The BIG Picture: Industry Jumping by Wealthy Capitalists

Scattered along the perimeter of the Amazon rainforest are cattle farming communities. Over the decades the Amazon rainforest has gotten smaller and smaller as land is demolished to provide grazing for said cattle. The cattle move to a new piece of property, destroy it by consuming anything of value and leaving it unable to rebound for a significant amount of time, and then simply repeat the process on a new piece of property next door.

This manner of consuming and controlling all that there is in a portion of land and then leaving it demolished only to move on to the next piece of land represents the industry jumping by wealthy capitalist over the last 100 years.

Capitalists behind the railroad industry maintained their profits by targeting whichever industry was the next up-and-comer, and that industry wasn’t always railroads. 

After the railroads were used to dominate and subjugate the trucking industry, from 1935 onward railroads were free to prosper.

But this prosperity came to an end around the 1950s.

U.S. Census Data from 1891 through 1957 paints a clear picture of railroad income and expenses. In spite of a small dip during the Great Depression, things continued to look up with an overall increase in operating revenue and net income, often aided by new bankruptcy law measures to provide money to railroads to purchase safety equipment, meet their local and state tax obligations, and more.


The Fall of Rome

However, as 1957 came to a close and the sixties were thrust upon the industry, net income began to drop. Railroads were using “side-stepping” techniques to stay afloat, such as deferring maintenance, accumulating, in the case of the Central Railroad of New York, a small but important Commuter Carrier, $500,000 each month of costs. Maintenance typically represented one-third of the railroads operating revenue so maintenance skimping meant no new rails, ties, or ballasts but better figures on the books.

These types of savings cushioned the railroads during the 1958 decline but they could not stop what was coming. 

20 of the 37 large Eastern railroad systems went into the red by more than $86,000,000 in the first six months of the year. The Pennsylvania Railroad, the number one Railroad in the industry accounted for over $25,000,000 of this collective deficit and the acting president of the Pennsylvania Railroad, James M. Symes was already reporting another $5,000,000 for July of 1957.

President of New York Central, the second largest railroad, Alfred E. Perlman predicted July of 1957 to be the worst yet for railroad debt. 

The New York, New Haven, and Hartford Railroad was reporting losses of $4,900,000 at the start of 1958 and expected another $1,000,000 just in July of that same year. 

The Boston and Maine Railroad already noted a $3,453,528 deficit for the first half of 1958 and only had 15 months left to repay $47,000,000 in mortgage bonds.

In August of 1958 rail bankruptcy was considered a national threat and aid legislation was proposed to help this decline, as it had so often helped in decades prior. For 4 months, railroad leaders spoke before Congress testifying of the dangers of a fallen railroad industry. 

The result?

Calls for legislation, cost-cutting, subsidies, or simply more traffic on the railroads.

new Transportation Act which authorized the government to guarantee 15-year commercial loans up to $500,000,000 to the railroad industry to offset the costs of equipment and maintenance. 

It wasn’t enough. 

Railroads were still showing 22% below the 1957 figures. Perlman said he did not expect the industry woes to resolve until at least the end of the decade, “I see no comeback right now.”

Some rail leaders, however, maintained hope that by 1959, things would resolve. This wasn’t the case. By the start of 1959, railways were facing bankruptcy. 

Backing a New Horse

Between 1960 and 1970, railroad companies started to file for bankruptcy. The New Haven railroad filed for reorganization under the Federal Bankruptcy Act in July of 1961, marking the turning point for the railroad industry. President of the railroad, George Alpert stated in a news conference, “Our battle to save the New Haven railroad from bankruptcy has been lost.”

At the same time remarks were made criticizing the government for no longer providing the same fiduciary support to the railroad industry as it had done in decades prior.

No longer paying lobbyists to encourage Congressional decisions in favor of the railroads, the industry began to collapse as wealthy capitalists profiting from railroad security and opulence pivoted their influence to the next piece of land, as it were, the next industry. 

Now they backed manufacturers, distributors, and retailers to secure their interests. 

Still in control of the Interstate Commerce Commission, wealthy capitalists were able to shift legal support toward shippers for the next 45 years, using the same tactics and phrases. Now it was no longer the railroads but the shippers who were “in the best interest of the people” and best for the national economy. The Interstate Commerce Commission in 1963 now focused on aid for shippers, noting that shortages for shippers. 

Surcharges were suddenly postponed for the industry. So prevalent was the aid invested in shippers that it vexed international counterparts. President Johnson voted in favor of new maritime shipping enterprises to bolster the industry. 

By 1966, the Interstate Commerce Commission was helping shippers with legal orders to aid equipment shortages. The following year, forums held by the Shippers Conference of Greater New York discussed how containerization could cut domestic transportation costs for shippers.

The same lobbyists were sent to Washington to use the Motor Carrier Act as a way to drive transportation costs down so that they could profit as other companies struggled to pay higher prices. Overall, wealthy capitalists jumped from the railroads into the larger shippers—manufacturers, distributors, and retailers. This form of industry jumping was not a new phenomenon, and represented one of the many rules in an antiquated playbook by which they operate.

Why is No One Talking About the Elephant in Long Haul Trucking?

Long Haul Trucking is a Virtual Mountain of Gold Just Waiting to be Mined. 

What makes the proverbial mining of gold in the trucking industry so interesting is that the mountain is owned by shipping companies. The more figurative gold trucking entrepreneurs take, the less gold the shipping companies keep. It’s a zero-sum game. And because of that, the elephant in this industry is a creation of the larger shippers to impede the productivity of trucking entrepreneurs to mine gold, so to speak.

Not removing the elephant is a monumental mistake by trucking entrepreneurs. The cost is hundreds of billions of dollars in forfeited wealth, since 1980. 

Let’s talk about the elephant.

It’s the reason why larger shippers have carte blanche when it comes to setting the terms of service i.e., unreasonable delays in loading and unloading; the irony of charging penalty fees for not being on-time; and nominal detention pay, at best, or nothing at all. 

It’s the reason why the broker population is so prolific and why they almost always kowtow to the larger shippers—manufacturers, distributors, and retailers. 

It’s the reason why freight prices and rates will never reach the level you want them. It’s the reason why your only real growth comes from M&A, which is extraordinarily risky and expensive, especially now.

And it’s a BIG reason why your driver turnover is so high and retention so low. Let’s be real, IF more than half of your employees quit every year, you have a systemic problem!

But most of all, the elephant is the reason why your net earnings last year was only $400 million and not three times more! I’m not kidding—the elephant is a wealth-eater, and it has got to go!

What is the Elephant? And How Did It Come to Be?

The elephant is an oversaturated market. 

That means there are too many for-hire truck owners—about 415,000 too many. They compete for full truckload freight and nothing they do is healthy for LHTDs, other truck owners, or the industry as a whole. 

Let’s visit the forgotten history of American trucking to understand why the elephant came to be.

Believe it or not, wealthy global capitalists declared war on trucking companies in 1935. They were heavily invested in the railroad industry and were outraged when the railroad began losing business to trucking companies in the late 1920s. The response was a declaration of war. They paid experts and academics to influence politicians—ensuring Acts of Congress were drafted to their advantage.

These wealthy global capitalists used Acts of Congress as strategic weapons. 

The Motor Carrier Act of 1935 outlawed competition, supressed growth, and heavily affected the income of trucking companies while benefiting the railroad companies. The act further constrained truck owners by forcing them to fix prices, in blatant violation of antitrust laws. Having forced trucking companies into operating illegally, the Reed-Bulwinkle Act of 1948 backtracked by simply exempting freight carriers from prosecution while leaving the other constraints intact. Truck owners suffered yet another income blow when the Motor Carrier Act 1980 allowed excessive competition, which achieved the goal of flooding the market [thus forcing a change in market structure from something resembling an Oligopoly to Perfect Competition] with unsophisticated trucking entrepreneurs, lowering the rates of the industry overall to the great financial advantage of the larger shippers.

The Motor Carrier Act of 1980 is still devastating trucking companies in 2021. 

It created a highly competitive environment which allowed wealthy capitalists to maneuver into a position where the market would set prices. Whereas the 1935 act gave the power to set prices to the government, the 1980 amendment put the power firmly in the hands of the market—larger shippers. The scheme was so masterfully executed, that trucking companies didn’t even realize that there was an option to take back their only power [to set the price] and once again control their own industry.

Is it Even Possible to Remove the Elephant? What Does “Remove the Elephant” Actually Entail?

Anyone who understands that too many truck owners—the elephant—is the root cause of every complex problem that plagues long haul trucking today, also understands that you cannot turn back the clock. This is true, which explains why no one is talking about the elephant.

But what those same people don’t understand is that the destructive effects of the Motor Carrier Act of 1980 can actually be reversed, so much so that the end result would create an industry operating as though the act of 1980 was actually revoked, and every change that followed it: in effect, restored to its original form.

That means a mass exodus of hundreds of thousands of truck owners, trucking companies, and brokers too, over a timespan of about 20 years. It also means a forced shift in market structure from where it is today—Perfect Competition—back to something that every trucking company deserves: an Oligopoly.

The larger shippers will begin to panic as they watch the larger trucking companies grow organically as they take-up the freight lost by the smaller departing companies. This will trigger a massive reaction from crony capitalists, who will respond by sending millions of dollars in political contributions to lobby groups who will also join the fight to find ways to stop trucking entrepreneurs from removing the elephant.

It sounds far-fetched or perhaps even impossible. But it’s really not. Not when you consider the fact that all that will transact is the reverse of what happened 40 years earlier i.e., post deregulation. The only difference is that the transformation is being directed by trucking entrepreneurs rather than wealthy global capitalists and corrupt politicians.

What Would Change IF the Elephant was Successfully Removed? Who Stands to Benefit Most?

The face and landscape of the trucking industry would never be the same. 

The top trucking companies would each own upwards of 80,000 to 100,000 trucks. Their business models would resemble a highly efficient and productive UPS or FEDEX enterprise. Independent owner-operators would be living the dream and driving for the passion, while those who get out, will do it for the money on the other end. Long haul truck drivers would be highly skilled and seasoned professionals, and embrace the many opportunities to advance during their career. But best of all, they will retire debt free and rich in under 12 years. 

You would see conventional trucks, alternative energy trucks, and driverless trucks all fully integrated into a state-of-the-art long haul trucking ecosystem with blockchain and geospatial management technologies all producing profit for every LHTD and trucking company. 

You would see the Great Wall of Freight Brokers dismantled and replaced with a revolutionary new infrastructure with charging stations, city and city-limit hubways, new and highly-efficient dedicated lanes, one robust end-to-end logistics solution, fueling centers, healthy eating for LHTDs, interstate transfer plazas that are purpose-built for driverless trucks, medical centers for LHTDs and their friends and family, and certified training centers.

Would you see consumer prices across the board increase? Maybe. Or maybe the vanishing revenue to the massive freight broker machine would absorb the fundamental change.

Those who will stand to benefit most from this change are LHTDs and the top trucking companies.

What Enables Trucking Entrepreneurs to Remove the Elephant? Moreover, What Would Cause the Mass Exodus of Hundreds of Thousands of Truck Owners and Trucking Companies? 

If you remember, wealthy capitalists used the Motor Carrier Act of 1980 as their weapon of choice to flood the market with unsophisticated trucking entrepreneurs and force an all-important change in market structure, from something that resembled an Oligopoly to what we have today, which is Perfect Competition.

Today, our weapon of choice is a revolutionary new retirement plan for LHTDs. It will permanently end the driver shortage in 90 days, but more than that, it will force another major shift in market structure from where it is today—Perfect Competition—back to something that every trucking company deserves: an Oligopoly. 

The name of this retirement plan is TruckonomicsTM.

As the premier retirement plan, Truckonomics is offering LHTDs the one thing that they want more than anything: the option to get out of their truck… with a passive income that keeps them out of their truck permanently.

Every trucking company, large and small, has a fatal vulnerability that has never been tested. That vulnerability is disloyal drivers. IF your competitor can give your drivers the one thing that they want more than anything else in the world, they will abandon your company in a heartbeat!

Truckonomics was designed to give LHTDs that one thing. 

Truckonomics is offering LHTDs the chance to:

  1. Retire from driving
  2. Own their own home debt free and clear
  3. Live debt free
  4. Earn a passive income [from a fleet on income-producing trucks] that meets their every need
  5. Have at least six months worth of emergency money, available at any time
  6. Accumulate six figures in retirement savings

All six achievements to be realized in under 12 years.

As a virtual weapon, Truckonomics will be used to force trucking companies out of business and into bankruptcy by exploiting their single-largest vulnerability—disloyal truck drivers. It sounds brutal, and for the owners of those companies, it might be. But for their drivers and support personnel, it will be an enormous step up to a future that has never looked brighter.

Our approach is to offer Truckonomics to LHTDs exclusively through a network of select trucking companies. That means, any LHTD who chooses to opt-in to the Truckonomics retirement plan must be first actively employed or sponsored by a trucking company in our network.

For more information, subscribe and watch for more posts like this one.

The Beginning of Market Structure: Competition from Railroads

The Beginning of Market Structure Changes: Competition from Railroads

Within a few years of its passage, the Motor Carrier Act of 1980 achieved its goal: to force a change in market structure from a Monopoly to Perfect Competition. Central to the egregious minds of the wealthy capitalists, their real intent behind the Motor Carrier Act of 1980 was to force the change in market structure and this change took the form of dangerous levels of competition. 

Whereas the original Motor Carrier Act of 1935 sought to move control into the hands of the wealthy few by forcing a market structure in the form of a monopoly, once those same wealthy few were no longer interested in maintaining their monopoly they passed a revised version of the same legislation which reversed all of the policies they had enforced for decades. This new Motor Carrier Act of 1980 reversed the monopoly and opened the doors to an outpouring of competition, perfect competition. 

New Competition 

While truckers may have believed that railroads were their biggest enemy at the turn of the century, it seems that the industry left behind by wealthy capitalists in favor of other forms of shippers, rose like a phoenix from the ashes of deregulation to once more derail truckers. 

Harold H. Hall, the chief executive officer for the Southern Railway Company, when interviewed noted that he blamed the trucking industry for not “paying the share that it should of the construction and maintenance costs of the nation’s highways” but by comparison, his railroad tracks have undergone “extensive repairs” and “are in as good condition now as they have been”. This attitude was expressed in part of his favorability for deregulation, indicating that deregulation across the whole of the transportation industries could be profitable for railroads that are considered more well maintained. 

By 1983, the Interstate Commerce Commission allowed railroads to provide trucking services, eliminating the barriers to competition they had, as an organization, fought for before Congress in 1935. Doing so was ostensibly to support railroads but instead flooded the transportation industry with a fire hydrant level of competitive flow. Nelson Cooney, the general counsel for the American Trucking Association, explained that they would ask the Interstate Commerce Commission to reconsider this action and appeal to the United States court of appeals for the District of Columbia because the move removed protections for the trucking industry and watered down what little progress trucking companies were able to make in the previous decades. 

Big trucking companies in spite of recent losses from the economic downturn argued against the increased competition as a burden. Mr. Cooney noted, “the railroads are so big and control so much that they will be an enormous competitive factor. At the rate they’re moving, this could be a free-for-all.” 

When the Interstate Commerce Commission issued a report with their decision they rejected these arguments stating that because the railroad industry which was once the dominant industry, only accounts for 36% of the ton-miles of freight across the nation today, they couldn’t possibly have as detrimental an impact as the trucker’s argued. 

However, the facts speak for themselves. 

The Norfolk & Western Railroad, as one example, obtained a controlling interest in a regional carrier called Piedmont Airlines after which they merged with Southern Railway and have moved toward complete integration of rail services with their airlines. Similarly, Conrail, a government operated freight carrier, began testing vehicles that could travel on railroads, pulled by cars as a way to increase control over the transportation market by providing railroads with a wider reach into other forms of transportation. 

In so doing, these two examples illustrate that predictions from truckers were completely on point: railroads were saturating the market with too much competition by extending their grasp beyond just rail lines.

Predictions Come to Pass

Major trucking companies started to close their doors almost immediately after trucking deregulation went into effect, filing for federal bankruptcy because of a “weakened economy” and “inability to stay profitable”. Specifically, this bankruptcy was often cited as related to the “decline in tonnage”, according to Richard Staley, a senior economist working for the American Trucking Association. 

Truckers attempted to strike, but to no avail. The railroads were able to revive themselves. Transportation stocks lost value, truckers lost jobs. 

These predictions of mass bankruptcy and trucking industry failures because of deregulation came to pass by December of 1983. Over the course of the previous three decades, the trucking industry saw the worst shake out since the Great Depression. 72 freight haulers had to shut down taking 2.2 billion dollars or 16% of the entire industry revenue with them. Several industry leaders accounting for 28% of the industry’s revenue or 3.9 billion dollars, noted significant drops and poor operating ratios from 1980 through 1982. 

Thousands of established carriers and new, low-cost truckers who entered into the business as soon as the Motor Carrier Act of 1980 was passed, have collectively contributed to 32.2% of driver layoffs by the close of 1982. Industry analysts and trucking officials concluded that while the recession did negatively impact the trucking industry, “deregulation was an equal contributor”.   

It was noted that since the Motor Carrier Act of 1980, the number of carriers in operation has increased 40%. In a testimony before Congress, George Zigish, the vice president of the AAA Trucking Corporation said that this decision by the I.C.C. was “ spreading the business thinner and thinner” resulting in “a huge overcapacity problem in the industry.”

In order to combat the overcapacity, existing carriers had to fight for business retention by dropping their freight rates an average of 30% for some companies. Truck loads were less than full more often than ever before. 

While the majority of carriers have succumbed to bankruptcy, the 10 leading carriers have increased their market share by 48.5% as a direct result of oversaturating the market. 

By 1984 it was clear that the I.C.C. was no longer being held responsible for its previously abusive policies for the transportation industry, but was under fire for its mass regulation. The previous move to replace existing members on the Interstate Commerce Committee who were not pushing fast enough for deregulation came to pass as three new members joined the Interstate Commerce Commission in 1983 after which an accord was reached to silence any differences between the current 7 Commissioners for the Interstate Commerce Commission and continue with deregulation. The three new members were referred to in Washington as “deregulation purists” and all three among the original list proposed by Republican Administration officials in response to criticism of slow deregulation by Mr. Taylor for the previous three years. 

New appointees to the I.C.C. brought a particularly brash style of thought with them. A new member of the Interstate Commerce Commission Frederic Andre suggested that the regulatory panel allow convicts to run businesses from jail, and that bribery should be considered “discounts” or “rebates”. He noted that bribes were, “‘probably one of the clearest instances of the free market at work”, a comment Mr. Taylor disagreed with.

Transcripts of private meetings during which time these ideas were shared had Andre’s comments about price fixing as follows: 

”In other words, the fixed rates that I think are socially onerous are when the Government fixes them. But if the I.C.C. were not in the picture, a purely private-sector conspiracy to fix rates has its own built-in forces to counteract it.”

Smaller railroads like the Denver & Rio Grande Western Railroad wanted to remain small but competitive, and yetmergers with larger railroad companies forced small railroads to acquiesce to a murder themselves or remain uncompetitive, representing yet another way that an industry representing only a fraction of the total transportation revenue was eating away at competition for the trucking industry.

Within six years, the Reagan Administration called for the abolition of the Interstate Commerce Commission after it had successfully implemented deregulation demanded by lobbyists and politicians justifying the action by noting we should, “let the market take care of itself” now. This action was supported by one of the Republican-nominated replacement members, Heather J. Gradison who, after joining the Interstate Commerce Commission fought hard for fast deregulation across the transportation industry but agreed that their time had come to an end now that deregulation was in place.

The revised Motor Carrier Act of 1980 had achieved its goal: complete deregulation of the trucking industry and with it, a competitive flood of biblical proportions that saturated the industry so heavily it remained poised to flounder at best. 

This was conducted to force a market structure change from a monopoly to that of perfect competition. Above all else, above the smaller regulations for rates, new companies, and shipping, the Motor Carrier Act of 1980 sought only to change the existing American market structure in favor of those who forced the change alone. 

Detriment of Perfect Competition

Industries are defined by their characteristics, and the trucking industry and transportation industry alike were defined by their predominant characteristics throughout the decades.

Predominant characteristics define monopolistic competition, like that brought about by the Motor Carrier Act of 1935 which legislatively consolidated all output within the transportation industry into the hands of a single firm: the Interstate Commerce Commission. Thereafter, this commission was tasked with restricting entry into and out of the industry and alleviating any specialized information about production techniques. 

In so doing, this monopoly enabled wealthy capitalists who backed the railroad industry at the time to completely control the transportation industry. 

Once those same wealthy capitalists removed their support from the railroad industry and focused instead on other investments, they needed to break down all aspects of the monopoly they had created. 

This was achieved with the Motor Carrier Act of 1980, an iteration of the same act which flipped an industry on its head with a single piece of legislation, converting a monopoly into perfect competition virtually overnight. 

Perfect competition is referred to by economists as atomistic competition and its relation to atomic destruction is fitting. By converting the transportation industry into perfect competition, the characteristics of the industry became the exact opposite of a monopoly by allowing a large number of buyers and sellers, offering homogeneity of shipping, opening the proverbial floodgates for free entry into the market, and eliminating all price control for which the same politicians had fought so hard decades prior. 

Wealthy capitalists understood what the pros and cons would be in either situation and applied political pressure where it suited their pocketbooks most; the most notable characteristic of Perfect Competition is that no seller, no trucking company, was given the luxury of setting their own prices. The Motor Carrier Act of 1935 purportedly offered this freedom by way of the Interstate Commerce Commission, but this was never a luxury placed in the hands of trucking companies. With the implementation of the Motor Carrier Act of 1980, the same politicians, businessmen, and academics who had fought for so long in favor of regulation and price setting (through the Interstate Commerce Commission and its monopolistic hold on the industry) switched sides with impressive speed. Daniel O’Neal Jr,chairman for the Interstate Commerce Commission, was not the only leader who seemed to change his decades-long stance on regulation without reason. The eventuality was that the Interstate Commerce Commission lost its right to a market that existed as a consequence of its decades of flooding. 

Perfect Competition was the intended outcome because it guaranteed that the larger shippers would always have the best prices, no matter what happened to the economy as demonstrated by the hundreds of smaller trucking companies who could only rely on cutting their costs (efficiency) to stay alive. 

Reese H. Taylor, a former chairman to the Interstate Commerce Commission warned from the start that, “it will be awfully hard for smaller trucking companies to stay in business trying to match 50% discounts by the bigger companies. People who worry about entry should realize now that predatory pricing is a big ball game because there cannot be competition if the smaller companies cannot survive.”

These losses for the deluge of smaller trucking companies meant significant financial gains for the top 10 trucking companies which saw almost a 50% increase in profit at the same time as many smaller companies filed for bankruptcy over the years immediately following the passing of the Motor Carrier Act of 1980.

By flooding the market, it was inevitable that the existing market structure would shift or change in such a profound way that the newly developed character-traits or characteristics of the newly changed market would equal Perfect Competition.

Wealthy Capitalists predicted this level of atomistic competition as a result of flooding the market and were poised to profit from it for the long haul. 

Deregulation: When Fast Wasn’t Fast Enough

Deregulation: When ‘Fast’ Wasn’t Fast Enough Following The Motor Carrier Act of 1980

The Motor Carrier Act of 1980 created a highly competitive environment which allowed the capitalists to maneuver into a position where they could dictate market prices. Whereas the 1935 Act gave the power to dictate prices to the government, the 1980 act put the power firmly in the hands of the shippers. Deregulation replaced regulation, lobbied using the same vernacular, the same cries that this was in the best interest of the economy, the same reasoning and same commissions. The scheme was so masterfully executed, that trucking companies did not even realize that there was an option to control their own industry. What’s more, the revised version of the Motor Carrier Act changed, in one piece of legislation, what was previously a monopoly into perfect competition. 

The Deregulation Leader

Every great movement has its leaders, and the movement of greed by way of the Motor Carrier Act of 1980 and the deregulation it enforced was led by such names as Darius W. Gaskin.

Accusations were made against Darius W. Gaskin, the chairman of the Interstate Commerce Commission, or I.C.C., for driving truckers into the biblical Lion’s Den of competition, stripping them from protective regulations and in so doing exposing them to complete destruction. Gaskin, a zealous man, noted that competition was the best market regulator and was defined as a person who “enjoys remarkable success in persuading others to accept his economic views”.  An article published in the New York Times explains that at the end of the 1970s he influenced airline deregulation for the Civil Aeronautics Board, crude oil pricing decontrol for the Department of energy, and trucking deregulation by the Interstate Commerce Commission.

In his office at the Interstate Commerce Commission, with his boots on his coffee table, Mr. Gaskins explained his philosophy was to cut back regulation in all his jobs. In testimony before Congressional committees he pushed for all of the reforms embodied by the latest iteration of the Motor Carrier Act of 1980.

Mr. Gaskins taught at the University of California at Berkeley before leaving in 1973 for a job with the Interior Department. He became the director of the Bureau of Economics at the Federal Trade Commission in 1976 where he influenced major rule changes and deregulation. The following year Alfred E. Kahn hired him for the newly created Office of Economic Analysis where he urged his employer to provide deregulation for airlines immediately. After he succeeded in deregulating the airlines he worked for the Energy Department in 1978 where he convinced the department that regulating oil prices was hurting the entire country and only with deregulation through the National Energy Plan could changes be completed.

Thereafter he was appointed to the Interstate Commerce Commission, an appointment heavily opposed by the American Trucking Association which went on record asking, “how can someone who doesn’t believe in regulation be an effective regulator?”

Profit Drops for Truckers

His efforts, and those of likeminded individuals resulted in the passing of the Motor Carrier Act of 9180 and with it, complete devastation for the trucking industry in the form of market saturation. 

In September 1980, price policies knocked 14% from trucker annual profits, resulting in demands for rate increases and higher layoffs.

A recent recession resulted in a substantial decline for trucking freight volume across the nation. Organizations representing regulated companies went to the Interstate Commerce Commission to seek approval for increased rates between 2.5% and 4.7% while concurrently contending with companies engaging in rate cutting and reductions.

Paul Schuster, president of Schuster Express Inc., noted that the ”I.C.C. had better grant the increase if they want to keep us in business.”

During that same year an official from the Interstate Commerce Commission argued that “while the economic downturn has led to a significant downturn in motor carrier traffic volume as measured in tons or ton-miles, the impact on motor carrier revenues and profits has been less severe than a brief look at the volume statistics would indicate.”

Without help, trucking executives resorted to layoffs, cost-cutting measures and a few succumbing to bankruptcy. Bennett C. Whitlock Jr., president of the American Trucking Associations, gave a speech in Washington to transportation experts where he noted that the rising cost of labor and fuel “indicate that the industry as a whole is earning… entirely too close a margin.”

The American Trucking Associations, headquartered in Washington, represents over 17,000 carriers and trucking organizations and they fought hard against the I.C.C. and all of its deregulation, attempting to keep the trucking industry afloat.

They lost.

The Motor Carrier Act of 1980, passed the previous summer, under the guise of fostering competition, eased the rules for the trucking industry exacerbating the negative impact of the recession of 1973 and 1974 from which truckers were able to rebound. The figures indicate that at the beginning of 1978, the freight industry was carrying 980 million tons of freight and 1979 became prosperous as well. It was at the start of 1980 that things began to change.

Deregulation Throughout the Industry

By October of 1980, deregulation was blazing through the transportation industry. It was argued that the government, which had since the previous iteration of the Motor Carrier Act tightly regulated the trucking industry, was responsible for costly Inn efficiencies which now this essited the exact opposite behavior: unfettered deregulation.

The idea was planted in economics study groups from the 1950s onward but did not gain support in Washington until the beginning of the 1970s. 

What was the purpose of such unfettered deregulation? 

To force a change in the existing market structure. The Motor Carrier Act of 1980 forced a change in market structure from a monopoly to perfect competition, from complete control in the hands of the monopolitic Interstate Commerce Commission to an atomistic and dangerous free for all which still stripped shippers and trucking companies of any fair right to set rates. This was its intent, while the previous iteration of the bill under the same name, the Motor Carrier Act of 1980, was designed to force a market structure change to a monopoly. 

By forcing the market to shift to perfect competition the characteristics of the industry became the exact opposite of a monopoly, allowing thousands of new shippers into the market, opening free entry and eliminating all price control. Wealthy capitalists were still guaranteed profits by way of the larger shippers in which they invested, larger shippers who would always retain the best prices regardless of the economy while smaller companies would be forced to cut their costs and efficiency to compete.

It started with smaller industries of transportation like airlines in 1978 with the passage of the airline deregulation act. This was designed to purportedly encourage competition by reducing Federal controls over the assignment of routes and fares.

Alfred E. Khan, the then-head of the President’s Council on Wage and Price Stability, and chairman of the Civil Aeronautics Board in 1977 and 1978 was an outspoken proponent of deregulation.

Urged forward by people like Khan, President Carter signed the Motor Carrier Act of 1980 reducing controls over interstate trucking which was allegedly designed to make it easier for truckers who change their routes, change their tariffs, and enter into the business whereas the previous iteration of the same act, under the same name, sought to restrict entry into the business, smother rates and tightly control routes.

That same year came railroad deregulation by way of the Staggers Rail Act of 1980. This, similarly, provided railroads with the flexibility to sign contracts with freight shippers, get rid of undesirable routes, and set their rates.

Supporters of deregulation like Khan argued that it would increase efficiency and result in billions of dollars in savings for truckers, airlines, and railroads. President Carter said that it was crucial to reduce inflation and spur competition.

The Carter Administration worked with banking executives to advocate for partial deregulation elsewhere such as the Federal Communications Commission and the banking industry. The push for increased deregulation in many other tangential sectors paints a picture of those same banking executives seeking personal control over their financial decisions, the government regulation on their communications, and their interests in shipping.

The International Brotherhood of Teamsters argued that the Interstate Commerce Commission had, by 1981, already exceeded Congressional intent by establishing overarching deregulation laws. These rules were resulting in such a saturated market that competition took the form of instability for trucking companies who, as Al Gardner, the then vice president of traffic, noted “might get business for a time, but they won’t keep it”. He went on to explain that a shipper can now lose a customer with a simple delay, breakdown of equipment, or damaged shipment leading to long term instability and a lack of reliable business for any one company. 

One can have too much of a good thing. In this case, that good thing was, and is, competition.

By 1982, 5,122 new truck companies had registered with the Interstate Commerce Commission and existing motor carriers filed over 18,700 applications for new routes. Freight profits were falling by between 10 and 20%. John Ruan, president of the Ruan Transport Corporation noted that, “deregulation has turned the industry upside down and the recession has magnified its effects”, creating a free-for-all.

Many of these new entrants into the industry were small, non-union trucking companies with wages an average of 20 to 30% lower than the comparative union companies. The result was that union truckers lost significant market shares, some between 20%, and drivers were out of jobs. 

Reports and Political Pressure

Senator Howard W. Cannon, chairman of the Senate Commerce Committee warned Federal regulatory agencies in 1979 to be cautious in their moves for complete deregulation, himself an avid supporter of deregulation. He emphasized that deregulations especially for the trucking industry needed to undergo meaningful, regulatory reform dictated by congress, not by individual committees. And yet, individual committees continue to wield their power.

He was not alone. Fred Thayer, professor of public and international affairs at the University of Pittsburgh, warned that “in the economically deregulated industries, intensive competition promotes wholesale violation of the rules because people feel compelled to cheat.”

Daniel O’Neal Jr, chairman for the Interstate Commerce Commission said in January of 1979, “ I don’t believe in deregulation. I think we need improved regulation to get the kind of competition that will help the trucking industry and shippers” and yet, within a few months he became a leader for deregulation, approving major proposals that saturated the competitive market. He was asked by industry leaders to remove himself from participation in Interstate Commerce Commission proceedings relating to deregulation because he was so biased in favor of deregulation. Such swift flips in regulatory viewpoints became commonplace as lobbyists, politicians, and the wealthy capitalists who controlled them applied their influence.

Reese H. Taylor, a former lawyer specializing in regulatory matters, was appointed as chairman to the Interstate Commerce Commission by President Reagan in 1981, and testified before Congress and in meetings across the nation in support of deregulation, with illustrations and narrative analogies.

But his support was clearly not adequate enough.

By February of 1982, the Joint Economic Committee of Congress demanded that the new Reagan Administration give the Interstate Commerce Commission more guidance for encouraging additional competition in the trucking industry.Consisting of 20 members, 3/4 of the committee or 15 members of Congress signed a report that suggested new members be appointed to the Interstate Commerce Commission who favored “more competition and less regulation in trucking”. Robert Dahlgren, a chief spokesman for the committee noted that only half of the members, 10 of those who signed the report, did so without reservation. The 5 remaining members who signed did so later. It is important to note that the 20 person committee was comprised evenly of 10 democrats and 10 republicans.

This report came as a rebuff to Reese H Taylor, the acting chairman of the Interstate Commerce Commission who, when prompted to encourage mass deregulation from the Motor Carrier Act of 1980, gave testimony before a Congressional committee that he had no guidance from the Reagan Administration and as such would not pursue strict deregulation enforced by the Interstate Commerce Commission particularly in light of the decades of regulation for which the Interstate Commerce Commission had been responsible.

When Taylor did not act accordingly, the economic committee concluded in its report that he “abandoned the goal of a freely competitive trucking market and has moved to reverse the progress toward deregulation which has recently been made. This policy contradicts the intent of the Congress embodied in its passage of the 1980 Motor Carrier Act. It is also at odds with the philosophy of the administration of President Ronald Reagan on the general subject of regulatory reform.”

In this report, severe criticism of Taylor explained that the Interstate Commerce Commission, after the passage of the Motor Carrier Act of 1980, opened the trucking industry to all newcomers who were “fit, willing and able”.  The report said that Taylor expressed concern over “predatory pricing” because of mass deregulation, that he attempted to hire regulatory staff and hold hearings on new applications, “rather than allowing them freedom to expand”  immediately.

Taylor went on to warn, “It will be awfully hard for smaller trucking companies to stay in business trying to match 50% discounts by the bigger companies. People who worry about entry should realize now that predatory pricing is a big ball game because there cannot be competition if the smaller companies cannot survive.”

Taylor combated the accusations by noting that the Interstate Commerce Commission was “moving at a steady pace to implement and administer the reforms envisioned by Congress in passing the motor carrier Act of 1980”, but that “contrary to some impressions [the act] does not allow the I.C.C. carte blanche to eliminate all trucking regulations.”

Taylor was progressively implementing deregulation in a methodical and legal fashion, approving 90% of the applications for expanded trucking, and as a direct result was publicly chastised. Congressional members influenced by their constituents of wealthy capitalists asked for direct presidential intervention to remove Taylor from his post because he was not implementing mass deregulation at a speed they demanded.

This attack against Taylor for being too slow to commit to deregulation was also applied to Mark S. Fowler, chairman of the Federal Communications Commission who Alfred E. Khan thought seemed “willing to open the field to competition” ; behavior Khan noted was juxtaposed by the slower progress of Taylor.

Robert G. Shepherd, Chief of Staff to Mr. Taylor explained that the American Trucking Associations and the Teamsters Union had criticized the Interstate Commerce Commission deregulating too quickly, and that such reregulation would threaten union jobs. Taylor also noted that the Interstate Commerce Commission had already exceeded the requirements for deregulation by the Motor Carrier Act of 1980. He added, “The trouble is, people expect me to enforce the bill they wanted, not the one that passed.”

Mr. Taylor criticized Darius W. Gaskins and Marcus Alexis, former I.C.C. members for “liberally handing out operating licenses to trucking companies, often issugin even broader rights than applicants requested”.

In spite of his Pro-competition policy, failure to move as quickly as certain politicians and their wealthy capitalist backers demanded resulted in Republican administration officials nominating four new members for the Interstate Commerce Commission who favored deregulation and would more readily implement demands of Republican committees.

Forcing a faster speed for implementation of a shift in market structure from a monopoly to perfect competition, the proponents of deregulation fought hard to expedite changes brought about by the Motor Carrier Act of 1980. Their lobbying and political efforts left a lasting, detrimental impact on the trucking industry. 

Jurisdiction: Inside the Reed-Bullwikle Act of 1948

Jurisdiction: Inside the Reed-Bullwinkle Act of 1948

The Reed-Bulwinkle Act of 1948 set a new standard in low and egregious behavior. The Motor Carrier Act of 1935 certainly achieved its goal of suppressing the trucking industry while at the same time ensuring that the railroads could thrive. One major failure of the Act was that it forced trucking companies to breach the Sherman Antitrust Act of 1890, and so rather than repealing the Act and risk never passing a new effectively restrictive act, they simply sought to indemnify trucking companies from going to jail and placing additional controls over the trucking industry and its success or failure in the hands of the railroads. 

Vetoes Vetoed

In spite of the tumultuous history, and multiple attempts by the President to veto the bill, and testimonies in Congress against the act, it persevered. 

President Truman vetoed the bill, nevertheless, in June of 1948 the Senate passed it 63 to 25, with four more votes than required. This wasn’t the first time the president vetoed the bill and the Senate overrode nor would it be the last. June 14th was a historical Day by Congressional standards which represented 3 vetoes in the span of four days which, resulted in the passing of the Reed-Bulwinkle Bill. Until that time there had never been so many vetoes overridden by the senate in such a short amount of time. House majority leader Rep. Charles A Halleck said that the president was simply “not in tune with the will of the people”, once more charging that support of the railroads and their rate-making process was in the interest and desire of the general public. 

It was stated that the railroad Industries had specific carrier problems, like the problems of the trucking industry eating away at their profits by simply offering a more competitive shipping solution but these problems needed to be fixed by the government because a vital rail system was “in the interest of the nation’s economy”. 

Free Reign and Lower Taxes

Approval of the Reed-Bulwinkle Act, vetoed by the then president but enacted by Congress in direct defiance to the president’s opposition, meant that railroads could adhere to any position taken by the Interstate Commerce Commission without fear of the courts challenging those decisions.

Part of this bill made adjustments to the taxes levied against railroad companies on payrolls for unemployment and sickness benefits. The bill would provide a reduction to the current taxes on wages and salaries for unemployment. It stood at 3% but the provision dropped it to two and a half percent as long as the railroads maintained a Surplus Reserve Fund of $450,000,000 or more. The provision noted that in the event this Reserve Fund should fall below that amount, the taxes levied would increase by 1% until that figure was met again. When passed, it was projected that the railroads wouldn’t have to face an increase in taxes for at least 7 years because of their Reserve Fund. 

It was estimated that this would save the railroads nearly $100,000,000 while simultaneously reducing the amount of tax paid income circulating into the treasury and subsequently into the American economy. Such a move does not corroborate these sentiments that the rail system in its existing form was in the interest of the nation’s economy.

Leveraging Government Support

As part of the Motor Carrier Act of 1935, the government still offered subsidies or stipends under specific circumstances for the railroads. This was, once more, touted as an attempt to keep the railroad strong for the sake of the American economy. American railroads were given favorable legislation and a great deal of financial relief under the guise that it was the government’s job to prevent competitive capitalism from eating away at railroad profit margins. 

The Interstate Commerce Commission continued to bully the government into further aid. On one occasion they levied threats against the government. J. Hayden Allredge, a member of that same committee, told Congress that the railroads were soon to lose passenger Revenue because they were approaching passenger Transportation charge limits and if they did so, the Interstate Commerce Commission would demand Federal subsidies to compensate for these losses. in a somewhat ominous tone he added that these are “ most serious problems… and one that ultimately may be serious Congress.” 

Squashing Other Competition

Having sat before Congress in one form or another for several years, the recently passed Reed-Bulwinkle Act stopped the Saint Lawrence River Waterway project, another move advantageous to railroads. This proposed Waterway would have permitted ocean-going vessels to travel through the Great Lakes and in so doing take considerable traffic from railroads in the northeastern regions. It was argued that even though this Waterway would only be functional half of the year, icebound the other half, this introduction of part-time traffic would have offered lower rates than railroads, further interfering with their profits.

A provision in the Reed-Bulwinkle Trust Act enabled the Interstate Commerce Commission, and by extension the figureheads for many prominent railroads the freedom to hold railroad rate conference agreements and similar rate making agreements for the trucking industry. This was attacked as a “highly sinister lobby” by many. 

Interchanging Control for Railroads

With rates for trucks now firmly under their control the rail right industry continued its present practices. On January 10th 1949, William T. Faricy, president of the Association of American Railroads filed a petition for 337 railroads which in total represented 3/4 of all freight cars across the United States. The petition was submitted to the Interstate Commerce Commission for approval of interchanging freight cars. Interchanging freight cars allowed the monopolistic railroad companies to increase profits by changing cars from one company to another during transport in order to avoid higher costs, circuitous routes, or bringing cars to areas where they currently did not exist. 

This request was yet another example of a provision provided for the railroad industry on Reed-Bulwinkle Act, otherwise considered illegal and a violation of anti-trust laws by many politicians and yet given an exemption. 

Impacts on the Interstate Industry

The control given to the railroad industry and the Interstate Commerce Commission to set rates for all types of transport did not just impact the trucking industry although the trucking industry was its primary target. Railroads were also allowed to set rates for themselves, and in so doing set them higher than the rates any trucking company could charge for the same distance traveled or the same service. Groups like Southern Railroads would submit petitions to the Interstate Commerce Commission asking for approval of ratemaking for specific railroad companies like the Southern Freight Association, solidifying higher profit margins than comparable shipping methods.

The following month, over 150 Interstate bus companies, all members of the National Bus Traffic Association, submitted a plea to the government for their own ratemaking and operational control. The same petition was submitted to the Interstate Commerce Commission in 1948 under the Reed-Bulwinkle Act where it was vetoed.

Lawsuits were brought against the Reed-Bulwinkle Trust Act in 1950 by the government in short spurts, but they amounted to nothing. In one such claim, 47 railroads were the subject of a 6 year long antitrust lawsuit by the government. Federal District Judge John Elephant noted that it was not the “proper function” of railroads to control the rate making process. These suits, however, were fought diligently by the Interstate Commerce Commission and amounted to nothing. 

Continued attempts at lawsuits fell on deaf ears. The interstate industry remained firmly under control of the railroads and the Interstate Commerce Commission thereafter. Things did not improve in 1980 with the subsequent passage of yet another Motor Carrier Act.

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.

Control: The Rate-making Process and how it Was Used to Profit the Railroads

From 1935 until 1980 there existed a rate making process enacted by the railroads which put rate restrictions on trucks. This system relied on advocates who went before Congress and claimed that rate making for trucks (and conveniently not for railroads) was for the good of the people. 

Rate Making

Beginning in 1935, the Motor Carrier Act gave railroad companies better control over the trucking industry. F.E. Williamson, president of the New York Central Railroad, went on the record as saying that the Motor Carrier Act would “establish regulations for rate-making” only for truckers. By way of the Interstate Commerce Commission and subsequently, the railroad owners to whom they answered, the railroad industry was given complete legal control to dictate rates for truckers among other things like working conditions, and other safety measures. 

Tangentially, a part of this rate making process was the power given to the Interstate Commerce Commission to take direct action against any lawsuits or legal issues surrounding this rate making process, thereby cutting out a neutral third party judicial system and enabling the source of rate making control with the power to deny claims against rate making control. 

The Interstate Commerce Commission required trucking companies to provide information on their fare data, charges, and tariffs. This enabled the commission and the railroads by extension to ensure railroad rates were less than trucking rates, ensuring the railroads would continue to control freight shipping and profits. Unfortunately, the profit-grabbing did not stop there. 

Reed-Bulwinkle Proposal

Nearly two decades after the motor carrier Act was passed, further restrictions were enforced upon the trucking industry by way of the railroads and the Interstate Commerce Commission who continually lobbied Congress to pass a new piece of legislation called the Reed-Bulwinkle Act.

The Reed Bulwinkle Act exempted railroads from antitrust prosecution as it applied specifically to the ratemaking procedures used by the Interstate Commerce Commission. Rate conferences, the meetings where rates were fixed for the trucking industry, were now legalized. Those who participated in this “conference method” of rate making were given exemption from the anti-trust violations by Interstate Commerce Commission approval. 

By 1948 the Department of Justice had uncovered a flaw: this type of ratemaking was illegal and violated antitrust laws. The Department of Justice limply objected that these rate making agreements were considered illegal and the antitrust immunity provision in the Reed-Bulwinkle Act only applied to agreements if they were not contrary to the public interest.

Objections Overruled

Not everyone was on board with the Reed-Bulwinkle Act, including the then President of the United States and Senator Burton K. Wheeler, chairman for the Senate Commerce Committee who noted that the government relief offered in this bill “goes too far”. Over the course of several days his testimony was given demanding that the ACT be thrown out of court, particularly given the economic impact it would give for railroads traveling east to west, a differential against the South upwards of 39% economically.  He noted that the railroads were only fixing freight rates to which they all agreed in a system “rigged to keep the South and West in economic bondage”.

That same year, C.W. Harder, the president of the National Federation of Small Business, called on President Truman to veto the bill and the exemptions from antitrust prosecution. In his words the rate making process and the Reed-Bulwinkle Act represented the “soul of communism”.

He further noted that allowing the Reed-Bulwinkle Act to pass would result in “wrapping our nation’s entire transportation system into a tight, strangling Monopoly-cartel combine” which would destroy “protective barriers of free competitive enterprise which… have made this nation the hope and envy of the world today.”

Wendell Berge, Assistant Attorney General, testified before a Senate committee that the Association of American Railroads and their industrial allies were trying to use “unlawful domination and control.” In April of 1946 he pleaded that the Reed-Bulwinkle bill, which at that time had already been passed by the house, be stopped. 

He noted, “this bill is an attempt to legalize and perpetuate the most far-flung and dangerous Monopoly that has yet been foisted on the American economy.” 

Part of his evidence was that the railroad represented a transportation monopoly in conjunction with other basic Industries which fixed transportation prices so that they could maintain the industrial status quo and prevent any new enterprises from competing within their industrial monopoly.

Concerns were noted that this illicit monopoly prevented southern and western regions from developing any competing Industries while concurrently depriving the courts in these respective areas from the jurisdiction they would need to file civil suits against elicit railroad operations. This would establish a “dangerous precedent in antitrust”. 

At the same time, the Department of Justice objected on the grounds that this bill would “destroy the freedom of competition and remove a large segment of the economy from the sphere of economic freedom which is now guarded by the anti-trust laws”. 

Berge explained that by placing control into the hands of the Association of American Railroads to fix Transportation rates, Congress would be giving a private government “the power to determine whether an industry shall grow or be stifled.”


Transportation costs are a fundamental element in the industrial pricing system for any business. Controlling the cost of transportation can dictate competitive success or failure but establishing a fixed rate system overseen by only one industry gives that industry the power over our competitive economy. It gives that one industry power to eliminate competition.  

On record, Berge made his point succinctly: 

“The rail combine through interlocking banking influences has already allied itself with the steel, oil, cement and other combines to erect arbitrary rate blockade against the entry of competitors in the west and south. Enactment of the Bulwinkle bill would permit this unlawful power to go unrestrained and would result in the cartelization of the nation’s economy by a combination of super trusts, resulting in a complete reversal in our system of competitive enterprise.”

Governor Arnall would go on to accuse the railroads of a conspiracy, “instigated in 1934 by powerful Northern Financial interests… at the behest of those interests”, namely, the Association of American Railroads. 

The railroad industry did not only claim to represent the best interest of the economy, and subject the trucking industry to ratemaking, but they also found indirect ways to influence the legal representation given to the trucking industry. For example Edgar S. Idol served as general counsel for the American Trucking Association Inc, but he stated that the Reed-Bulwinkle Act was “plainly evident…imperative if complete chaos and confusion is to be avoided in the motor carrier industry.”  These statements were made after Idol was involved in a great deal of complicated legal transactions which finally came to a head in 1963 when the Commissioner of the Internal Revenue upheld deficiencies having to do with Idol and his wife from the decade prior. Most of these deficiencies represent a tangled web of what could be considered bribes from a specific truck carrier, stock options, and special transportation rights for said specific truck carrier given by the Interstate Commerce Commission. Eventually the Reed-Bulwinkle Act would come to represent a new standard in dominating, monopolistic behavior from the railroad industry. 

Oppression: Why wealthy capitalists despised the early pioneers of American trucking (1920 to 1935)

The Transportation Act of 1920 practically guaranteed financial assistance from the government to the railroad companies. It even mandated the ICC to ensure their profitability. But why did wealthy capitalists and the railroads rail, as it were, against the early pioneers of the trucking industry? Profit.

Separate but equal?

During the 1920’s, plans still made headlines to forcefully make rail and trucking transportation systems somehow equal, in an effort to prevent the trucking industry from fairly earning the majority of profits in the freight shipping industry. Under the Transportation Act of 1920, Frederick J. Lisman claimed that Congress was required to make all systems equal. Publications in September of 1926 reveal that arguments were being made that the Transportation Act of 1920 required Congress to maintain competition to whatever extent possible and subsequently keep different systems of freight equal in all fashions. One such suggestion was to allocate specific territories and freight lines for the trucking industry limiting where they are allowed to travel.

Of course, not everyone took these arguments standing. Resolutions were adopted by The Merchants Association of New York against potential amendments for the Transportation Act. In an article on October 20th, 1923, it was made clear that the Merchants Association adopted a resolution to oppose any and all amendments to the Transportation Act of 1920.

Why? The changes in the proposed amendment would further restrict the transportation system in favor of the railroads and against the trucking industry. The main argument was that the trucking industry and the railroad industry and the public needed time to judge the potential impact of the recently passed transportation before changes were made to it. But time wasn’t given. Lawsuits were given instead to distract from the core issue.

Lawsuits galore

In places like Pennsylvania, it was argued that certain coal roads which served the local areas needed to be integrated into the existing Pennsylvania railroad system because at present, they were only accessible by truck, giving an unfair advantage to the trucking industry. Attempts at lawsuits were made. However, these lawsuits eventually reached the Supreme Court involving railway companies from San Francisco, Texas, St Louis, although early in the 1920’s courts held that lawsuits to recover transportation charges do not qualify if they referred to a case that took place prior to the Transportation Act of 1920.

Government funding

This did not dissuade the railroad companies who continued to fight for regulation policy after the Transportation Act in their favor. Small improvements in transportation and earnings for railroads over long haul trucking were applauded by bankers and carrier officials. Arguments were made that people were “fed up” with the inefficiency of the government and the way it had interfered with railroads; these allegations resulted in improved terminal facilities designed to expedite railroad shipping and increased government funding to bolster the railroads accordingly. Provisions from the Transportation Act of 1920 practically guarantee that the government provide financial assistance to the railroad companies, and as such billions of dollars flowed in their direction. Government and commercial investment in improved transportation across 7 railroads in Cincinnati, New York, Buffalo, New York, Pennsylvania, and others represented one of many Investments made in order to beat the rising trucking industry.

Consolidation for profit

Debates were being heard by the Interstate Commerce Commission as to which railroads in individual cities and for how many miles should be integrated into which trucking companies or right under the fold of existing railroad companies. Companies like the Pennsylvania Railroad were fighting for a liberal division of the existing transportation routes and the associated freight. While major railroad companies were fighting against the trucking industry they were also engaged in internecine issues, arguing before Congress that larger companies like the Pennsylvania Railroad company should be allowed to absorb smaller names like Jamestown, Westfield, & Northwestern Railroad Company to gain small, 34 mile segments of line one company at a time.

Networking and political favors

Arguments in favor of railroad consolidations were not new. On November 22nd, 1927, Daniel Willard, the president of the Baltimore and Ohio Railroad hosted a dinner in recognition of his own success serving for the railroad company during which time 100 financial men and businessmen of Baltimore were present alongside Governor Ritche and Mayor Broening who both spoke on behalf of Willard. During this Gala event Willard told tales of his rise from a track Walker all the way to the executive of a railroad company and announced a consolidation plan for all of the existing railroads, grouping them into four different systems based on geographic area in an attempt to counter the success of the trucking industry. The governor praised his public service and his successful rags-to-riches story, indicating that it was the epitome of American industrialism. Dinners of this nature became commonplace, an opportunity to wine and dine wealthy capitalists and government officials thereby creating a network through which pressure could be applied in favor of railroads.

Victories were handed to the railroad companies throughout the 1920’s and 1930’s by Congressional decisions like the Treasury decision to use Recapture Law to return $10,000,000 in profit to railroad companies. The importance of this decision is so nuanced as to almost be glossed over. During the Great Depression, the government captured or took 10 million dollars from the railroads as part of the emergency Transportation Act. The government invested this money in securities which yielded just shy of 4 million dollars in profit for the government. Thereafter on July 21st, 1933, the government repaid railroads the ten million dollars it had appropriated. Having helped the government during a time of crisis and as a direct result of that help yielded almost four million dollars in profit, Congressional decisions were starting to turn favorably toward railroads even if those decisions came at the expense of the trucking industry.

In March of 1933, Roosevelt advisers met with officials from railroad carriers, investors, and bankers to try and draft a new law that would provide ongoing government financial aid to the railroads touted as a form of American unity. The measure in question would further consolidate railroads, ironically doing away with railroad based competition, competition that larger railroads used as their arguments in favor of oppressive tactics against Long Haul Trucking.

It all comes back to profits…

An article from The New York Times published on October 27th, 1925, with the heading “Says Motor Trucking Cuts Rail Revenues” says it all. It was on this day that financial losses to railroads, the result of motor competition from the trucking industry, were recognized as a permanent form of financial loss. What’s more, testimonies at hearings before the Interstate Commerce Commission revealed that companies like Missouri Pacific were already fighting submitted applications from companies like Chicago, Milwaukee & St. Paul Road for increased road building programs west of Chicago at a rate of 5%.

In a testimony against the potential increase in the trucking industry, Mr. Baldwin noted that his passenger earnings from 1924 receded by $1,300,000 compared to the year previous, and the first seven months of 1925 indicated additional decreases of $800,000 compared to the same time frame from the year prior.

During that same testimony he noted that railroads were also losing Freight shipments as a result of the trucking industry, his company having lost over two million pounds of freight traveling from Little Rock to other Arkansas points and over 6,500,000 lbs of freight from Memphis to Arkansas. T.A. Hamilton, the legal counsel for security holders in the trucking industry from Chicago, Milwaukee & St. Paul Road, argued that long haul freight was simply more affordable for companies, due mainly to the fact that they charged less than their rail counterparts.

Each of these moves were relentlessly repeated. Lawsuits continued to be brought forth, the railroad industry leaders fought against truckers, and as more moves were made to secure government funding and network among wealthy capitalists, these efforts came to a head with the passage of the Motor Carrier Act of 1935, a piece of legislation that secured control over regulation, pricing, licenses, and operational activity for the trucking industry, control placed in the hands of the railroad.

Perhaps unexpectedly, trucking companies started to take some of the freight business from the railroads, and they were helped along by the Wall Street Crash of 1929. Throughout the coming decade, trucks were able to pick up the slack where railroads were failing or simply inadequate. They were able to provide better services in some more remote areas, and faster. But this could not stand, not when the railroads had spent so long networking with government and wealthy capitalists. The threat of trucking companies growing in popularity due to their convenience forced wealthy capitalists to enact the Motor Carrier Act of 1935, a move which delayed the rise of trucking by several decades.