Subjugation: How Wealthy Capitalists Squashed Freight Rates for Truckers for 45 Years

Major historical changes can often be traced back to a piece of legislation. Where freight rates for the trucking industry is concerned, that legislation is the Motor Carrier Act of 1935.  This piece of legislation greatly hindered the ongoing growth of the free, capitalist market that was free shipping. So severely did this single piece of legislation subjugate the industry, control the rates for shipping, and impose restrictions on driver routes that it crippled railroads’ biggest competition in a move that was no doubt intentional.

Applications and Certifications

1935 was a turning point for wealthy capitalists, the railroad industries they controlled, and the freight trucking industry. October 14th, 1935 launched the start of Interstate carriers being required to apply for U.S. permits. Applications for certificates, permits, and licenses were henceforth required under the Motor Carrier Act of 1935 for all trucks in the United States. Contract operators now needed certificates of public convenience or permits applications for which had to be submitted to the Interstate Commerce Commission within 120 days of the Motor Carrier Act going into effect. This application and registration process was long, drawn-out, and incredibly time-consuming. So complicated was the process that new truckers or new companies setting out to capitalize on the growth of the trucking industry were almost entirely unable to comply leaving only those previously established trucking companies to fight against subjugation by the railroads. Any application not granted within that timeframe or any carrier not operating with the necessary permits or certificates was considered illegal.

At the same time, no such requirements were put into effect for any other form of freight shipping, particularly the railroads. Instead, the signing of the Motor Carrier Act by President Roosevelt was hailed by the heads of many railroads as a way to “alleviate the reduction of passengers and profits on railroads”. There was no beating around the bush by men like F.E. Williamson, president of the New York Central Railroad who highlighted that this act would “equalize competitive conditions”.

Fairs and Profits

By April 1 of 1936, resolutions were sought to these restrictive practices; sought, but not gained.

F.E. Williamson, president of the New York Central Railroad highlighted that the Motor Carrier Act would “establish regulations for rate-making” only for truckers. The Interstate Commerce Commission and subsequently, the railroad owners to whom they answered, now had complete legal control to dictate rates for truckers, working conditions, and other safety measures.

Truck drivers and shippers all met regularly for town meetings like those called by the Shippers Conference of Greater New York, hosted by the Merchants Association. The latter did not give up its fight against the efforts by the railroad industry and wealthy capitalists to directly interfere with profits from the trucking industry. During this meeting a cross-section of shippers’ views were collected having to do with the effectiveness of the new truck rates put forth by the Motor Carrier Act of 1935. The meeting adjourned with a resolution calling for changes to rate making specifically that railroads no longer be in charge of rate making for freight and the trucking industry.

The Interstate Commerce Commission remained firmly in the pocket of the railroad industry and not but 2 years later in March of 1938, the Interstate Commerce Commission told Congress that minor amendments to the original Motor Carrier Act of 1935 would facilitate better efficiency in regulating the overall industry. In fact, one member of the Interstate Commerce Commission was quoted as saying, [truckers] “need much instruction and help from the regulatory authority, and it is of prime importance to…decentralize the administration of the act in every feasible way. And expedite action”.

Among the many recommendations made by the Interstate Commerce Commission to Congress was a change to the law which permitted the Interstate Commerce Commission to directly take action in various cases having to do with freight shipping without any public hearings, touted as a way to handle “relatively unimportant” cases without eating up Congressional time or money.

Another request was that Congress strengthen the authority of the Interstate Commerce Commission to be able to completely dissolve any organization or commercial consolidation they consider unlawful. This gave the commission the power to suspend operating rights or licenses from truckers without any proceedings or legal hearings.

Proposed rates were now set by a new rate bureau, an action that breached the Sherman Antitrust Act of 1890. All of these rates had to be submitted for approval by the Interstate Commerce Commission whose personnel were highly invested in the railroads 30 days in advance.

One additional aspect of this legislation was the requirement that motor carriers provide fare data, tariffs, and charges. The Interstate Commerce Commission was thereafter allowed to change the tariffs or the additional charges placed upon motor carriers.

The trucking industry did not give up the right. Motor Carriers continued to oppose a new transport plan proposed by the Motor Rail Company before the Interstate Commerce Commission in November of 1937. This particular issue was something a bit more nefarious than the previous attempts by the railroad industry to thwart any growth among the trucking industry; an application was put forth that would enable a company working in partnership with the Pennsylvania Railroad to distribute commodities by rail and motor truck, and in so doing proposed a rate structure that would be unattainable by other members of the trucking industry and only attainable by those motor trucking companies working in partnership with railroad companies.

Freight and Route Restrictions

The railroad companies and their compatriots did not give up. Additional aspects of the motor carrier Act of 1935 were enforced which included limiting the freight that the trucking industry was allowed to carry so as to not impose on the business of other trucking companies.

For the decade prior to these enforcement the trucking industry proved to be a more affordable alternative to shipping for many companies, and was able to reach areas where trains simply didn’t yet operate, offering more shipping options and reaching a wider demographic of the American public. As a direct result, further restrictions limited the driver direct routes between shipping and receiving, forcing trucks to take circuitous routes unnecessarily to try an increase not just the costs of shipping by truck but the profits.

In 1938 a change of status was enforced giving priority and fewer restrictions to trucking companies exclusively under contract with a railroad. This meant any trucking company performing a pick-up or delivery service specifically with a railroad which did not engage in any other trucking activities and therefore did not interfere with railroad profits was no longer regulated by the Motor Carrier Act of 1935. Instead it was directly supervised by the Interstate Commerce Commission giving a great deal more freedom only to those truckers collaborating with railroads. The railroads in conjunction with the Interstate Commerce Commission created such an oppressive environment that truckers and new trucking companies could only hope to avoid the floundering of the trucking industry by getting in bed with the enemy.

Things did not improve over the next 45 years, instead with severe restrictions on rate making and the subsequent enforcement of the Reed-Bullwinkle Act of 1948. Truckers were in for a long period of subjugation.

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