1940: Transportation

Passage of Transportation Act of 1940.

The most important event in the field of transportation in 1940 was a legislative one, viz., the placing of S.2009, or the Wheeler-Lea Omnibus Transportation Bill, on the statute books as the Transportation Act of 1940. This bill was in conference last year and it was predicted that there would be 'a long struggle before anything is agreed upon and enacted into law.' Of course, the struggle goes back more than a year, primarily to the attempt of the railroads in 1938 to secure wage reductions after they had been refused adequate rate increases; but, in spite of the protracted hearings before the Senate and House Committees on Interstate Commerce in 1939, the fight went on in the Conference Committee during the regular session of the Congress until the committee's report was submitted on May 3. But then the railway unions, all but one of which had previously approved the bill, joined forces with its opponents and succeeded in having it recommitted in the House on May 9.

Had the Congress adjourned at the usual time there would have been no Transportation Act of 1940, for the attitude of the President was such that there is no likelihood that a special session would have been called for this purpose. But conditions in Europe kept the Congress in session and after three months of even more bitter fighting the Conference Committee again reported to the House on Aug. 7. After a brief but bitter fight on the floor the House approved the Conference Report on Aug. 12. The report was not submitted to the Senate until Aug. 30, but it was passed on Sept. 9 and was signed by the President on Sept. 18.

There is no gainsaying the fact that the passage of this Act was an important step in progress toward the realization of a National Transportation Policy, but there is also no doubt that the Act falls far short of carrying out the recommendations of President Roosevelt's Committee of Six which, it will be remembered, reported in December 1938. There was somewhat more than a tacit understanding that the administration would support the findings of this committee when the railroads abandoned their wage reduction case in 1938 to give full opportunity to the President to accomplish something through this committee. But, instead of support, the President vetoed the only bill passed in 1939 carrying out a recommendation of the committee, the so-called 'Bridge Bill' freeing railroads from the expense of making alterations in structures due to flood-control and other projects from which they did not benefit. This bill was generally recognized as just and equitable and in fact it was later passed by the Congress over the President's veto. And during the long struggle over S.2009 the Administration stood aloof, except that two members of the Cabinet appeared at hearings in opposition to certain provisions of the bill. Hence the blame for many of the shortcomings of the Act must be placed on the Administration.

Nevertheless the Act accomplishes something, being the first legislative step since the Motor Carriers Act of 1935 and, according to some, the most important transportation legislation for 20 years, i.e., since the Transportation Act of 1920. And probably most people will agree that its most important part is Part III which becomes Part III of the Interstate Commerce Act. This subjects to I.C.C. regulation coastwise, intercoastal, inland and Great Lakes common and contract carriers by water engaged in interstate or foreign commerce, but exempts bulk carriers when the cargo space of the vessel is being used for not more than three commodities, including tank vessels designed especially for a single commodity in liquid form. Perhaps next in importance, potentially, is the provision for the Board of Investigation and Research noted above, though the results of its work are entirely conjectural and thus far the Board has not even been appointed.

Report of the Committee of Six on Transportation Problems.

Since the report of the Committee of Six formed the basis of S.2009 to a considerable degree, let us see how some of its other recommendations fared. First, the Act starts out bravely with the new 'Declaration of National Transportation Policy' recommended by the committee, which may mean much or little depending on how it is implemented by legislation. It declares the policy to be:

'to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Act, so administered as to recognize and preserve the inherent advantages of each; to promote safe, adequate, economical and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages, or unfair or destructive practices; to cooperate with the several States and the duly authorized officials thereof; and to encourage fair wages and equitable working conditions; — all to the end of developing, coordinating and preserving a national transportation system by water, highway and rail, as well as other means, adequate to meet the needs of the commerce of the United States, of the Postal Service and of the national defense. All of the provisions of this Act shall be administered and enforced with a view to carrying out the above declaration of policy.'

The recommendation of the committee for the repeal of reduced rates on government property under the land grant law was enacted in part, with the reduced rates still applying on war materials and military travel. It was also stipulated that the repeal shall not apply to any railroad which fails within one year to file a release of claims for lands in litigation with the Government, thus preventing its complete application.

Section 4 of the Interstate Commerce Act, the long and short haul clause, was not repealed as recommended, but was amended and extended to carriers by water. Fourth Section relief was expedited by a provision that tariffs may be submitted together with the application for relief and that the Commission may permit such tariffs to become effective on one day's notice.

The rule of rate making for carriers by rail was amended, though not as recommended, and now reads as follows:

'In the exercise of its power to prescribe just and reasonable rates the Commission shall give due consideration, among other factors, to the effect of rates on the movement of traffic by the carrier or carriers for which the rates are prescribed; to the need, in the public interest, of adequate and efficient railway transportation service at the lowest cost consistent with the furnishing of such service; and to the need of revenues sufficient to enable the carriers, under honest, economical and efficient management, to provide such service.' (See also RAILROADS.)

Restrictions on RFC loans were somewhat modified but not to the extent recommended by the committee. The total sum authorized for loans was increased from $350,000,000 to $500,000,000.

A Permanent Transportation Board was not provided for as recommended, since the Board of Investigation and Research is to terminate at the end of two years unless its term is extended for a maximum of two years more by proclamation of the President. This Board is to be composed of three members appointed by the President, by and with the advice and consent of the Senate, and its duties are to investigate:

'(1) The relative economy and fitness of carriers by railroad, motor carriers, and water carriers for transportation service, or any particular classes or descriptions thereof, with a view of determining the service for which each type of carrier is especially fitted or unfitted; the methods by which each type can and should be developed so that there may be provided a national transportation system adequate to meet the needs of the commerce of the United States, of the Postal Service and of the national defense.

'(2) The extent to which the right-of-way or other transportation facilities and special services have been or are provided by public funds for the use, within the territorial limits of continental United States, of each of the three types of carriers without adequate compensation, direct or indirect, therefor, and the extent to which such carriers have been or are aided by donations of public property, payments from public funds in excess of adequate compensation for services rendered in return therefor, or extensions of Government credit; and

'(3) The extent to which taxes are imposed upon such carriers by the United States, and the several States, and by other agencies of government, including county, municipal, district and local agencies.'

The Board is given ample powers to carry out such investigations and is required to transmit preliminary reports of its studies and investigations to the President and to the Congress on or before May 1, 1941, together with such findings and recommendations as it is by that time prepared to make. Other reports, including an annual and a final one are required. Much of the information called for in items 2 and 3 is already available from previous studies, notably those of the former Coordinator of Transportation, but findings as to relative economy seem to depend upon who makes the study. Unified control under the I.C.C. by able men unhampered by the multitudinous statutory exceptions, regulations and restrictions would certainly simplify and clarify the entire situation.

With reference to consolidations, the Act was improved by relieving the I.C.C. from the duty of prescribing a fixed plan, which has been found impracticable, and by increasing the discretionary powers of the Commission in consolidation cases. On the other side of the ledger, however, is the 'Harrington Amendment' protecting the rights of labor to continued employment, which virtually prevents for some time the securing of any economic benefit from consolidations.

Limited I.C.C. regulation of water carriers, as recommended by the committee, was provided as already noted, but the Act did not require the Government to dispose of the Federal Barge Line or provide for tolls on inland waterways, both of which were also recommended. Nor did a recommendation that waterway projects be undertaken only after a finding of 'public interest' by an impartial tribunal find a place in the Act. The Act does provide, however, that — 'In the application of the provisions of Part III to any (water) carrier owned or controlled by the United States, no different policy, rule of rate making, system of accounting, or method of determining costs of service, value of property or rate of return may be applied than is applied in the case of carriers not so owned or controlled.' This sounds good but it is probable that most, if not all, of the Government-owned vessels may escape regulation under the provision exempting bulk carriers.

It will be noted that air transportation was not mentioned in the declaration of policy, except that it might be considered that the phrase 'as well as other means,' refers to it, and this follows the prediction made previously that the setting up of the Civil Aeronautics Authority and the Air Safety Board would in all probability take care of air transportation and that the question of putting it under the control of the I.C.C. would not again arise. Last May, however, President Roosevelt promulgated Reorganization Plan No. 4, transferring CAA from its independent status and making it a Bureau of the Department of Commerce and also abolishing the independent Air Safety Board. The recent United Air Lines crash at Chicago, the third fatal crash since Aug. 30, contrasts grimly with the perfect record of 17 months before that during which not a single passenger was killed and puts the new CAB in the spotlight. In fact, it is probable that legislation restoring the independent Air Safety Board will be introduced as soon as the new Congress convenes in January.

Summary of Progress.

Aside from legislation or perhaps in addition to legislation, steady progress has been made in practically all fields, due to the constant study and research which is being devoted to transportation problems. Air conditioning, stream lining, power economies, track improvement and many other items are receiving constant attention, and so are highways and motor vehicles. Of course, defense activities and the possibility of having to defend our own territory have accentuated many of these problems such as that of doing away with bottlenecks in our extensive highway system. (See also AUTOMOBILE INDUSTRY.)

The increased traffic due to defense activities has helped out financially and return on capital invested has been estimated at 2.38 per cent for the first ten months of 1940 as compared with 2.07 per cent for the same period of 1939. There is little or no improvement in the matter of reorganizations and about the same mileage is under the control of receivers and trustees as last year. However, it is believed that our railroads are prepared for whatever conditions may arise on account of the war. In fact, they have already set up a system of traffic control which will prevent the congestion at ports which caused the breakdown during the first world war, a system which has already been tried with success. Such plans, together with the new equipment which is coming from our factories in large quantities, will make our backbone of defense ready. To construct highways and bridges will take longer, but maybe we shall not need them.