truck competitor. It proved nothing of the kind. At best all that it proved

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