in peace and times of national emergency. The indispensable conditions are:

First. The railroads, which are the backbone of our transportation systems, must be completely divorced from banker domination and control, thus restoring railroad managements to their owners.

Second. There must be a complete reversal of restrictive practices and suppressive policies in the industry in favor of a sane and constructive program in the public interest and in the interest of the owners of the railroads and those who work for them. Labor has a tremendous stake in such a program.

Third. There must be a renewed faith on the part of railroad managements in the future of their own industry-a reversal of the defeatist attitude of those who have permitted the railroad plant and facilities to deteriorate to a point inadequate to the Nation's needsand an appreciation of its true function in our American system of private enterprise.

Fourth. There must be a firm and just application of the antitrust laws to the industry. And, gentlemen, this means the repeal of the Reed-Bulwinkle Act. This is vital because the antitrust laws afford the protection sorely needed by owners and managers of private companies in all fields of public transportation, and by the public, against future attempts at banker domination and exploitation and the establishment of cartel monopolies.

That comes from President Truman. When he was Senator, he delivered a speech at Baltimore, Md., in regard to this program which is sponsored by the Association of American Railroads, to create reasonable monopolies to control all rail and motor, water, air transportation facilities. He condemned them as proposed cartel monopolies. Fifth. We need more initiative, more enterprise, on the part of railroad owners and managers, not more Government regulation. Freed of banker domination and monopoly controls, the private-enterprise system would have a real chance to function in this basic industry.

The objectives and policies of the Government should be:

First. The attainment of more, better, and cheaper transportation. Second. Modern transportation must be made available to all sections of the country without discrimination.

Third. Each form of transportation must be permitted to realize its full potentialities for service.

Fourth. Competition must continue to be the keystone of governmental policy.

The world is watching the great American experiment, the freeenterprise system, that has made us strong. Like liberty itself, the manitenance of that system imposes responsibilities upon each one of us. We must be vigilant to strike down monopolies in every field of industrial and commercial activity. The time for decision is at hand. Can our free-enterprise system stand up under attacks from monopolists and cartelists within as well as hostile forces from without? Or will they destroy our free economy, beginning with our transportation systems, as the monopolists and cartelists of Europe have destroyed the traditional capitalism on that continent?

The answer may very well begin with the report of this committee. And in that answer lies not alone the future of our people, but the hope of the peoples of this world.

(The data referred to earlier in Mr. Wiprud's statement are as follows (source, exhibit 40 of pp. 1703 through 1716 of hearings before the Committee on Interstate Commerce of the U. S. Senate, 79th Cong., 2d sess., H. R. 2536)):

FOLLOWING TELEPHONIC CONVERSATION OCCURRED NOVEMBER 26, BETWEEN WYLIE L. MOORE, PRESIDENT OF THE PURE OIL CO. OF THE STATES OF NORTH AND SOUTH CAROLINA, TENNESSEE, AND GEORGIA, AT CHARLOTTE, N. C., AND J. F. DALTON, TRAFFIC MANAGER, NORFOLK SOUTHERN RAILROAD, NORFOLK, VA.

Mr. DALTON. Have you any suggestions to offer as to the best way of arranging a meeting between the presidents of the railroads and the oil companies?

Mr. MOORE. I would suggest that you get the president of your company to contact the presidents of one or two other railroads doing business up and down the Atlantic Seaboard, and then contact the presidents of about three of the big oil companies in New York, but not over three.

Mr. DALTON. What oil companies would you suggest?

Mr. MOORE. The Standard Oil Co., Mr. Walter Teagle, president; Sinclair Oil Co., Mr. Gallagher; Gulf Refining Co.: Mr. Drake is president, but Mr. Hartman, vice president in charge of marketing, would be the man to invite to the meeting because he is in sympathy with the truck elimination. Mr. Hartman called me on the phone some time ago and asked if something couldn't be done to stop the trucking. It will probably be necessary to invite Mr. Drake and then he will designate Mr. Hartman. Mr. Rogers, of the Texas Oil Co., should be included. I do not think you will have any trouble in getting a meeting.

Mr. DALTON. Would you suggest that the letter be a joint one or separately to the president of each oil company?

Mr. MOORE. Separately. Ask them if they will meet you on a certain date at a hotel. They will come down to your room at the hotel and just sit down and you people discuss the problem.

Mr. DALTON. Don't you think the best way for the president to submit the matter to the oil companies is to simply say that there has been a great diversion of this traffic to the highways, and in the end it is probably going to provoke a state of chaos and discord as to the total movement of this traffic, not only that moving by rail or highway, but the aggregate of both via highway and rail, and the oil companies will find, in the end, that the results are not going to be as favorable as if the entire tonnage were transported by rail? It occurs to us that regardless of the question of rate levels, it is largely one of stabilizing the practices.

Mr. MOORE. That is right, and then I would add that while the thing is pulling the roof down on our heads, you are also pulling the roof down on your own heads by demoralizing the markets. See if you can't get together and work out something. If they start talking about rate reductions, say, “All right, what are you going to do with them when you get them?" They have to pass them on the public; they can't keep them. Any reduction you might give would be such a small fraction per gallon the public would not know it, one way or the other. As presidents of the oil companies, they can go forward.

You are not going to get anything through the traffic departments of the oil companies because the traffic departments are going to fight for rates. They have only one line of thought; that is to chisel. The executives of the oil companies have thought toward something constructive. I talked with the Georgia Public Service Commission this morning about the same thing and suggested to them that they not give permits to any more motortrucks.

Mr. DALTON. Do you mean not to allow the trucks to come to use highways? Mr. MOORE. Yes, and for this reason: In the first place, all the trucker has to do is get enough money to make a small down cash payment on the truck. If the operation is not successful, the oil companies usually lose because they sell them gasoline on credit; the car people lose; the people he buys groceries from lose; the public at large loses, because he hasn't anything.

Mr. DALTON. In other words, the community is made that much poorer?
Mr. MOORE. That's right.

Mr. DALTON. They do not help the purchasing power?

Mr. MOORE. No. They don't do anybody any good. Our commission (Georgia Public Service Commission) told me today that they were going to go on record to stop permitting the trucks to use the highways. The chairman said he has it up with the railroads now to see if he could not get them to put back some trains, and start an expansion program, give employment to people and ask the public to

come back and patronize them and give them some business. I think the public would favor the railroads. Both sides have made a serious mistake in sitting back and trying to remedy the matter by legislation in lieu of cooperation.

Mr. MOORE. Another bad situation is that if the oil industry contacts anybody with the railroad, it is a traffic man. If the railroad has contacted anybody in the industry, it was in the traffic end, where they are only interested in bargaining. Neither was in sympathy with what the other was trying to accomplish. That is why I suggest that you go direct to the presidents of the oil companies.

Mr. DALTON. I do not believe the presidents are very seriously concerned in reducing the rate levels, as much as bring order out of chaos and stabilizing the practices and the mode of transportation; that is, the means which may be used in transporting gasoline. As you stated the other day, the highway cannot absorb all of it and transport it, but it has got to go partly by rail and partly by highway, or all by rail. It has been stated to me that if the rates are reduced, that it will simply bring about an equality of transportation. My answer to that has been that if the rate is reduced from 32 to 24 cents, the highway operator will transport it just as actively, and in as large a volume.

Mr. MOORE. That is right. And another problem you might present at the meeting is this: In the first place, the truck operator doesn't know what it costs him to haul the oil. When the equipment wears out, he goes out of business, as a rule. Looking at it from a broad viewpoint, as far as I am personally concerned, if the railroads would restore the people back to work whom they have laid off-been forced to lay off on account of declining revenue-I would be agreeable to an increase in freight rates.

Mr. DALTON. That is a very splendid broad way to look at it. If the people at large would take that view, it would bring about equality of regulation as between the highway and the rails. The effect would be that the railroads would become bigger purchasers and larger employers of labor, and the result, in the aggregate, would be the upbuilding of the country, more toward the conditions of 1928. Most people, unfortunately, are unable to grasp the situation like your good self.

Mr. MOORE. Another thing: There is only a small volume of our business that could be hauled on a break-even basis at the present freight rate. In a case like from Wilmington to Asheville, then we would depend on the railroads, but to depend on the railroads for 95 percent of the loads and break their backs with 5 percent, we cannot expect them to carry on. It will cost us more money than it does now.

Mr. DALTON. In other words, we must cooperate with one another in this matter, toward the medium which will be used in transporting the petroleum.

Mr. MOORE. Right.

Mr. DALTON. If the oil industry will get together and prohibit, like the fertilizer people in many instances did, the trucks coming to the port for oil, that may have solved the problem? Do you mean the oil companies that have their own trucks should withdraw them from service; the oil companies that have contracts with outside parties should cancel those contracts, and they should eliminate dealers sending their own trucks or for-hire trucks to the ports for gasoline because the dealer can save between the highway on the one hand, and the rail rate, on the other, which gives him an additional margin to break down the market price of gasoline. As long as you patronize the highway, regardless of the railroad rate, you are going to have this demoralized situation within the oil industry. One thing I do not understand is why the presidents of the oil companies have not straightened this out.

Mr. MOORE. That is correct-you are now going about it in the proper way, that is starting at the head and not at the foot. I think the executives of the oil companies will be largely in sympathy with the problem when it is properly presented and they have a chance to think it over.

Mr. DALTON. The attitude of Mr. Hartman, of the Gulf Co., is somewhat surprising. I understood the Gulf had been quite active in handling gasoline over the highways.

Mr. MOORE. That is correct, but now they realize that it is all wrong and they are hurting themselves by it. The situation is developing into a racketeering proposition.

Mr. DALTON. Do you think the railroad presidents, at this meeting, should go so far as to make any suggestions to the presidents of the oil companies as to what might be done?

Mr. MOORE. Yes, indeed. Just talk turkey to them.

Mr. DALTON. Suggest that they abandon the use of trucks and prohibit their coming to the terminals?

Mr. MOORE. Yes.

Mr. DALTON. I feel that your suggestions are very valuable and will be fruitful to the interests of the railroads and oil companies, and I will keep you informed of how we are getting along.

Mr. MOORE. You can count on our company going along with any program that is worked out, and you can tell your president that.

Mr. DALTON. That is fine. I will tell my president of your splendid cooperation, and that the Pure Oil Co. will go along on any program that is decided upon. Mr. MOORE. Yes. You are working along the right line to work out something. and I hope that some good will come of it.

Mr. DALTON. Is the Georgia Public Service Commission going to permit any more trucks on the highways?

Mr. MOORE. No; but I don't want it to get out. I just wanted you to know. We have talked it is now crystallizing.

It was given to me confidentially. about it two or three times and

Mr. DALTON. It will possibly go to North and South Carolina?

Mr. MOORE. Yes; but as I said, I don't want it to get out.

Mr. DALTON. If we reach a solution of this difficult problem without breaking our backs, as you said, it will be largely because of your splendid cooperation. Mr. MOORE. I have not been able to trade my old friend Harrison about the Fayetteville lease.

Mr. DALTON. The lease is in status quo until we hear further from you.

SUPPLEMENTARY EVIDENCE RELATIVE TO RATE AGREEMENT FOR SHIPMENTS OF PETROLEUM IN SOUTHEASTERN TERRITORY

ATLANTIC COAST LINE RAILROAD Co.,
Wilmington, N. C., November 29, 1934.

In your reply refer to file 55794.
Personal.

Mr. A. F. CLEVELAND,

(At New York.)

Vice President, Association of American Railroads,

Washington, D. C.

DEAR GUS: In connection with telegrams exchanged yesterday in regard to con-ference in the matter of petroleum rates in Southern Territory:

A very unfortunate situation has arisen in the petroleum industry in the South, traceable almost directly, by the way, to the practices of the Pure Oil Co. A few months ago the Pure Oil Co. inaugurated the practice of permitting the dealers to purchase oil at the ports through which the oil is brought in and truck it to interior points, using dealers' trucks or contract trucks; dealers allowed the freight rate from the port to destination, and to the extent that he can transport or contract to have transported the gasoline at less than the freight rate, the difference to go to the dealer. This has enabled the dealers, in a large number of instances, to demoralize the price situation and, in consequence, a very unwholesome condition has arisen. A number of the oil companies competing with the Pure Oil Co. have had to meet the practices of the latter.

The Pure Oil Co.'s operations in the States of North and South Carolina, Georgia, and Tennessee are under the direction of Mr. Wylie L. Moore, who is president of the Pure Oil subsidiary operating in Southern Territory. I think he has become convinced that he started something that is harmful and wishes to stop it, and to have it stopped by his competitors.

During all this confusion the traffic managers of the oil companies have pressed for a reduction in the rates on gasoline in Southern Territory, and they frankly say that they want the freight rates made so low that there can be no incentive to truck by dealers or others; in other words, that the freight rates be reduced to the bare truck cost to the extent that the latter cannot compete.

Mr. Moore, in his negotiations with the Norfolk Southern Railroad concerning lease of a piece of property owned by that line in North Carolina, has gone into this matter quite fully with Mr. Dalton, traffic manager, Norfolk Southern Railroad, and the latter has furnished me, confidentially, a couple of memoranda that report in some detail phone conversations he has recently had with Mr. Moore. I have only one of those memoranda here and I enclose it, which is a stenographic report of what was said both by Mr. Dalton and Mr. Moore.

Mr. Moore will be in Washington tomorrow and it is my intention that he shall talk this matter over with you, as well as with the rest of us who attend the

conference. The purpose of the conference is to ask Mr. Pelley to arrange for yourself and Mr. Pelley to confer with the chief executives of some of the oil companies and handle this matter somewhat along the line of Mr. Moore's suggestion. For the purpose of giving you some preliminary information, I am sending this memorandum of the last Dalton-Moore conversation.

Incidentally, Messrs. Dalton, Oliver, Capps, and I conferred here yesterday with traffic managers of the Standard Oil Co. of New Jersey-Louisiana-Kentucky, Texas Oil Co., Sinclair Refining Co., American Oil Co., Shell Petroleum Corp., Gulf Refining Co., and Pure Oil Co., and their request was for reduction in the rates. They apparently knew nothing of Mr. Moore's activities, nor of any probable appeal of this matter to the chief executives of the oil companies.

In considering this matter, by the way, you will have to keep in mind the fact that, like many other situations, the rate level in the South is higher than in other territories, gasoline being no exception; and should scales of rates be brought before you, you will have to change your "sights" so as to be above the low level that you have been accustomed to in the West. Mr. Pelley, however, because of his former connection with the Central of Georgia, is doubtless still familiar with the fact that our level of petroleum rates in the South is higher than elsewhere and that fact will be less surprising to him than to you. Very truly yours,

Memorandum to Mr. PELLEY:

C. MCD. DAVIS, Vice President.

ASSOCIATION OF AMERICAN RAILROADS,

TRAFFIC DEPARTMENT, Washington, D. C., November 30, 1934.

Messrs. Davis of the Atlantic Coast Line, Oliver of the Southern Railway, and Dalton of the Norfolk Southern have conferred with me in regard to a threatening demand for a material reduction in the rates of petroleum products within the southern territory, which, if brought about, will, it is estimated roughly, cost the southern lines more than $7,000,000 per annum.

The difficulty arises from a demand on the part of the traffic managers of some of the principal oil companies for a reduction in rates up to 250 miles, with the threat that, unless such reduction is made, the traffic will be given to the trucks. At first, it appeared that a lesser reduction than that which is now demanded would be granted by the Seaboard Air Line through the medium of notice; and it was at the request of Mr. Capps, vice president in charge of traffic of the Seaboard Air Line, that they had intended to take the subject up with this association. At a meeting in New York between some of the southern managers of the oil companies, it developed that the amount of the reduction requested was far in excess of that originally proposed.

Mr. Moore, president of the southern branch of the Pure Oil Co., has become very much concerned over the marketing effect which the use of trucks is having upon the control of prices, and he has informally suggested to Mr. Dalton that the presidents of the southern lines most directly concerned have a meeting with the presidents of their own interests, as well as in the interest of the railroads, to discontinue the use of trucks and discontinue selling to dealers at their storage points, on the basis of a delivered price less the railroad freight rate. It is now suggested that in lieu of the southern lines' presidents having such a conference, you arrange a conference with the presidents of the oil companies and that you endeavor to bring about an agreement such as briefly outlined. I have been asked next Tuesday morning to have breakfast with Mr. Moore, who will be in Washington, and to discuss the matter further with him preliminary to his possible later conference with you.

The subject can be approached from two standpoints. First, the effect on the railroads; second, the effect on the oil companies, if trucking in a large way is substituted for railroad transportation. Briefly, these arguments are as follows: From a railroad standpoint, the oil companies should be shown that the railroads are among the largest users of petroleum products, and that an industry doing such a large business with the railroads ought not to adopt the policy that would seriously involve their customers. Second, the condition of railroad earnings would very seriously affect the southern railroads if a rate readjustment had to be made that would deplete their revenues to an extent of at least $7,000,000 per annum. The arguments in support of why it is in the interest of the oil companies to patronize the railroads rather than the trucks are as follows: