is a regulated commodity, and bananas and canned goods back from the Gulf Coast States from Florida through Texas, which is also a regulated commodity. Mr. BEDELL. How many trucks do you operate? Mr. HIRSCHBACH. We own and operate 200-roughly 200 trailers. We own and operate approximately 30, 35 of our own tractors and 100 to 110 independent tractors. Mr. BEDELL. With the independent contractors, do you lease primarily on a trip basis or an annual basis or both? Mr. HIRSCHBACH. On an annual basis. We do not trip lease. Mr. BEDELL. Do you believe or do you have any figures? Do you have any opinion as to whether your own operation where you own your own units, your tractors in particular, whether those are more costly or less costly than it is for the independent operator that runs his own tractor? Mr. HIRSCHBACH. We found that they are fairly close to operating our own vehicles with the tractors a little bit more costly. Mr. BEDELL. You think it costs you more to operate a tractor than it does an independent operator? Mr. HIRSCHBACH. Yes, but it's close. The reason that we use the independent contractor is with that amount of quantum of tractors that is necessary in our business to transport, pull our trailers and our product, we do not have the shop facilities nor the manpower, the driving power in this area to move them. Mr. BEDELL. The problem I have and I certainly understand the argument of for less-than-truckload quantities, how we need some protection in order to serve the smaller communities. In truckload contract hauling I guess the problem I have is that we have exempt commodities now wherein there are exemptions. If you forget the State regulations and all that problem, if there is competition therein, at least it seems to work reasonably well and people seem to stay in business and do that. We get the argument which you may hear that really if this wereif we were to exempt additional commodities such as what you're hauling, for example, that rate wars would again occur which would depress the rates to a point where only large carriers would survive. The problem I have with that, it seems to me in our economic system as it operates, if your statement is correct, that it costs a large operator more money per ton mile to operate his rigs than it does to the small independent operator, then it would seem to me that in free competition where it could be implemented and still enable us to serve a small community with less-than-truckload communities, it would seem to me that free competition tends to make those with the lowest costsenable those with the lowest costs to survive. If it's a small operator that has the lowest costs I have an awful hard time with the argument, which has been brought up also in Washington that if we had free competition in those areas, rate wars would ensue and the big ones with the high costs would survive and the little ones with the lower costs would not survive. Would you explain why it is that you have that. Mr. HIRSCHBACH. Yes. Mr. Bedell, I don't necessarily subscribe to your premise. First of all, the large carrier has the ability and the resource to buy his insurance cheaper. Mr. BEDELL. But you have already told me that your costs were higher. Mr. HIRSCHBACH. I said the tractor. Mr. BEDELL. Yes. To operate a tractor. Mr. HIRSCHBACH. The tractor and the trailer. But when you look at the total overall picture, the carrier, the large carrier that owns his trailers and I didn't say that they were that much higher. I said that they were very close to being equal. He is not going to allow us to see his traffic drained off to a number of the small carriers so he is going to go in and compete with the carrier or reduce his rate to drive that carrier out of busines. Now, this is what happened Mr. BEDELL. Do you do this? Mr. HIRSCHBACH. Not necessarily. I am not saying that I would do it. But to go back in the pre-1935 days when there was no entry requirements and everyone could come in and compete, they would bid off one against the other so the rates could go completely down below their costs. Mr. BEDELL. If that were to happen, isn't it true-if that were to happen, normally it would go below the costs of those with the highest cost first and they would start to lose money before the ones with lower costs would lose money? Am I correct in that assumption? Mr. HIRSCHBACH. I would subscribe to that, but I would say at that point the independent contractor would be completely-the small contractor would be completely broken. You also mentioned, Mr. Bedell, that we have a system now where there are no regulations on exempt commodities. These exempt commodities are moving at atrociously low rates. The livestock industry is an example of that. Most of the livestock truckers that I talk to want the Government to come in and put some rate regulation in so that they can move and adjust reasonable rates. The law of supply and demand of these exempt commodities reduces the rates down to a point where it's economically unfeasible to transport the goods. Mr. HUNGATE. Is it perhaps the case that even with these costs, that if you have got 25 million of those 26 million, you can live pretty good and last a long time? If you have $25 and owe $35, you're a bum. You'd be out in the street. What I am trying to get at, if you're big enough, perhaps you could continue to lose money until you get rid of those other fellows. Then you can raise your price. Grocery stores and drug stores, dairies, bread business-I am an authority on going broke. That's all I am saying. You think that might be the case? Mr. HIRSCHBACH. Well, that would be the case and that was the case before the Interstate Commerce Commission and Congress regulated or Congress regulated and delegated the Interstate Commerce Commission to take over the regulated carriers in 1935. Mr. HUNGATE. Even though the costs are higher of the large groups, I would expect that is true. If they have enough assets, they can shuffle them long enough until the small fellow is forced out. Then they come on in and put the price where they want to. Mr. BEDELL. No, I don't agree with that, Mr. Chairman. Mr. HUNGATE. I didn't expect agreement totally but I was just suggesting a theory that might be possible. Mr. Jensen? Mr. JENSEN. Mr. Hirschbach, how many trucking firms were there in 1935? Mr. HIRSCHBACH. I don't have any idea. Mr. JENSEN. Was the number greater in 1935 or less in 1930? Mr. JENSEN. Say 1930, 1925. What was the trend in 1935 when ICC came in? Were trucking firms on the increase or the decrease? Mr. HIRSCHBACH. Well, trucking firms have been on the increase from 1935 to the present day. Mr. JENSEN. Is the number of trucking firms increasing or decreasing today? Mr. HIRSCHBACH. What type of trucking firms? Mr. HIRSCHBACH. I would say that-well, I don't know. I couldn't answer that question frankly. But I think that they would be increasing. And for this reason that the applications-I am talking about the regulated industry-on file with the Interstate Commerce Commission for authority has drastically increased over the past 5 years. The fact that they doubled, the Interstate Commerce Commission had to do away with having oral hearings on all of these entry applications and go to a new simplified modified procedure. Of all of these applications they apply for, 85 percent are granted in one form or another. As our population grows and as our technology produces more goods that need to be transported, the trucking industry has increased. It also increased because of the breakdown in our railroad system. Mr. JENSEN. Well, let me respond to that. I don't have the figures before me, and I don't have accurate figures as to the number of trucking firms today as compared to a few years ago. But we have received testimony in Washington and I guess until it's proven wrong we'll be under the impression that somebody has done some kind of a study on the matter revealing that we certainly have fewer trucking firms today than we did 10 years ago, and the trend is definitely on the decrease. Today we have fewer trucking firms than in 1935, which certainly doesn't speak well for the way ICC regulates. Now, as far as figures that I do have, you talk about 85 percent of the certificates being given or granted by the ICC. Last year they granted 30. Now, if that's 85 percent, that's not very many new certificates. Mr. HIRSCHBACH. I said 85 percent in one form or another. Mr. JENSEN. I guess I don't know the total number. I do have the figures on that. There were only 30 new certificates granted last year by the ICC. Mr. HIRSCHBACH. I won't quarrel. I don't have the documents with me. I am taking the information that I have received from the American Trucking Association. Mr. JENSEN. I just wondered if you had accurate figures on that. That's all I was after was the exact figures. Mr. HUNGATE. Were you dealing in certificated? Mr. HIRSCHBACH. Certificated, yes. Mr. HUNGATE. That's what I thought you were dealing in. Mr. JENSEN. We have had a lot of criticism by independent truckers of the 75-25 percent split. Everybody is always willing to say that the grass is always greener on the other side of the fence. I would just like to hear someone inasmuch as I have never heard someone defend from the common carrier point of view the 25 percent take that they get on the lease haul. Mr. HIRSCHBACH. Well, I am not going to defend a take that the common carriers take in those words. I would say this: I think the independent contractor has got a lot of room for complaint as I have outlined in my statement of their treatment by a number of common carriers. First of all, I agree with them. I think it's completely ridiculous to issue a carrier a certificate that does not own a tractor or trailer when it's totally dependent upon the independent contractor to make his living. Now, I am speaking for myself. That's not the situation with our company. We own all of our own trailers. We own a substantial number of our own tractors. But in defense of the common carrier system, the common carrier has to provide a service to the entire shipping public without discrimination. Now, I am sure that other companies have to handle the straight truckloads of meat as well as the 3 or 4 pickups and the 8 or 10 deliveries throughout the country. The straight pickup load is naturally a better load, but he can't choose and select. And he is the one that is responsible for getting the truck from point A to B. The duty falls upon him to provide adequate insurance for the protection of the public. He has to carry that insurance. He is the one that has to maintain a reasonably adequate service, and he is the one that is responsible for the safety of the public on the highways while he does it. Now, a number of carriers do it either two ways. They either own their own tractors and trailers or they use the independent contractor. But the ultimate responsibility is on the carrier. Now, to get back to the percentage basis, the common carrier has a tariff. He files his rates with the Interstate Commerce Commission that produces revenue. He knows what his trailer costs are. He knows what his costs are for sales and solicitation. He knows all of his fixed and variable costs and he knows what it costs him to hire to put his own tractor on the road. If he is fair with his independent contractors, then he will lease the independent contractor in that area. But he has to be the one that has control and under his certificate and franchise, he is the one that is charged with providing the service. Now, if the independent contractor, like one of the gentlemen that was here testifying today, has 25 or 30 trucks, or 1, 2, or 3 and he has a shipper that is receiving inferior service or he can't get service at all, then that shipper can document those complaints. The independent contractor or the carrier can hire a registered practitioner and then an attorney, file an application before the Interstate Commerce Commission. Like I said, in 85 percent of the times these applications are granted in one form or another. I don't think there is a roadblock. All he has to do is show that the public convenience and necessity requires that service. Mr. JENSEN. Where do you get this 85 percent? You keep using that figure? Where does that come up? Mr. HIRSCHBACH. I got that figure from the Interstate Commerce Commission, itself. I would be happy to furnish it. I don't have it here today, but I would be happy to furnish it to you today. It's back at my office. If there is some quarrel with the figures, you can check it all and boil it down. Mr. BEDELL. The testimony we have had in Washington indicated that really for an independent operator to try and get certificated is just practically-I am not going to say an impossibility, but a tremendously difficult, expensive thing to do. I think that's been pretty clearly shown, has it not, Mr. Chairman? Mr. HUNGATE. If you would, file that information. Mr. HIRSCHBACH. I will. Mr. HUNGATE. If it's convenient today. If not, on or before 1 week from today so that the subcommittee has some deadline. Mr. HIRSCHBACH. In answer to your question, Mr. Bedell, I disagree with that. I try many ICC cases under the modified procedure for small independent operators. And I win more than I lose. Mr. BEDELL. For them to apply for certification? Mr. HIRSCHBACH. Yes. Gaining franchises, yes. Mr. BEDELL. Well, we really need that information. Mr. JENSEN. How many would you say are applying for certification each year? Mr. HIRSCHBACH. I don't recall the figure exactly, but I think from what I can a general idea would be 5,000 to 6,000 applications. I am sure you have it. I don't know. You're asking me. I don't know. And you have it. In order to save some time, why don't you tell me. Mr. HUNGATE. What we have is different information and we don't know who requested the information. This is one of the advantages of getting out in the woods and seeing what's going on. You get told something you may find out something else is the fact. [Mr. Hirschbach's prepared statement and exhibits follow:] PREPARED STATEMENT OF GEORGE HIRSCHBACH, VICE-PRESIDENT, HIRSCHBACH MOTOR LINES, INC. It is axiomatic that the independent owner-operator trucker is necessary and vital to our nation's motor surface transportation system. The owner-operator strike in 1974, precipitated by a lack of diesel fuel and concomitant rising costs, absent increased revenue to cover said costs, brought their problems sharply into focus to millions of Americans, particularly the shipping public. It is also true that this country has the best motor carrier transportation system in the world. Our equipment technology, natural resources, skilled drivers and operators, interstate highway system, and public demand for goods of all varieties, which must be loaded and delivered with prompt dispatch, among other things, has been instrumental in obtaining for our people a motor surface transportation system second to none. A viable "for-hire" motor carrier system, under the jurisdiction of the Interstate Commerce Commission, has emerged which our government officials and representatives must not allow to be torn down or destroyed by deregulation. This system must remain viable for the small less-than-truckload shipper as well as the large shipper to move their goods at reasonable, nondiscriminatory, nonprejudicial rates. Before addressing my |